Marketing meeting: Take One. "We sell electronic organizers
so we should market to anyone who needs organization or likes
gadgets. Let's send a flyer to everyone in town."
marketing meeting: Take Two. "We've cluster analyzed ZIP
codes in a five-mile radius of our store. Area one and four are
mostly seniors and blue-collar families, so we'll focus on
areas two, three and five professional singles and white-collar
middle class and affluent families who buy personal electronics.
We'll target 30 blocks with three separate mailers."
isn't it nice to know the person you're marketing to may
actually want your product or service?
Geodemographics, also known as cluster or lifestyle marketing,
jolts demographic marketing up a few notches. "Geodemographics
is kind of a holistic approach to marketing," says Michael J.
Weiss, author of The Clustered World: How We Live, What We Buy,
and What it all Means About Who We Are (Little, Brown and
Company). "It doesn't just consider demographic
information like age, income and marital status. It also looks at
the effect of whether people live in a city, a small town or a
rural area. It looks at lifestage whether you're young and
single, a couple with kids, or a retiree. And it also looks at
other factors, specifically how you behave in the
marketplace."
Weiss, a freelance writer by trade, initiated his study of
geodemographics after interviewing Jonathan Robbin, founder of
Claritas Inc. Robbin, a social scientist, merged census data,
marketing surveys and ZIP codes into a lifestyle segmentation
system called PRIZM (potential rating index for ZIP markets), the
basis for cluster marketing in the United States. Intrigued by the
geodemographics concept, Weiss took on the marketing-science
beat.
Content Continues Below
We've asked Weiss to provide the lowdown on cluster
marketing to help you make the most of your marketing efforts. So,
who are the people in your neighborhood? Keep reading to find
out.
LAURA TIFFANY:Why is cluster marketing more effective
than other types of marketing?
MICHAEL J. WEISS: It's based on a powerful
sociological phenomenon that birds of a feather flock together.
That is, people who live on the same block tend to share similar
backgrounds, values and consuming patterns. So by looking at what
clusters are found in a given trading area, an entrepreneur can
learn from surveys what the residents tend to eat, drink, drive and
think about. And that information can help a person decide whether
to open a store in a particular area, what products to stock, what
music to use in a commercial and even what colors to use when
they're designing a brochure.
It's much better than intuition, which is what a lot of
small-business people use when they're trying to plan their
marketing. And it's more powerful than demographics because it
considers lifestage and urbanization.
TIFFANY:The number of PRIZM clusters increased 55
percent from the 1980s to the 1990s. Do you see a similar increase
in the approaching decade?
WEISS: I really think we're becoming more and more
diverse in this country. I think we'll see a continued
population growth out in exurban America, so you're going to
see more telecommuters countryside taking their city tastes with
them. Also, the high cost of housing inside the nation's
beltways is pushing younger families out to rural America.
Baby boomers are going to start entering their retirement years
come 2005 and 2010. As a result, we'll see more active
retirement communities in the Sunbelt. Boomers will also want to
retire to college towns where they have great memories and are near
a cultural center. There's also going to be a group of boomers
who have no desire to leave their neighborhoods in cities and
suburban areas.
Another big trend that's going to create more clusters is
the increase in immigration. Half of all U.S population growth in
the next 50 years will occur among immigrants coming to America. A
lot of people don't realize Hispanics will be the largest
minority group in this country, so we're going to see more
second generation Hispanic Americans who are upper middle class and
affluent with their own lifestyle types.
TIFFANY:In your book, you say there's a
"thriving homogenized culture" exemplified by places like
Wal-Mart and Home Depot. How does this mesh with the idea of
clustering?
WEISS: Basically you have several different cultural
phenomena taking place. America still has a very thriving
homogenized culture, and you can see it in all the cookie-cutter
malls you see off the interstate, and in the spread of
McDonald's and Home Depot and Wal-Mart stores all around the
country. But the reality is that a lot of these mass-appeal
businesses really don't reach dozens of the clusters.
So you have these two tracks going on in American business--a
booming homogenized mainstream business culture, as well as
numerous specialty stores and boutiques, which are really catering
to these cluster niches. I think the nation is big enough to
support both kinds of business types.
TIFFANY:As the country becomes even more clustered,
will the Wal-Marts and McDonald's still have mass
appeal?
WEISS: I see two conflicting trends taking place. This
whole notion of shopping as entertainment will still draw people to
the big-box stores and megamalls in the same way that town centers
drew people to be around their neighbors 100 years ago.
On the other hand, the blossoming of niche marketing, where you
have dozens of cable television channels and Web sites that reflect
very specific tastes and values, also reflects the fact that more
and more Americans want to be targeted in the way they receive
information. There's so much information clutter out there that
people are going to want to have a filter. I see a real boom in
Internet-based marketing, specialty-boutique marketing and very
narrowly focused stores in the business community.
TIFFANY:Which clusters are the trendsetting
ones?
WEISS: The rich and sort of funky clusters in the big
cities are the real trendsetting cauldrons. These are areas where
you have a lot of art galleries, specialty boutiques, museums,
small theaters and colleges nearby, so you have a very receptive
climate for new products, services and technology. These are areas
where you have the early adopters, like the Urban Goldcoast,
Bohemian Mix, and Money and Brains clusters, who are the first to
glom on to different ideas and trends. The products and services
then slowly filter out from the city centers to the hinterlands,
down the socioeconomic ladder to smaller towns and more downscale
areas where they're spread out to the entire populace.
TIFFANY:In your book, you give an example of a camera
store that should market to Winner's Circle addresses (the
second most affluent cluster, residing in new money suburbs),
whereas the local hardware store might do better marketing to Kids
& Cul-de-Sacs addresses. Isn't this limiting your possible
sales? Shouldn't you explore all your options--not just the
most likely?
WEISS: That's a very critical question because I
really look at cluster-based marketing as a risk-lowering device.
When you do a cluster analysis of a trading area, you are finding
people who are most likely to be interested in your product or
service. But then the question becomes, what happens after
you've saturated that audience? How do you reach out to new
kinds of consumers for your product? That has to be part of your
cluster-based analysis.
The great thing about clusters is when you do a profile of your
trading area, you can find that out of 62 clusters, there are 35
that are nowhere near this area. They're just not interested in
a lawnmower in city neighborhoods or a swing set in a singles area.
So the clusters can really help you focus in on the people who you
want to go after, in addition to those who you really know are
completely outside your area.
TIFFANY:If someone can't afford to hire a cluster
marketing firm, how can they use this method themselves?
WEISS: First of all, companies like Claritas sell very
basic trading-area profiles for only a few hundred dollars. But I
believe in guerilla marketing, and you can do some of your own
analysis right from your own cash register. Look at receipts and
the people who are coming into your store, and try to map your own
trading areas.
Then do some test-marketing: Send out a flier featuring one kind
of product or service at your current price or at a discount to the
area and see which kind of customers respond. Then do a bigger
mailing to the different neighborhoods or the different ZIP codes
that reflects what you found.
Small businesses should do focus group research, even if it just
means bringing a dozen friends to your house and asking them if
they like this cookie or that one, this book or that hammer. Find
out exactly what they like about it, and then figure out where
these people live to do your own cluster marketing. I'm a firm
believer in the idea that homegrown cluster marketing is a lot
better than no-target marketing and a lot better than
intuition.
TIFFANY:What types of things should you ask your
customers when you're analyzing them at the purchase
point?
WEISS: Talk to people who are regulars and ask them where
they live, what they like about your store, what they don't
like about it, what they wish you had in the store, and what other
kinds of stores they like.
Or, if you think people will be sensitive about answering
personal questions, you may say, `What kinds of people live in your
neighborhood? What kinds of stores are really popular? What kinds
of cars do people drive? What kinds of homes are in the
neighborhood?' So you're not just asking what the
particular customer is doing.
TIFFANY:Can you explain the idea behind global
clusters?
WEISS: There are now cluster systems in 25 countries, and
it's possible for multinational companies to target the same
kind of consumer in one country or another.
Nearly every country has its neighborhoods of Old Money Flats
and New Family Suburbs and Working Class Villages and Waterfront
Retirement areas. And the consuming patterns of each of these
lifestyle types tend to be the same, whether you're in
Australia, Italy or England. So a company can now find the
lifestyle type that's most receptive to its product or service
in America and then pick and choose the same kind of lifestyle type
in Spain, France or Italy, and market its product there as well
using similar kinds of messages. There's even a global cluster
system called MOSAIC, from Experian Information Solutions Inc.,
which has classified 14 common lifestyles in 19 countries. This is
the way of the future--doing cluster-based marketing throughout the
global village.
TIFFANY:How can global clustering help Internet
marketers?
WEISS: There are now Internet marketers using clusters,
and they're able to learn where people live by using cookies on
the Internet and getting demographic data from people who fill out
applications and customer profiles. So you don't have to use a
geographic-based address to reach people in the different clusters.
They can came to you in what historian Daniel J. Boorstin has
called consumption communities: communities based on people with
shared tastes and consumer behavior.
TIFFANY:Some arguments against cluster marketing
include concerns about privacy and that clustering stereotypes and
oversimplifies consumers. How do you dispute this?
WEISS: Cluster systems are very good arguments against
concerns about privacy since they're based on geography. They
don't really care about what individual households are doing
because clusters are based on the theory that birds of a feather
flock together--that, essentially, you reflect the neighborhood
where you live.
When it comes to the concern about being pigeonholed into these
classification types, I see that concern as reflecting good news
and bad news. The bad news, of course, is that Americans hate to be
pigeonholed, and they really resent that they can be so easily
targeted into one of these different lifestyle types. The good news
is that we're really a very diverse people, and there are at
least 62 kinds of us in any appreciable number in this country.
We have to recognize that marketing technology is able to
identify patterns of behavior and different lifestyle types within
the great American population. That's a good thing because
businesses have a way of getting out products and services that
we're interested in as opposed to a lot of stuff that we really
don't have time for. I look at that as a positive force.
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