This Spotlight on Location Data blog series is brought to you by Esri, a leading provider of software that brings location intelligence to business decisions.

Location data can be powerful tools for retail businesses looking to tailor their stories to a particular customer segment, as well as for manufacturers trying to decide which retailers will be most able to move their products. I spoke with Amy Wilde of sales and marketing solutions firm MarketStar to learn more about how retailers are putting location data to work. The following is an edited transcript of our conversation.

How can businesses use lifestyle segmenting to target their retail efforts?

Businesses that are smart with their marketing dollars will use segmentation to first determine who they want to target. A lot of the businesses, especially small businesses, that are looking to get into the retail channel anticipate that everyone will want their product. They anticipate that the whole world will want to pick up their new fandangled gadget, but what we’ve found is that they can slim that down and really narrow the field and really determine the segments that they select are going to purchase based on — a lot of times we do market research right up front. We have focus groups or we do an online survey to determine who those people are that would purchase a product through the retail channel, and from that we’re able to take the ZIP codes and do a segmentation analysis.

Now if we don’t have market research data, then we can typically work right with the clients on what makes sense for their brands that they’re going after. A lot of our clients are in the wireless category, and we will work with them on what type of customers they want to target — whether it’s old, young, Generation X; maybe it’s the grandmas and grandpas, the affluent segment that want to keep up with their grandkids.

Once they’ve figured out who they want to target — it can be either a new product a new promotion or an overall brand that they want to start to really define who they want to target. Once they have that in place, it’s fairly easy for us to come in and say, “Here’s where you need to go to market.” Out of all of the [Core-Based Statistical Areas] in the United States, here’s the top 25% that make sense for you, and then they can match that up with a retailer in those areas.

Can you explain a little bit about how you mix location data into this? Where is the data coming from and how are you using it? The retail data, we just simply purchase from a retail warehouse … which just includes addresses, a few firmographics such as square footage and a number of other small firmographics that really guide us. But these are in lists that you can get on the Internet through a number of sources.

Are there other ways you can combine this with maps or other location-related tools, in terms of like visualizing the data?

Certainly any time we can get sales data directly from the retail locations … our representatives will work with the store associates, and afterward we fill out what’s called a call report — basically a survey or a quick rundown of what they did and how many items they helped sell, if there’s competitive products on the ground, if there is a lot of traffic in the store. All of that data is gathered, and we can take that back, and using [geographic information systems], we can help our vendor … determine more closely where to really target their audience, their market, their competitive advantage, all of that stuff. It’s through that data that our reps are collecting through the retail locations.

What are some ways you actually see people use this data to target their marketing or tailor their retail experience?

One of our clients has come to us within the last year or so … they had gone to a third party and collected fantastic data that basically told them who their customer was, but not where to find them. So we were able to use GIS and the demographic and segmentation to tell them where they should go to market, and then on top of that we used this cull report data as well as any kind of other cells data that we could gather with the retail information. We were able to rank each of those.

So now what you have is, you have a slice of where to go based on who you’re targeting, and then within those markets — so say, Atlanta and Salt Lake City and San Diego … now within those markets you know what retailers have the highest propensity for going to purchase that product based on real data that we’ve collected as well as the soft metrics such as demographics and spending categories within the census data.

I think the biggest “aha!” for many of these corporations and the big name brands that we deal with now is the fact that they can look at a market now and understand who is living there, and understand now based on the data … how to target them. That becomes a huge deal. That becomes a really big deal. So, our reps … now go in with a specific message based on who lives around that area.

So if we’re going in the Phoenix area, that’s going to have a higher concentration of these silver and gold, affluent grandmas and grandpas — older generation — that have the ample money to spend on a new product or to buy it. But, they don’t want to be told [about] every single gadget, or every single feature of the gadget, they just simply want a good product that works, that they can work with their grandkids on.

So, what we do is that we have talking points that we teach our sales reps how to talk the talk and walk the walk based on where they’re going, what retail locations they’re going into, what markets and the different messengers by market, and I think that’s real critical in this new wave of how to help everyone save money while going to market … is to be really conscious of who you’re selling to and how to get them to listen and open up. And certainly, it is not the same for everyone, and we’ve come to understand that quite aggressively with our clients, and it’s a brand new concept, though, to most of these big name brands, to really focus on who you want to go after and it’s been very successful for us.

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