Geodemographics Research Paper

2. The Development Of Geodemographics

The collection of customer information and target marketing have been around since the late nineteenth century, and customer segmentation and micromarketing were introduced in the 1950s. It was not until the 1970s, however, that theoretical, technological and institutional innovations made possible the maintenance of electronic databases on consumer behavior, the statistical analysis of consumer identity, and precise geographical location of consumers upon which geodemographics depends. Its invention is attributed to Jonathan Robbin, a sociologist who, in the early 1970s, saw entrepreneurial potential in the recently introduced Zone Improvement Plan (ZIP) of the US Postal Service. First, he aggregated demographic data for the 240,000 block groups of the Bureau of the Census into the 36,000 postal delivery areas. Then he performed multivariate analyses of this data to produce 40 lifestyle categories describing consumer potential—hence he called the system PRIZM (Potential Rating Index for ZIP Markets). This innovation allowed marketers to target potential customers through heavily discounted bulk direct mail campaigns.

Today, publicly produced census data are still a vital component of geodemographics, and vendors still adopt clever acronyms like ACORN (A Classification of Residential Neighborhoods developed by CACI Marketing Systems, UK) and PSYTE (from CompuSearch, Canada) to describe proprietary segmentation systems. However, the US Bureau of the Census itself provides ZIP level data as a result of lobbying and financial assistance from the geodemographic industry, and its computerized spatial database called TIGER (for Topologically Integrated Geographic Encoding and Referencing) is the basis of the geography of most geodemographic systems. In Canada and the UK, there is also close cooperation between industry and government—in the UK, for example, Pinpoint Ltd. and the General Post Office have digitized every address that receives mail. In these countries, geodemographic databases incorporate diverse sources of data from official records, reported consumer behavior, lifestyle preferences and even psychological profiling (‘psychographics’). Elsewhere, the industry has been slower to develop, largely owing to limitations in quantity and quality of public and private data, but it is truly international, with business marketing publications and software solutions available for many individual countries and most regions of the world. A cross-cultural clustering of consumers is already available for Europe.

While a host of specialist corporations and consultants offer individual services, a series of licensing agreements, acquisitions and mergers have resulted in national, and in some cases, transnational ‘information conglomerates’ (Curry 1993, p. 27) that purvey complex, integrated geodemographic systems. Such systems typically include three principal components: electronic databases composed of public and private, individual and aggregate information; segmentation routines that identify consumer types through cluster analyses of behavioral and psychographic data; and a geographic information system that provides the means for spatial analysis and mapping.

3. Electronic Consumer Databases

The geodemographics industry accumulates data from numerous sources to create its Marketing Customer Information Files: purchasing proprietary information on customers from corporations, such as point of purchase surveys, warranty registration questionnaires, customer-preference cards and satisfaction surveys, and from government agencies; purchasing customized data from syndicated national consumer panel surveys, media surveys, opinion polls and credit bureaus; obtaining public transaction records of institutions such as banks, insurance companies and health services, which are kept in compliance with government regulations; and ‘mining’ public records on births, deaths, marriages, property transactions, crime, and mailing address changes. The scale is enormous, encompassing the vast majority of all of US households, and what were once databases are now ‘data warehouses’ with more than one trillion entries. Specialist firms and software programs provide means to sift and sort data to eliminate redundancies and match entries, particularly in terms of street addresses, and consumer information is now updated instantly and can be downloaded on line from most of the geodemographic vendors.

Such data are often collected and sold with only the implicit consent of consumers, who are unaware of the further uses to which data gathered in one transactional context might later be put. As a result of informational campaigns and legal actions, consumers are becoming increasingly wary of invasions of privacy and suspicious of ‘consumer espionage’ (Larson 1992, p. 5), and the industry has adopted voluntary controls. Even individuals who explicitly opt out when presented the option, however, are likely represented in official databases, and their consumer ‘profile’ can be inferred accordingly. Privacy is a notoriously tricky issue, and surveillance may be a necessary quid pro quo of participation in capitalist society (Robbin, cited in Larson 1992, p. 55). Perhaps public concern should be not so much about specific instruments of surveillance technology nor their applications to particular individuals, but the manner in which social subjects are constituted and represented in the discourses of social and spatial sciences (Foucault 1979). Thus, geodemographics is replete with ‘strategic’ metaphors of military operations, sexual conquest, and psychological manipulation, based upon reduction of identity and social difference to consumer profiles and residential location through its segmentation schemes and ‘market mapping’ (Goss 1994).

4. Consumer Profiling

Contemporary segmentation schemes go well beyond the abstract demographic variables of the census to offer ‘Character: not just characteristics,’ and this system, called Focus, for example, offers ‘multidimensional portraits of real people,’ revealing ‘lifestyle and mindset’ and promising marketers will ‘see how customers view themselves,’ and ‘meet their customers on a first name basis’ (National Demographics and Lifestyles 1993, p. 2). Segmentation schemes draw upon information on brand preferences, media habits, credit rating, lifestyle and values, to divide neighborhoods in the US, typically into 30–40 categories such as ‘Pools and Patios,’ ‘Shotguns and Pickups,’ ‘Fur and Station Wagons,’ and ‘Hard Scrabble’ (PRIZM) or ‘Cautious Young Couples,’ ‘Sustaining Ethnic Families,’ and ‘Young Accumulators’ (MicroVision). Marketers ‘get acquainted’ with these potential customers through visual scenarios representing consumers engaged in a typical activities in front of their home and/or detailed imaginary vignettes describing their typical names and everyday lives—particularly their consumption practices. Although analysts argue their schemes imply no social judgments, the rankings, weightings and premiums charged for names of affluent consumers, and description of segments give them away: to the marketing industry, social identity and value is lifestyle, and ‘you are what you buy’ (Piirto 1991, p. 23).

5. Geographic Information Systems

The ‘geo’ of geodemographics is essential for several reasons: first, because the map transforms complex data into simple ‘actionable’ visual images—red typically represents a ‘hot’ market—ideal for busy executive officers; second, because addresses of households provide a convenient way to match database records; third, because addresses are means by which consumers are reached with marketing messages or products, whether delivered by mail, conventional media or retail outlet; fourth, because a range of analyses and transformations can be applied to spatial data to create ‘custom’ geographies such as retail trade areas, sales territories and media footprints; and finally because marketers infer characteristics of individual consumers from aggregate data and substitute missing values in their databases based on residential location. This last function is important because in some forms of data (census and vehicle licensing, for example) individual records are not available for confidentiality reasons, and where records are missing, the costs of collecting such data are generally prohibitive.

The importance of the geographical basis of marketing information is attested by the lengths to which the industry goes to infer residential location even for users of the World Wide Web, constructing user profiles from ‘search engine queries; online shopping patterns; requests for localized information, such as movies, concerts, lectures and stores; and interested in regional websites such as yourcity.com’ (Melville 1999, p. 34). Inference from ‘neighboring’ records is based on the assumption, according to Jonathan Robbin, that ‘humans group themselves into natural areas … They create or choose established neighborhoods that conform to their life-style of the moment’ (cited in Burnham 1983, p. 92). Not surprisingly, Claritas’ promotional material similarly claims that it is ‘based on the fundamental sociological truism that ‘‘birds of a feather flock together’’ ’ (Claritas National Planning Data Corporation (NPDC) 1992). The geo-graphical basis of consumer profiling is also a result of the so-called neighborhood effect, such that, for example, ‘when one moves into a suburban neighborhood in which everyone has a gas barbecue there is a strong motivation to buy one’ (Lea and Heumann 1999, p. 26). There is, of course, an undeniable spatiality to everyday life, but to infer individual characteristics from those of an area is to fall for the ecological fallacy (to assume that individual characteristics can be inferred from group characteristics, which is only true if the population is homogeneous) and the question is how much such an effect is natural or intrinsically motivated, and how much it is the product of the marketing enterprise itself.

6. Conclusion

Geodemographics is particularly hype-ridden and the success of its applications limited, for example, to very modest ‘lifts’ in customer response by 5–10 percent in direct mail campaigns, even if this represents considerable savings in a large-scale operation. It is, nevertheless, the fastest growing segment of the information industry, presumably because of its promise of intimate and actionable knowledge about consumers. Geodemographics first reduces the subjectivity of individuals to objective and quantifiable characteristics, then reconstructs composite ‘soap opera’ identities (Goss 1995, p. 187), perhaps more consistent with marketers prejudices than social reality—hence one geodemographic system promises that ‘as you get to know [our cohorts], you’ll discover these are all people you know: your friends, neighbors, relatives, and—most importantly—your customers’ (National Demographics and Lifestyles 1993, p. 2). There is a second, more sinister, self-fulfilling promise, however, in that the definition and targeting of consumers based on residential location may effect redlining of consumption, such that marketing campaigns and retail services are provided only to addresses—with known names, inferred names, or merely ‘Current Resident’—with the ‘right’ statistical and behavioral profiles. This is not to argue that there are not cleavages in consumption based on class and residential location, but if, for example, magazine issues are differentiated in terms of advertising content for subscribers in different ZIP codes, as some already are in the US, consumption of these goods and services in turn will reproduce, and perhaps actually produce, further segmentation and segregation of society. Such is the instrumental reason behind the hype of geodemographics.

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