MARKET ANALYSIS — THE HOLISTIC APPROACH TO MARKETING
| DOI | https://doi.org/10.1108/eb057511 |
| Pages | 18-20 |
| Date | 01 May 1988 |
| Published date | 01 May 1988 |
| Author | John Whitehead |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
MARKET ANALYSIS -THE HOLISTIC
APPROACH TO MARKETING
by John Whitehead
CACI
Market Analysis
Introduction
Not every manager is fully aware of the revolutionary changes which are sweeping through today's business
information industry. Amongst the most burgeoning areas of change is market analysis, which, in the United
States, is reckoned to gross well over $100 million annually, with parallel developments on this side of the
Atlantic — especially in Britain.
Basically, what it is all about is using computer power to produce an information system of infinitely greater
power and utility to marketers than the sum of the individual sets of data at their disposal.
The first stage for the marketer is to assess the various
marketing databases such as customer information,
research data and other intelligence. Where market
analysis comes in is to link this information to large,
external databases which are organised on a
geographic basis. Published census statistics are the
most important of these.
The result is the creation of computer systems which
can provide insights into market patterns and marketing
opportunities. For example, new systems have emerged
to target advertising, promotional and merchandising
activity. Sales territories can now be planned by
computer. Moreover sophisticated market modelling
systems are coming within reach of all retailers and
proving vital to the location of new sites and the
evaluation of existing ones.
Market analysis or geodemographics (even the
practitioners have not yet agreed a name) has
established a firm foothold in many key areas of
business, and each year more key pieces of the jigsaw
fall into place.
Growth has been faster in some areas than others, but
every step in the development of this new industry has
proved to be based firmly on sound information and
techniques, offering substantial gains to the marketing
community. Market analysis is not a passing fad but
represents a major advance in marketing methodology.
Direct Marketing
Direct marketing means sending advertising and
promotional material directly by mail to potential target
customers. This was one of the first industries to come
to grips with the new opportunities in market analysis.
In their simplest form, these opportunities involve using
neighbourhood classification systems, such as CACI's
ACORN (A Classification of Residential Neighbour-
hoods), to target potential customers by door-to-door
advertising.
Based on census statistics, ACORN identifies and
classifies neighbourhoods on a street-by-street basis
into one of 38 different types of household,
distinguished by their score on 40 variables covering
age and household type, housing and employment
status.
The underlying principle is simple. People with similar
lifestyles and expenditure patterns congregate in the
same neighbourhoods. Home-based classification
systems demonstrably say much more about a person
than the more traditional market segmentation system
— social class — which is based on occupations.
As every post code in the UK has been allocated an
ACORN type, retailers or manufacturers are able to build
up a detailed profile of their target markets, using
existing customer addresses or the post code addresses
of respondents to market research surveys.
For example the ABC1 Guardian and Observer reader
in ACORN neighbourhood H29, "Better-off
cosmopolitan areas", is aeons away from the ABC1
Telegraph and Mail on Sunday reader of ACORN
neighbourhood J34, "Spacious inter-war semis, big
gardens". Yet, in terms of age, sex and social class, they
could be identical.
Similarly, a blue-collar family resident of ACORN type
B4,
"Modern private housing, young families", will
probably share more in common in terms of lifestyle,
values and consumer behaviour with his white-collar
family neighbours than with blue-collar family residents
of ACORN type F19 "Low-rise estates in industrial
towns".
By linking the post code through ACORN, for example,
with the Target Group Index Survey (TGI), it is possible
to pinpoint local patterns of preference for a particular
product on a street-by-street basis. This enables the
retailer to identify which areas offer the best prospects
for a particular product, and, by linking this information
to the electoral
roll,
mailshots can be personally
addressed to potential customers, or leafleting
IMDS
May/June
1988
18
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