Chapter Five Using Geographic Information Systems for Marketing Research

Chapter Five

Using Geographic Information Systems for

Marketing Research

Copyright © Houghton Mifflin Company. All rights reserved. 5 | 2

What is a Geographic Information System?

• A software application, either desktop or web-based, that allows users to present and interact with data on or from a map


Why GIS ?

• Standard GIS software allows researchers to– Integrate multiple data sources

– Create interactive maps

– Forecast sales

– Identify the most responsive consumer segments

– Determine the most cost effective advertising methods and strategies


Why GIS ? (Cont’d)

• Standard GIS software allows researchers to– Monitor customer responses to marketing

activities

– Develop micro-marketing strategies to better understand and analyze the lifestyles and product preferences of people living and/or working in various neighborhoods


Exhibit 5.1 Using GIS To Obtain Directions to Domino’s

Reproduced with permission of Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc. Map provided by MapQuest ®


Domino’s: Using a GIS

• Domino's GIS, powered by MapInfo, is used to– Map, in advance, the best delivery route to each

customer’s address

– Select store locations based on driving distances

– Distribute inventory efficiently based on buying trends and other factors


Domino’s: Using a GIS (Cont’d)

• Domino's GIS, powered by MapInfo, is used to– Identify business opportunities

– Analyze purchased demographic data such as household age, income, and gender by pointing and clicking, looking at detailed street maps and drilling down for in-depth customer information


Geocoding

• Geocoding is the practice of assigning specific latitude and longitude coordinates to information

• Geocoding software is usually bundled with other GIS software


Exhibit 5.2 The Process of Geocoding

Text and graphics reprinted from "ArcView ® GIS Means Business," courtesy of ESRI. Copyright © 1997, Environmental Systems Research Institute, Inc. All rights reserved.


Micro Marketing by ACE Hardware

• Ace Hardware, in the Paradise Valley area of Phoenix, AZ, conducted an in-store survey to obtain relevant GIS data – Trade area map : allowed the management to

visualize its customers and learn who and where their customers are

– 85% of its customers came from one to three zip codes


Micro Marketing by ACE Hardware (Cont’d)

• Advertising was direct mail sent to customers by zip code

• Could substantially reduce its cost of advertising by eliminating mailers to zip codes outside its trade area


McDonalds In Japan is Faster with GIS

• McDonald’s plans to open 2,000 new locations in the next 5 years– Plan depends on their ability to review potential sites

quickly and accurately

• GIS has made this process much more efficient knowing the restaurants minimum sales requirements and the factors that affect demand

• McDonalds is opening new locations faster than you can say cheeseburger!


Developing Local Advertising Campaigns

• GIS was used to develop a regional newspaper insert program for the Mercury Grand Marquis luxury automobile to– Enable Lincoln Mercury to develop cost-effective

regional advertising programs

– Examine past buyers of a certain vehicle and locate similar types of consumers in the desired region

– Identify the neighborhoods and zip codes where consumers are most likely to buy the given vehicle


Table 5.6 Propensity to Buy Indices for 3 Different Zip Codes


Mapping the Propensity to Buy Index

• Areas where Grand Marquis should be advertised– Each zip code area will be color coded to

distinguish between the more promising and less promising areas


Lincoln Mercury Research Results

• Distributed Grand Marquis insert on two separate occasions in 2001 using Southern California newspapers

• First month of the campaign– 362 Grand Marquis vehicles sold in Southern California– Represented the highest sales in February since 1996– Increase of 3% in Grand Marquis sales during first

quarter of 2001– California accounted 6.4% of the Grand Marquis sales

in February–an increase of 2.2% over year 2000

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Chapter Five Using Geographic Information Systems for Marketing Research