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GIS for Advantage in Marketing and Routing: Case Study of a Small Home Accessories Firm
James B. PickSchool of Business, University of Redlands
Kamala Gollakota,School of Business, University of Redlands
Hamid FalatoonSchool of Business, University of Redlands
Lisa Benvenuti, Redlands Institute
University of Redlands, Redlands, California, USA
Nathan Jimerson, Redlands Institute
University of Redlands, Redlands, California, USA
Paper Presented in Academic Program of ESRI 2008
,
Paper Presented in Academic Program of ESRI 2008 Business GIS Summit,
Chicago, Illinois, April 30, 2008
Key Sections of PresentationKey Sections of Presentation• Objectives and Research Questions
• Literature review
• Methodology
• Case Study Findings
– Customer mapping
– Demographic, housing, economic trend analysis
– Geodemographics
– Routing applications
• Strategic Benefit
• Conclusion
Goal and ObjectivesGoal and Objectives
• The goal of the present exploratory paper is toThe goal of the present exploratory paper is to analyze readiness for undertaking spatial technologies with a focus on GIS strategy andtechnologies, with a focus on GIS strategy and competitiveness.
• The research questions are analyzed through• The research questions are analyzed through in‐depth case study analysis of ABC Blinds, a small home accessories firm in southernsmall home accessories firm in southern California.
Research QuestionsResearch QuestionsThe research questions are the following:
1.What have been business goals, markets, and strategies of ABC Blinds?
2 What spatial data mapping and analysis can2.What spatial data, mapping, and analysis can help ABC Blinds perform better in its business markets and strategies?markets and strategies?
Literature ReviewLiterature Review• GIS in business has been studied for many years, but there has been relatively little in‐depth case study.
• Neufeld and Griffith (2005) examined the GIS development choices facing Isobord, a p gCanadian manufacturer of particleboard.– Isobord’s options included contracting its GIS with p ga tiny consulting firm, utilizing a moderately priced desktop GIS provider, or going with a very expensive consulting company data‐bases.
Literature Review (cont.)• The case study of Engineering Systems (ES), a 15‐person GIS
consulting firm serving county and city governments in
Literature Review (cont.)
consulting firm serving county and city governments in California and several other states, focused on systems development, training, and staff retention (Pick, 2008).
– A major problem that occurred several times was the hiring by ES’s larger client firms of its skilled on‐site employeesemployees.
• For larger businesses having GIS, it is most often an independent unit, the GIS department or office, which is responsible for implementing spatial technologies company‐wide (Grimshaw, 2000; Pick,2008).
– Key aspects of success is the relationship of the GIS– Key aspects of success is the relationship of the GIS department to the IT department (Pick, 2008).
MethodologyMethodology• The methodology is case study (Yin 1994). The case study
strategy consists of definition of the study focus frameworkstrategy consists of definition of the study focus, framework construction, interviews, data collection, and case analysis. Case study investigation often has small sample sizes (Yin 1994)1994).
• The two enterprises for this exploratory study were selected from a set of five firms in a large‐scale study funded by the g y yU.S. Small Business Administration of GIS in small business. The enterprises were chosen on a convenience basis, but from different industries (home accessories and landfrom different industries (home accessories and land appraisal), which are related to each other.
• Secondary materials on spatial technologies in the firms were requested, and provided by most firms.
Case Study Findings for ABC Blinds• ABC Blinds, Draperies and Shutters (ABC Blinds,), is owned by a
husband and wife team: John and Sally Smith (fictitious names).
• It was founded fifteen years ago as a home furnishing design consulting firm, then moved into integrated design, retail, and manufacture. Today it does mostly retail and some design.
• By 2007, ABC Blinds, had over a million dollars in sales with five full time employees and three part time employees. The company operated out of its own facility in Victorville. This facility served asoperated out of its own facility in Victorville. This facility served as both a showroom and office.
• ABC Blinds sells a wide range of standard and custom window coverings Products included: wood blinds faux wood blindscoverings. Products included: wood blinds, faux wood blinds, aluminum blinds, Roman shades, roller shades, cellular shades, and various draperies.
Map of PrincipalMap of Principal Market Areas for ABC Blinds
Victorville CaliforniaVictorville, California
(Source, Walter Feller, MojaveDesert.com, 2008)
ABC Blinds’ StrategiesABC Blinds Strategies• ABC Blinds is presently at a juncture point that it can continue
its historical business make changes to the geographicalits historical business, make changes to the geographical reach of its markets, bring back a manufacturing function, develop its headquarters real estate into a larger home i t t ith it lf d th t t d/improvement center with itself and other tenants, and/or develop more its marketing to business customers.
• ABC provides service to high end homeowners, business, p g , ,commercial building and school districts, government facilities, and property management companies. Since the demography of the region has changed ABC company isdemography of the region has changed, ABC company is considering how to consolidate more geographically, while identifying ideal customers with specific income level, age, and location.
ABC Blinds’ Strategies (cont.)ABC Blinds Strategies (cont.)
• Also the firm is evaluating to expand itsAlso the firm is evaluating to expand its present business location by building a new structure not only to expand its own showstructure not only to expand its own show rooms, design center, and offices but to add an additional structure to rent to a homean additional structure to rent to a home improvement outlet for networking of their services This might help in marketing andservices. This might help in marketing and creating additional income from a different source for diversification purposessource for diversification purposes.
GIS Mapping to support Marketing at ABC Blinds
• GIS mapping and analysis were accomplished in consultation i h h ABC Bli dwith the users at ABC Blinds.
– Since ABC Blinds would eventually take over its GIS, the level of spatial analysis was kept simple.level of spatial analysis was kept simple.
• The study team focused part of its interviews on determining what internal and external attributes might be the most l d f l b drelevant and useful to be mapped.
• The team also directed question sets toward determining the data and process flows in the present information systemsdata and process flows in the present information systems (ISs), and assessing the technology skill levels of the firm and its outside IT consultant.
Five background factors that influence marketing for ABC Blinds(1) Competition in the High Desert region(1) Competition in the High Desert region
(2) ABC’s traditional market lies in the middle and upper‐middle market segmentsupper middle market segments
(3) Distances. ABC’s market regions extend over very large distancesvery large distances
(4) Need for customer service. ABC’s competitive advantage is tied to its personalized service ofadvantage is tied to its personalized service of customers.
(5) Constraints on employee’s time(5) Constraints on employee s time.
Implementing the Marketing Analysisp g g y• This GIS project consisted of taking the customer list from ABC Blinds, re‐
formatting and data‐cleaning it, geocoding it based on parsed addresses, bi i h li i h l d d f d lcombining the customer list with a cleaned and re‐formatted sales
spreadsheet, and producing a set of maps including customers, sales totals, customers by time period, and customers by major product categorycategory.
• The 8,000 customer records from the past twelve years were submitted to geocoding. Those that successfully geocoded were mapped. Additional customer record attributes including year of sale sales amount numbercustomer‐record attributes, including year of sale, sales amount, number of sales, etc., were compiled by ABC Blinds from data on sales and marketing in the GoldMine software.
The team developed an extraction pre processing geocoding and– The team developed an extraction, pre‐processing, geocoding, and mapping process covered extracted spreadsheet files into maps.
• Maps were produced using ArcGIS of customer characteristics for the market regions of ABC Blindsmarket regions of ABC Blinds
Cumulative Sales 1997‐2007 by Customer i i li dLocation, Central Region, ABC Blinds
Sales Type at Date of Last Purchase, Central i li dRegion, ABC Blinds
Mapping Demographic, Economic, and B i Ch t i tiBusiness Characteristics
• The second major area of mapping utilizedThe second major area of mapping utilized Business Analyst Online, the spatial web service of ESRI Inc that providesservice of ESRI Inc. that provides demographic, economic, and business information for the U S by many levels ofinformation for the U.S. by many levels of census geographical units, by addresses, and for rings donuts and hand‐drawn polygonsfor rings, donuts, and hand drawn polygons (ESRI, 2007).
• There are over a thousand attributes available• There are over a thousand attributes available at various geographical levels.
Prototype Use of BAO Map Services for i iForecasting Home Prices
• A prototype of use of Business Analyst Online forA prototype of use of Business Analyst Online for ABC Blinds is the projected shift in housing values from 2006 to 2011 in ABC’s key market areas. The median value of owner‐occupied homes in California grew from $211,500 in 2000 to $477,700 in 2005, at
t 2000 2005 f 16 3 t la rate 2000‐2005 of 16.3 percent yearly.
– The rate of increase was exceeded by several percentage points in the largest cities ofpercentage points in the largest cities of Victorville, Apple Valley, and Rancho Cucamonga.
Median Value of Owner‐Occupied Housing Units by ZIP Code, ABC Blinds, Market Region, 2006 with 1, 2.5,a and 4 Minute Drive Times
Median Value of Owner‐Occupied Housing Units by ZIP Code, ABC Blinds, Market Region, 2011, with 1, 2.5,a and 4
Minute Drive Times
Geodemographic AnalysisGeodemographic Analysis
• Geodemographic analysis was performed for ABCGeodemographic analysis was performed for ABC Blinds key market areas, using Tapestry from ESRI in Business Analyst Online.y
• The geodemographic segments that dominated ABC’s key market areas were useful inABC s key market areas were useful in understanding existing key markets, so that they can be marketed better.
• Segments outside the key market areas suggested new market areas of greater potential.g p
Community Tapestry LifeMode Groups in ABC Blinds Analysis L1. High Society. Affluent, well-educated, married-couple homeowners. Ethnically diverse
and fast growing. Active in public activities, sports, travel. L2. Upscale Avenues. Prosperous, educated, married-couple homeowners in distinctive
housing choices by segment. Invest in enhancing their homes. Leisure includes sports e.g. golf, bicycling, and domestic vacations.
3 i Ci d ll i ld h fl i h di i f b l AL3. Metropolis. City dwellers in older homes reflecting the diversity of urban culture. Ages, household types, and employment varies. Moderate income on the average. Uniquely urban and media-oriented lifestyle. Like urban-type dancing and music.
L5. Senior Styles. Senior lifestyles by income, age, and housing type. Large and growing group with diversity in segments. Politically active. Like to play or look at golf. Read daily newspapers and for TV prefer the newsdaily newspapers and for TV prefer the news.
L7. High Hopes. Young households striving for the “American Dream” of home ownership and rewarding work. About half homeowners and many willing to move for better opportunities. Tend to be young, college-educated with below average net worth. Mixture of household types.
L8 Global Roots Ethnic and culturally diverse families Household are young have low toL8. Global Roots. Ethnic and culturally diverse families. Household are young, have low to moderate incomes, and often rent in multiunit buildings. Most are households with children, so interest in children’s goods. Maintain ties with home countries, sometimes by travel.
L9. Family Portrait. Youth, family life, and children. Ethnically diverse. Mostly home owners in single-family homes. Lifestyle centered on youth and family. Often visit zoos g y y y yand parks.
L10. Traditional Living. Middle-aged, middle income, settled – Middle America. Older and often finishing child-rearing and looking towards retirement. Tend to buy American cars, and give care to gardens and homes. Depend on traditional information sources such as newspapers.
L12. American Quilt. Households in small towns and rural areas. Segments reflect the different sectors of small-town life. Tend to be somewhat affluent and homeowners. Rural lifestyle includes fishing, hunting, power boats, country music. Like pickup trucks.
Source: ESRI, 2006.
Characteristics of Three Segmentation Categories ithi Lif M d G f Gl b l R twithin LifeMode Group of Global Roots
Industrious Urban Inner City Tenants City Dimensions Industrious Urban Fringe
Inner City Tenants City Dimensions
Household type Family mix Mixed Mixed Median age 28.6 27.8 28.7 Income Middle Lower Middle Lower MiddleIncome Middle Lower Middle Lower MiddleEmployment Skilled/Services Services/Prof/Mgmt/Skilled Skilled/Services Education No HS diploma; HS
Grad No HS Diploma; HS; Some College
No HS Diploma; HS Grad
Residential Single family Multiunit Rental Multiunit RentalResidential g yRace/ethnicity White, Hispanic White, Black, Hispanic White; Black; Hispanic Activity 1 Attend movies once a
week or more Buy baby products Shop at convenience
stores Financial Have mortgage Have personal education Have personal
insurance loan education loanActivity 2 Drink coffee often Buy/rent horror, comedy
videos Own a cat
Media Listen to Hispanic/variety radio
Watch syndicated and cable TV
Watch daytime TV Hispanic/variety radio TV
Vehicle Own/lease Toyota Belong to car dealer auto club
Own/Lease Ford
Source: ESRI, 2004
Table 4. Tapestry Resuilts by LifeMode and Segmentation Categories for ABC Blinds, by City
Life/Mode Group (in bold) and Sgement. Apple Valley Hesperia Victorville Adelanto Barstow
Rancho Cucamonga
L1 High Society 15.8 6.7 35.9g ySophisticated Squires 6.7 15.5Exurbanites 15.8Suburban Spendor 8.6
L2 Upscale Avenues 19.0 22.9 17.9In Style 13.0Cozy and Comfortable 6.0 12.7yEnterprising Professionals 8.5
L3 Metropolis 5.3 8.1City Lights 8.1Modest Income Homes 5.3
L5 Senior Styles 12.3 9.0 8.2Prosperous Empty Nesters 6.9The Elders 5.4Simple Living 6.4 6.1
L7 High Hopes 4.9 6.1 14.2Aspiring Young Families 4.9 14.2Great Expectations 6.1
L8 Global Roots 20.9 23.8 36.4 99.8 27.9Industrious Urban Fringe 10.5 21.8 23.4 69.0 8.1Inner City Tenants 6.0 10.6 9.8City Dimensions 27.5 9.9
L9 Family Portrait 5.0 23.9 33.5 20.7Up and Coming Families 7.9 13.2 11.1Milk and Cookies 5.0 16.0 20.3Urban Villages 5.1
L10 Traditional Living 17.1 10.7 20.7 52.4Main Street USA 12.9 10.7 17.6 29.2Rustbelt Traditions 9.4Midlife Junction 13.8
L12 American Quilt 9.8
Other 0.1 4.8 1.2 0.2 1.6 3.2
Advantages of Geodemographics for l dABC Blinds
For ABC Blinds, analysis of its current key market cities has , y yalready provided insights. Among the advantages of having the capability in house are:
(1) d d k t b d th h(1) new or underserved market areas can be assessed through Geodemographic evaluation,
(2) current high‐potential LifeMode groups and specific ( ) g p g p psegments can be monitored longitudinally to scan for promising categories,
(3) ld k b l d f i i i(3) older market areas can be evaluated for continuing promise, re‐location of facilities and personnel, or possible closure, and (4) advertising and marketing.
ABC Blinds: Routing ApplicationABC Blinds: Routing Application• The field marketing and installation people at ABC Bli d i l h R dABC Blinds can conveniently use the Rand McNally routing map service as needed to fi d k ffi i h i “ ”refine and make more efficient their “gut”
routing experience or to chart routes to new, f iliunfamiliar areas.
• The feasibility has been successfully tested with the recommended mapping services (Business Analyst Online and Rand McNally Road Explorers Premier).
Map of Full 36 Step Routing from ABC Blinds Headquarters to 3 Stops and Back to ABC Blindsq p
Source: Rand McNally, 2007
Strategic Benefits: ABC Blindsg• In the case of ABC Blinds, the firm depends on its growth and
continuing development of its customer base, which is spread over a vast land area, probably an area that is too large for such a small 8 to 10 person firm. This is especially true give the presence of around 50 competitors in ABC’s market area.
• ABC can improve its competitiveness by gaining a better d t di f h it t l t d h t th iunderstanding of where its customers are located, what their
product preferences have been, what the size of annual sales are, and what the geodemographic characteristics are for its key markets. This knowledge might influence ABC Blinds to reduce its market size, focus on particularly promising markets, diversify into real estate, or scale up its size for other markets.
Findings for Research QuestionsgThe research questions are the following:
1. What have been the business goals, markets, and strategies of ABC Blinds?
The business goals are currently to retain competitive retail position in the Inland Empire and to find, develop, and grow customer base. Strategic alternatives include keeping a stable market position, growing, developing real estate assets, or selling.
2. What spatial data, mapping, and analysis can help ABC Blinds perform p pp g y p p fbetter in its business markets and strategies?
These are the following: detailed analysis of customer data relative to customer locations, analysis of demographic housing, economic, and y g p gindustry trends, geo‐segmentation analysis in key market areas, and simple transportation routing analysis.
ConclusionsConclusions
• ABC Blinds’ history, goals, markets, and strategies have been y, g , , gexamined and summarized, based on extensive interview study.
• The firm is seen to be at a crucial juncture point in its history with strategic alternatives in front of it It has the opportunity towith strategic alternatives in front of it. It has the opportunity to benefit from spatial applications in marketing and sales, as well as in routing.
• The feasibility of applications in marketing, geodemographics, and logistics that help ABC Blinds to perform better has been successfully prototyped with desktop GIS and with the mapping y p yp p pp gservices of Business Analyst Online and Rand McNally Road Explorers Premier.
Conclusion (cont.)• The spatial applications have been shared with ABC Blinds
management who have found them to be useful in customer
Conclusion (cont.)
management, who have found them to be useful in customer mapping, mapping of key economic, business, and demographic attributes, mapping of geodemographic tt d f d i tipatterns, and maps of drive‐times.
• The study reveals the importance of calibrating spatial applications to correspond to the limited training, time, and pp p g, ,resources available in small businesses (Neufeld and Griffith, 2005).
The end user challenges with spatial concepts (West 2002) were– The end user challenges with spatial concepts (West, 2002) were mitigated by emphasizing mapping of familiar historical customer data with simple analysis and by using spatial web services.
Conclusions (cont.)Conclusions (cont.)• Cost, skills, and workforce constraints at the firm made more
complex spatial analysis infeasible. Because of these limitations,complex spatial analysis infeasible. Because of these limitations, sophisticated marketing models sometimes applied by middle‐to large‐sized retail firms Jones and Hernandez, 2004) were not prototypedprototyped.
• The challenge of understanding geodemographics (Harris et al., 2005) was somewhat reduced by the strong background and experience in marketing for one of the company’s owners.
• The presence of informal spatial systems development procedures typical of small businesses, noted by Pick (2008) wasprocedures typical of small businesses, noted by Pick (2008) was confirmed by the informal approach the firm took to adding spatial applications in this case study analysis.