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Feature Crank Up The Volume ADD GIS TO BIG BUSINESS 
The role of GIS in determining both business strategy and tactics has grown tremendously of late. In a world where competition for market share is constantly intensifying, businesses are turning to GIS technology to help plan everything from location of new outlets, to simple market mapping to catchment area analysis to customer profiling and complex spatial modeling. Two basic factors are responsible for this development: On the one hand, the little shop around the corner is almost as obsolete as the phonograph. Most retail sales are now affected big retail chains, either in the shape of huge supermarkets or in shops that specialize in marketing certain types of wares. In each case efficiency and profitability depend on successfully competing with business rivals who try to attract the same pool of potential customers. The demands are changing continuously, influenced, among other things, by economic conditions, waves of fashions, etc. In addition, consumer demands in different localities are also dictated by their economic and social levels. All these aspects can be registered geographically, as long as you have geocodes, which most retail databases should have. And here lies the enormous advantage of GIS, which enables the interested party to map each and every aspect geographically and to correlate the data intelligently, thus providing the entrepreneur with a sound basis both for strategic and tactical business decisions. On the other hand, the wealth and variety of GIS technology now offered in this field has grown by leaps and bounds, and so has its accessibility and user-friendliness, while the prices have dropped to make purchasing it financially viable. Retail companies of all types, from department stores to restaurants, choose GIS to quickly assess real estate values and market viability. The variety of tasks that GIS helps perform include:
According to the researchers, "Many major UK retailers have now become advocates of the micro-marketing philosophy, and therefore are demanding more detailed information regarding their customers and the markets within which they operate. The synthesis of such information," they continue, "is aimed at gaining an understanding of all aspects of the marketplace, so the retailers can promise the ‘right’ product in the ‘right’ place at the ‘right’ tine, and thereby satisfy the needs of their customers. One of the latest manifestations of this move had been the recent introduction of loyalty card schemes, which arm the marketer and location planner with highly detailed data regarding the individual customer purchasing behavior." The researchers found evidence of a positive relationship between the size of a company and its amenability to invest in GIS. Major grocery chains were among the first retailers to invest in GIS. While in Britain there exists up-to-date information as to how big retail businesses "digest" GIS, there seems to be no comparable research in the US, although GIS undoubtedly plays a major role in many big business enterprises. The Newspaper Network The Newspaper Network (TNN) is a national sales and marketing company specializing in developing customized newspaper advertising programs for national retailers and ad agencies. A subsidiary of the McClatchy Company, TNN defines potential markets for sales development and provides competitive print media analysis and rates.  Demographic analysis and visualization using MapInfo Professional (R) and MapInfo (R) TargetPro (R) help you instantly see trends in a market area and focus on areas of opportunity. Headquartered in Sacramento, CA, the company has five regional sales offices and annual billings of more than $400 million. The firm’s need was to analyze and develop highly accurate demographic reports and maps and transform them into profitable advertising decisions for clients. In 1998, TNN selected a solution comprised of MapInfo®TargetPro®, MapInfoProfessional® and MapInfo®MapMarker®PLUS US as the core engine for its nation-wide, custom marketing and analysis services. The solution drives applications that access and manage demographic data, define and map detailed trade areas for clients and identify newspaper circulation coverage for those areas. According to Karen Hardison, TNN vice president of marketing, the company looked at several products before deciding on TargetPro. "The MapInfo solution was more robust than several others that had more capabilities and functions than we were looking for," Hardison said. "Also we wanted to deal with one vendor so that, if we had issues or problems, we could just go to one contact." In addition to the TargetPro intuitive query engine, TNN acquired all three optional modules for this system: Demographic Analyzer, which allows rapid market analysis of any custom or Census-defined geographic area; Cluster Analyzer, for profiling customer databases and geographic areas, and PowerPack Data Module, with roughly 9,000 demographic variables, plus a survey of consumer information by Media Research Institute. The data module also includes MapInfo lifestyle segmentation data. TNN chose TargetPro to assist in marketing analysis, defining trade areas, predicting buying behavior and helping clients make the most effective media buy for their advertising dollars. According to Hardison, TargetPro is the key tool for these applications. "We found it to be a simple one-step solution for demographic research and analysis and for providing data in a uniform and consistent format for any market our clients are looking at." Hardison said a typical application is defining trade areas for clients who want to advertise grand openings of their retail stores. "We overlay the demographic variables of the client’s target audience, e.g., age, household income, etc., on all the ZIP codes within a given radius, and color code them according to how closely the populations match those of the client’s target audience. The client may also want other information, including shopping malls, anchor stores, highways and the locations of competitors’ stores. After the trade areas are defined, we overlay newspaper circulation data on them. The output is delivered to the client’s sales people who determine which of the recommended newspapers will provide the best advertising coverage for the areas defined." TNN Senior Marketing Analyst and GIS Specialist Jonette Phillips said TargetPro dramatically speeds the processing involved in these applications. "The technology is extremely fast," Phillips said. "TargetPro can process over 150 demographic variables by ZIP code for the entire United States in 20 minutes. If we wanted to do the same thing by Census block group (2,263,160 nationwide), it would take about 40 minutes–that’s phenomenal! Before we had this technology, if we wanted to process that many demographic variables for the whole state of Texas, our system would have had to run overnight. "We have been very pleased with the extremely fast processing ability of TargetPro," added Phillips. "It will also produce any type of file–mapping, Excel, DBF or ASCII–and populate a map, database or spreadsheet with information from the data module." Phillips noted that the company’s present platform–2 Gateway 400 MHz PCs, each with a 35 Gb hard drive and 365 Mb of RAM–is considerably faster than its previous system. TNN delivers most of its data on disks, but Phillips said that is changing. The company is developing a Web-based application with MapInfo®MapXtreme® to enable clients to access their data directly from desktops. The new TNN’s Intranet/Internet site will provide client access to maps with their target audience criteria, geographic and newspaper circulation data. Customer Resource Management (CRM) Asked whether their clients prefer solutions to specific problems or whether they are prepared to institute GIS globally, Jon Winslow CRM Market Director at MapInfo replied, "The answer is something in between. It is surprising - the wide difference between clients and their capabilities. Some very large U.S. retailers do very little in terms of geographic analysis when they plan their site acquisitions. There is often a mentality that says some one has to feel the dirt and sniff the ground in order to make a good decision. Other companies invest heavily, build GIS departments from the ground up, figure what demographics drive their business, work with consultants to develop custom models that take interaction with nearby competitors in account. In general, though, customers are looking for answers. Our industry is like any other. The company that can answer the most relevant customer question the quickest will win big."  MapInfo (R) PSYTE (R) lifestyle data helps predict consumer preferences. It is available at any level of geography, from Designated Market Areas (DMA) down to Block Groups. Critical Decision Making "When companies decide to invest heavily in understanding their customers," Winslow continues, " the contact is at the executive level. For example, a bank that knows it has to optimize the location of its branches to adjust to an acquisition makes that decision at the executive level. We meet with the VP of Marketing or Real Estate — sometimes even higher. A retail company that knows it needs to add location to its sales force automation system usually makes that decision at the VP level. In those cases, a GIS specialist, some one trained to take advantage of MapInfo or other geographic analysis tools usually comes up with a solution and drives the idea up the chain of command. Companies that are progressive and serious about cutting costs and increasing their business have executives that can understand a workable solution when it is presented to them." There have been definite practical results in decision-making achieved by one of Map Info’s clients, according to Winslow. " In the case of Imperial Oil, we were able to help them unlock data that otherwise would have remained completely hidden. By helping them prepare and analyze their customer data, by adding important location attributes to their loyalty-card information, and by creating simple, effective applications to show the results of marketing programs by location, we helped the GIS expert at Imperial Oils supply information for critical decision making that had not been available before."  Easily compare potential site locations using demographics, MRI expenditure data and drive time analysis to ensure the right decision. MapInfo Site Selection Chris Kochan,Market Research Manager of Rack Room Shoes in Charlotte, N.C, says "there are two individuals including myself who could be considered "GIS specialists", but neither are senior management team members. He adds that his department (market research) "is responsible for utilizing GIS technology to guide decision-making in our buying, advertising and real estate departments." While market research is the only department in the company that utilizes GIS directly, the aforementioned departments benefit from the technology through our analyses performed with it.Our management team receives analyses through the market research department, which, in turn, receives raw data from our Oracle database and various departments. The area greatest affected by the technology has been site selection. We have greatly enhanced our ability to forecast sales of potential locations and select only those meeting our requirements," states Kochan. Buying and Shopping Patterns Another MapInfo client, a large firm employing some 7,000 employees which deals with outdoor advertising — street furniture, billboards and illuminated ads — offers mall advertising offerings through which companies can promote and brand their products at the point of purchase. The firm uses MallScape and MapInfo TargetPro to create trade areas which determine the distance each consumer travels to shop a particular mall. With this information the firm can determine the demographics of each mall’s shoppers. Consequently the firm’s clients use each mall’s trade area demographics to help sell their ad services. "MapInfo has surveyed its customers many times to find out what drives the US of GIS in retail," concludes Winslow. "We think we know what they eventually want to do with their systems. Basically, they want to discover trends that can make their company more profitable and they want to deliver information related to those trendsto the point of execution." ESRI  Banking and Insurance According to Lee Burton, ESRI Industry Manager for Banking & Insurance, 44 of the top 50 largest US Banks are ESRI software users. "As for Insurance," he asserts, "ESRI''s GIS is used by the majority of worldwide Re-Insurance organizations. "Typically, business clients will come to ESRI for help with a specific need. For example, most banking clients originally came to ESRI for a compliance (fair lending) solution. GIS is the perfect solution for ensuring compliance with federal lending regulations. More recently, we''ve worked to develop these sites into enterprise installs where other departments (i.e. marketing, senior management, etc) can access and analyze geographic information to make better business decisions, as opposed to having only one department benefit from the use of GIS. "The user is usually within a particular department (i.e. marketing, underwriting)," Burton continues. "However, GIS is still often used for communications to senior management. (e.g. Why should we place a branch on 5th street? How many of our competitors are already in that area? What profiles of consumers are within an eight minute drive time of this potential location?) "Our business users tell us that GIS provides an excellent communication mechanism for senior management to best understand their business operations. Nevertheless, we do have many users at the corporate level. In a nut shell, the maps capture the attention of senior management and provide a much greater understanding of what is happening where." Colleen Schelde, Retail Business Solutions Coordinator at ESRI’s headquarters in Redlands, California, adds, "The majority of our business customers are looking for complete out-of-the box solutions that solve a specific business problem that will save them time and money and make them more efficient and in turn have a positive effect on their ROI (Return on Investment)." Who in the company is responsible for GIS buying decisions? Schelde replied, "In some cases it is at a high executive level rank and then in others it''s at the GIS Analyst level. Bottom line - the higher the price tag - the higher up the ladder it goes, but if it''s just a purchase of software - normally that''s from the GIS Analyst. It also depends: if it''s just a purchase of software or a custom project as well."  Results of Targeting Customers Is there proof of practical results thanks to GIS? "There are many such instances," concludes Burton. "Here is one such example of positive changes in decision-making achieved by a banking user of GIS. Prior to using GIS, the Credit Union of Texas (formerly Dallas Teachers’ Credit Union) would send ''blanket'' direct mailers to all of their 200,000 clients. They would be pleased with a 1-2% response rate. Using ESRI''s GIS (ArcView Business Analyst), they started to segment direct mail offers into groups of 10,000 members (clients). The members were segmented by profile, geography, financial behavior, and some other characteristics. Today, the Credit Union sends mailings to segmented groups of 10,000 and earns a 9-10% response rate. So,not only is there less overhead for sending direct mail, but there is greater precision about who should receive which offer." Intergraph  Solving Specific Problems Answering the query whether clients generally request solutions to specific problems or whether they opt for the entire GIS package, Shelley Miller of Intergraph) says, "When we work with our customers, it is typically to solve a specific problem. The solution may be solving a departmental/organizational issue or it may require an enterprisewide implementation. It really depends on their business goals. Most often, our experience is that GIS is deployed throughout the enterprise to complement an organization’s IT strategy. Our GeoMedia products fit very well at the enterprise level because of their openness and adherence to IT standards." GeoMedia, she adds, affords access to all geographic data formats and serves as both a complete desktop system and a platform for custom solutions. Asked on what level their clients deal with GIS, Ms. Miller stated, "We often interact with selection teams that include a combination of IT managers, GIS managers, and up to Chief Information Officers. Today, the IT department has a strong voice in the selection and implementation of a GIS system." Summary With Internet retailing becoming increasingly popular and traffic in physical retail locations beginning to decrease, it is clear that GIS has become an essential tool for retailers in deciding which businesses should be moved, remodeled or closed, and how, by analyzing customer profiles, marketing and advertising, their business could be made more profitable. Lili Eylon is Czech by birth, has lived and been educated in the U.S. She now lives in Jerusalem where she is a freelance journalist. Her work has been published in the International Herald Tribune, a German daily, as well as technology publications worldwide. (Editor’s Note: At press time, the following significant announcement came across the wire:) ESRI Announces Acquisition of CACI''s U.S. Marketing Systems Group Involves Software, Data Assets, Methodologies and the Creation of ESRI Business Information Solutions. Read the press release here. |
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