Geodemographics

Geodemographics uses geographical information, typically census and other sociodemographic and consumer statistics for very localized geographical areas, [Page 170]to improve the targeting of advertising and marketing communications, such as mail shots and door drops, and to optimize the location of facilities or businesses. The central goal of geodemographics is to classify people according to the type of residential neighborhood in which they live. The segmentation scheme (that is, the system of classification) is developed through complex proprietary spatial and nonspatial statistical procedures that group neighborhoods according to their similar combinations of geographic, demographic, and consumer characteristics.

For example, a geodemographic classification might determine that residents living between the 1200 block and the 1600 block of Ash Street are likely to buy a lot of encyclopedias and eat frozen yogurt. Geodemographic classifications can be accessed via GIS or directly through tabular information relating geographic locations to classification segments.

Geodemographics classifies residential neighborhoods into a set number of residential neighborhood types. The number of categories typically ranges from around 35 in relatively homogeneous markets, such as the Republic of Ireland, to about 60 or 70 in more complex markets, such as the United States. Classifications are typically assigned to geographic locations using the finest level of geography for which census statistics are published and/or the lowest level in a country's mail code geography (for example, U.S. ZIP codes). Thus, potential customers can be geodemographically coded by their addresses using a table containing the assigned classification code for each geographical unit. In countries where mail codes are not used, address recognition software identifies the census area in which the customer's address falls and then looks up the corresponding geodemographic category.