Geodemographics

Geodemographics refers to computer-based systems that combine spatially referenced data about consumers with statistical analysis and mapping programs that are used primarily to identify potential targets for business purposes. Geodemographics depends on the oft-quoted assumption that birds of a feather flock together or, more specifically, that you are where you live and, in business applications, that you are what you buy; that is, individuals' characteristics can be inferred from knowledge of aggregate demographic, socioeconomic, and behavioral data that describe their places of residence, and such characteristics predict the likelihood of purchasing particular constellations of commodities and services. No doubt, consumers can benefit from information tailored more precisely to their desires and needs, and there undoubtedly is a spatiality to everyday life, but critics have raised concerns about invasions of privacy[Page 181] that these systems threaten and about effects of the so-called ecological fallacy, through which individual characteristics are erroneously inferred from area or group characteristics.

Although collection of customer information began during the late 19th century, and segmentation of consumers was performed during the 1930s, it was technological and institutional innovations of the 1970s that brought about this revolution in marketing. Sociologist Jonathan Robbin combined factor and cluster analysis of data for 240,000 block groups of the U.S. Bureau of the Census to create 40 lifestyle categories, and these data were then cross-referenced with 36,000 postal delivery areas of the new Zone Improvement Plan (ZIP) of the U.S. Postal Service to produce a system called PRIZM (Potential Rating Index for ZIP Markets). This kind of information allowed businesses to target potential customers through discounted bulk-mail marketing campaigns and to undertake retail site evaluation and trade area analysis.

Geodemographics became the fastest-growing segment of the marketing industry, and a wave of mergers and acquisitions led to development of information conglomerates that are increasingly global in scope. For example, Claritas, the company that Robbin founded in 1971, acquired National Planning Data Corporation, Donnelley Marketing Information Services, National Decision Systems, and Market Statistics and was itself purchased by VNU, a company that includes A. C. Nielsen, Nielsen Media Research, Spectra Marketing Systems, and Scarborough Research. Recently, in partnership with Toronto-based Environics Analytics, Claritas has developed PRIZM CE, a segmentation system for Canada that integrates with its updated PRIZM NE system for the United States to allow continent-wide marketing programs. Skipton Information Group combines its proprietary Euro-Direct CAMEO clustering system and Micro-Vision's Market Maker geographic information system to bring life to data for postcodes in Britain, ZIP+4 in the United States, postal codes in Canada, Ilots in France, and Cho-Mokus in Japan as well as for administrative units in 24 other countries. Experian, a subsidiary of GUS, offers a segmentation system called Global MOSAIC that classifies more than 800 million of the world's consumers for cross-border target marketing, and it offers proprietary MOSAIC segmentation schemes for 20 countries.

Collaboration between public agencies and private businesses in Britain, the United States, and Canada in particular has facilitated development of massive electronic databases that combine information from censuses, public records, consumer and panel surveys, and commercial transactions, often with more than 1 trillion records. CACI Marketing System's ACORN segmentation scheme is based on more than 125 demographic statistics and 287 lifestyle variables in its Consumer Register database of 40 million U.K. consumers covering the 1.9 million postcodes in the United Kingdom; Claritas's PRIZM NE includes behavior records for more than 890,000 households and list-based data for more than 200 million households as well as census data down to block group and ZIP+4 areas of the United States; and MapInfo, a subsidiary of R. L. Polk Canada, combines 250 demographic and consumer behavioral variables from more than 100 million households to produce its PSYTE consumer segmentation system for 90,000 geographic units.

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