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Analyze Market tools generate a layer that displays expected customers by a selected geography level. The output feature class also includes expected penetration and expected index values. The output of the tools predicts the quantity of customers in new areas, based on the segmentation distribution of customers in existing markets.
Analyze Market Potential output
The Analyze Market Potential tool measures the likely demand for a product or service for your market area at a specific geography level. You can use this tool to make decisions about where to offer products and services.
- Expected Customers are calculated by first calculating penetration rate for each segment in your customer profile. Then, the penetration rates are applied to the respective base count in the corresponding segment. Lastly, Expected Customers are summarized across all segments for each record in the selected geography.
- Expected Penetration is calculated by dividing the Expected Customers in each geography with the corresponding base value, such as number of households or adults. For example, if a ZIP Code contains 20 Expected Customers of 400 households, the Expected Penetration is .05, or 5 percent.
- Expected Index is calculated by dividing the Expected Penetration for each geography with the overall Expected Penetration rate and multiplying by 100. The results are then rounded to whole numbers. For example, if a ZIP Code has an Expected Penetration rate of .5 percent and the overall Expected Penetration rate is .25 percent, the Expected Index is 200.
- Expected Volume is calculated the same way as Expected Customers but returns the quantity of the Volume Info Field from your Customer Profile. An example of volume information that can be used in the Customer Profile is proprietary sales data. Using this example with a geography level of U.S. ZIP Codes, the output returns total expected sales for each ZIP Code.
- Expected Average Volume is calculated by dividing the Expected Volume for each geography by Expected Customers. For example, if the Expected Volume of sales for a ZIP Code is 500 and there are 10 Expected Customers, the Expected Average Volume is 50.
- Expected Volume Index is calculated in the same way as the Expected Index but uses volume information instead of a count of Expected Customers.
Analyze Market Area Gap output
The Analyze Market Area Gap tool analyzes a market using segmentation profile information. A market is analyzed with the number of current customers, the number of core and developmental targets, the customer penetration, the number of expected customers, and the gap between the two customer values.
- Gap is calculated by subtracting Expected Customers from Actual Customers.
- Core and Developmental Targets are selected from the input Target Group parameter. They produce output fields that list the percent of the base that falls into each.
- Penetration is calculated by dividing the number of customers in each geography by the corresponding base. For example, if a ZIP Code contains 20 customers and 200 households, the penetration is:
- Expected Customers is calculated by first calculating the penetration rate for each segment in your Target Profile. Then, the penetration rates are applied to the respective base count in the corresponding segment. Lastly, expected customers are summarized across all segments for each record in the selected geography.
- Actual Customers are summarized from your input customer layer to create a count for each geography of the selected level.