Tutorial: Use Target Marketing

Available with Business Analyst license.

Target Marketing helps you better understand the characteristics of your customers and markets. Target Marketing allows you to locate areas containing the types of customers that make up your best or core customers and allows you to find more of such customers. Tapestry Segmentation data is the foundation to Target Marketing analysis. In the United States, this dataset is called tapestry. The whole Target Marketing analysis is dependent on customer and market profiles. This analysis shows how your customers are distributed across a market in relation to socioeconomic groupings.

This tutorial will walk you through the six steps of conducting a Target Marketing analysis. The data being used in this tutorial is a layer of customers in San Francisco County, which you will analyze based on the foundational tapestry segmentation data.

Note:

Target Marketing is supported only with locally installed Business Analyst datasets.

Before you can get started, you will access the Target Marketing Wizard:

On the Analysis tab, in the Workflows group, click Business Analysis > Target Marketing Wizard .

The Target Marketing dialog box appears on the right side.

Customer profile

A customer profile is a summarization of segments that have been appended to customer points. If a customer point is found to be in a block group that has been classified as 3A (Laptops and Lattes), that customer record is classified as 3A. Once this classification has taken place for all customer points, the count of records in each segment is collected, and the resulting summary represents a customer profile.

1. Click the Customer Layer drop-down list and choose the customer layer.
2. Click the Target Profile drop-down list and click Create new from customer layer.
3. Click the Segmentation Base drop-down list and click Total Household as the segmentation base.

   You can choose Total Household or Total Adult Population as your segmentation base. The base type you choose is dependent on the type of product or service you are analyzing. For example, if you are an appliance retailer, your customer is typically a household since the purchase is for the household as a group, not individual. If you are a shoe company, your customer is a person, not a household. Shoes are typically purchased for an individual, not for a group.

   Note:

   Further analysis is dependent on the segmentation base you choose.

4. Click the Volumetric Field drop-down list and click SALES.

   This is an optional field. As the customer data in this tutorial has information about sales (dollars spent by customers), choose the volumetric field. The distribution of sales by segment is listed in the target profile. This allows you to identify types of consumers that have the highest propensity for buying your product.

   Profiles based on volumetric data allow you to apply more weight to customers who spend, visit, or use more and apply less weight to those who don't. In a profile without volumetric data, each customer is weighted the same, and none is given higher importance over another. This can make a difference if you have some customers who spend $100 and other customers who spend $10,000.

5. In the Target Profile Name text box, type SF Customer Profile and click Next.

   The target profile is created using the customer points.

   The customer profile is stored as an item in the Target Marketing subfolder of the Business Analyst node in the Catalog pane.

Market area

The customer profile that you created in the previous step will be compared to the market area profile that you create in this step.

A market area profile is a summarization of total household or total adult population in a specific geographic area summarized across all segments. The area can be a standard level of geography such as ZIP Code, Core-Based Statistical Area (CBSA), Designated Market Area (DMA), state, county, tract, block group or a custom-defined area such as a ring, drive time, polygon, or other trade area type. In most cases, you create a market area profile to use as the base when analyzing your profile.

Note:

As the summarizations of segmentation base (total households or total adult population) are dependent on the market area, it is important to choose a market area that is applicable for your customers. For example, tapestry characteristics in California may or may not be identical to North Carolina. Therefore, identifying the segments who are your best customers in California and finding more customers like them in North Carolina may not be completely applicable. Which is why the market area you choose for the analysis is crucial.

For this analysis, as the customers are in San Francisco County, you will specify the San Francisco County polygon as the market area.

1. For Market Area, click Use Polygonal Layer and choose the San Francisco County polygon layer.

   Note:

   This option is unavailable if you do not have a polygon layer in the map.

2. Click the Base Profile drop-down list and click Create new from San Francisco County.

   The base profile is created, and the Four Quadrant Analysis dialog box appears.

   The base profile is also stored as an item in the Target Marketing subfolder of the Business Analyst node in the Catalog pane.

View created profiles

Before you move forward, you will look at the two profiles that were created in the above sections.

1. Switch to the Catalog pane.
2. Expand the Business Analyst node and the Target Marketing subfolder, right-click, and open the SF Customer Profile.sgprofile.

   The Segmentation Profile dialog box appears.

In the dialog box, you can see the distribution of the customers in Segment ID, Segment Name, customer Count, Percent of customers in each segment. You can also see the distribution of sales in each tapestry segment in the Total Volume column, the Volumetric Percent and the Average Volumetric.

• Total Volume—If a volumetric field is used, the total volume (for example, number of visits or dollars spent) is the summation of the volume for each customer classified in that segment.
• Average Volumetric—The average amount spent by each customer in that segment. This value is calculated by dividing Total Volume by Count.

Note:

These volume fields are only available when a Volumetric Field value is specified when creating a customer profile.

3. Click OK to close the dialog box.
4. Right-click and open SF County Base Profile.sgprofile.

   You can see the distribution of the segmentation in the market area, the Count of the segmentation base (Total Household for this analysis), and the Percentage for each segment.

5. Click OK to close the dialog box.

Target groups

Target groups are collections of targets that are grouped together for further analysis. The most efficient method of creating target groups is to identify target segments based on comparison of your customer and market area segmentation profiles.

1. Switch back to the Target Marketing pane.

   You will still see Step Three: Configure Target Group.

2. Use the default value for the Target Group Name box.
3. Click the Menu button and click Open Four Quadrant Analysis.

   A dialog box with a chart showing Index and Percent Composition opens. All the segments are plotted on the chart and categorized into four targets: Core, Developmental, Niche, and Monitor.

For this analysis, you will use the four default targets. To create additional targets, you can click Add .

4. Click Developmental, and click the Edit button . This allows you to rename the target. Leave the default name.
The default Index and Percent Composition values are set to 110 and 4% respectively.
5. In the graph, click Index (Y-axis), and drag it to 6.

   The value in the Percent Composition text box is now updated.

6. Click Menu , and click Reset Boundaries.

   This resets Percent Composition to 4%.

7. Click Next.

   The Step Four: Mapping step appears.

   The target group is also stored as an item in the Target Marketing subfolder of the Business Analyst node in the Catalog pane.

Mapping

Now that you have created customer and market profiles and target groups, you will create maps that allow you to better understand your customers. The segmentation maps are key to unlocking the information stored in your customer data and allow you to generate five maps:

• Target layer
• Target Penetration layer
• Target Group layer
• Market Potential layer
• Market Area and Gap Analysis layer

These layers will be generated at the geography level that you specify in this step. Segmentation classifications are defined at the block group level in Esri Business Analyst data. In this step, you can use any geography level from block group (smallest geography level) to the entire country (largest geography level). However, using block group as the geography level has a limitation, as each block group has only one segment classification. For example, block group 060750101.001 in San Francisco County is classified as 3B (Metro Renters), and if this classification falls within the core target, the penetration will be 100. If it does not fall within the target, the penetration will be 0. There are no in-between values when using block groups.

This is not the same when using a geography level of US Tracts or any other geography that is larger than the block group. This is because multiple block groups are combined to make up the tract (or the larger geography). Due to this, multiple block groups may have multiple classifications, and only some of the classifications may make up the core target. Therefore, the penetration values will range between 0 and 100 and will not be just 0 or 100.

1. Click the Geography Level drop-down list and choose US.Tracts.
2. Under Mapping Layers, select all the layers.
3. Accept the default for the Output Location value.
4. Click Next

Reporting

Complete the following steps to select reports.

1. Under Available Reports, select all the reports.
2. Accept the default for the Output Location value.
3. Click Next

Summary

In the Summary step, all the parameters that have been previously filled out are summarized.

1. Review the summary.
2. Click Finish.

   The analysis runs and outputs the mapping layers at the US.Tracts level. The File Explorer also opens to the reports that were selected.

Results

The following section explains each of the output layers from the analysis

Target layer

The US Tracts in the target layer are symbolized as In or Out, showing tracts that capture dominant segments that make up the core target and those that do not capture dominant segments in the core target, respectively.

1. Right-click the Target Layer (Core) layer.
2. Click Attributes Table.

   The attributes table has ID and Name fields that denote the US Tract. 2022 Dominant Tapestry Segment denotes the segment code that dominates the US tract. Status denotes whether a tract is within the core target.

Target Penetration layer

The Target Penetration layer is symbolized by the penetration field in the attributes table. The penetration field is showcasing the percentage of total households (segmentation base for this analysis) that is within the core target.

1. Right-click the Target Penetration layer.
2. Click Attributes Table.

   The attributes table has additional fields such as 2022 HHs in each Tapestry Segment and the Penetration field.

Target Group layer

The Target Group layer is symbolized into the four targets. The tract will be categorized into one of the four targets, depending on which dominant segment is predominantly present in the tract and which target that segment falls within.

Market Potential layer

The Market Potential layer is symbolized with expected customers at the U.S. tract level. The calculation of expected customers is dependent on the counts in customer and market profile and the total household population within each tapestry segment and the individual US Tract.

1. Right-click the Market Potential layer.
2. Click Attributes Table.

   The attribute table has Expected Customers, Expected Index, and Expected Penetration. As you used a volumetric field in the analysis, additional fields such as Expected Volume, Expected Average Volume, and Expected Volume Index are also appended to the output.

Market Area and Gap Analysis layer

The Market Area and Gap Analysis layer is symbolized by the gap field. The gap field is dependent on the actual customers in a particular tract and the expected customers within the same tract. A positive gap value indicates that the business is capturing customers at a higher than expected rate. A negative gap value indicates a lower than expected value.