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Winter 2008/2009
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Tapestry Segmentation Answers These Four Marketing Questions

The Who, What, Where, and How About Customers, Constituents, Donors

Highlights

  • Segmentation identifies types of consumers, what they buy, how to reach them, and where to find more like them.
  • Tapestry Segmentation is built with Esri's proven segmentation methodology.
  • Tapestry Segmentation is available in a variety of formats and deliverables.

Sending the right message that promotes the right products and services at the right time to the right audience is a challenge that organizations face constantly. For example, how should customers be notified of an upcoming sale at a store? How should government agencies notify residents in their community about new services that are available or services that have changed? How does a nonprofit organization develop compelling content that will generate a maximum response rate from donors and volunteers? Segmentation can provide answers about "who" consumers, constituents, and donors are; "what" they buy; "how" they respond to messaging; and "where" more like them can be found.

  click to enlarge
This map of the United States by county illustrates the locations of the 12 Tapestry Segmentation LifeMode Summary Groups, which are based on similarities in lifestyle and life stage.

Tapestry Segmentation from Esri provides an accurate, detailed description of America's neighborhoods. Using proven segmentation methodology introduced more than 30 years ago, Tapestry Segmentation classifies U.S. neighborhoods based on their socioeconomic and demographic composition.

What Is Segmentation?

Segmentation is based on the principle that people with similar tastes and lifestyles will seek others with the same tastes—"like seeks like." People with similar cultural backgrounds, needs, and perspectives naturally gravitate toward each other. As singles change life stages when they marry, have children, become empty nesters, and retire, they move to neighborhoods where people share the same life stages or have compatible lifestyles, live in similar circumstances, and display common consumer behavior patterns. Once established, a neighborhood's character tends to remain stable over time, even though individual residents may come and go.

Segmentation Answers Four Questions

Segmentation provides valuable insight into consumer behavior and can answer the who, what, where, and how questions about customers and prospects.

The first step is to understand the who—customer and prospect types based on their demographic and socioeconomic composition. Are they young, old, married, single, educated, affluent, or retired? This demographic information already begins to segment a market's population. Segmentation also reveals what types of products and services they buy and what they do in their spare time. For example, do they buy luxury items in department stores, shop at warehouse or discount stores, use coupons for added savings, purchase children's clothing, play video games, or take the kids on an outing to a theme park? This knowledge can save time and money by focusing on areas that will produce the best results while avoiding those with little potential.

The third element is how targeted customers and prospects can be most effectively reached with the type of media and messaging they'll most likely respond to. If customers listen to the radio during their commutes, shop online, or watch TV, time bought during morning-drive programs or advertising on favorite Web sites and cable TV will catch their attention and get the message across.

When who the best customer types are, what they buy, and how they can be reached are known, then research can be done in other areas to find where people with similar tastes and lifestyles are located.

Tapestry Segmentation

  click to enlarge
This map of the United States by county illustrates the locations of the 11 Tapestry Segmentation Urbanization Summary Groups, which are based on similarities of population density, physical location, and affluence.

A successful market segmentation system must be able to accurately distinguish between consumer behaviors. With more than 50 years of combined experience in building segmentation systems, Esri's data development team used its proven methodologies to create Tapestry Segmentation.

Tapestry Segmentation consists of 65 segments that identify distinct types of people, such as Senior Styles (9 segments from wealthy, active seniors to those who live on fixed incomes in low-rent, multiunit housing), Global Roots (8 segments of racially and ethnically diverse neighborhoods), or Solo Acts (5 segments of singles). Other segments include Military Proximity (neighborhoods of active-duty families and civilians who work on military bases) and College Towns and Dorms To Diplomas (2 segments of college students). The nonclassified segment comprises areas such as golf courses, cemeteries, or group quarters.

For a broader view of U.S. consumer markets, the 12 LifeMode summary groups in Tapestry Segmentation provide a view of the segments by their lifestyles and life stages, such as singles, married couples, parents, empty nesters, or retirees. Another view of the segments is by the 11 Urbanization summary groups that are based on population density and affluence. Segments in the Urbanization summary groups range from residents of the largest cities with populations of more than 2.5 million (U1: Principal Urban Centers I) to those who live in small communities in the remote rural areas of the United States as identified in summary group U11: Rural II. Deciding which summary group to use in an analysis depends on the application. For certain products or services, the Urbanization groups may distinguish consumption patterns better than the LifeMode groups, for example, when analyzing regular movie-going audiences. For lifestyle- or life stage-related behaviors, such as traveling domestically, the LifeMode groups would be more effective.

To accurately describe all U.S. residential neighborhoods, Esri's data development team used several statistical methods to ensure the optimal number of segments. Each U.S. neighborhood was analyzed and sorted by more than 60 data attributes, including income, employment, home value, housing type, education, household composition, age, and other key determinants of consumer behavior. Verification was performed for each segment and summary group to ensure stability and validity. Replicating the segments with characteristics not used to create them enabled the developers to confirm the system's stability. Linking the Tapestry segments to the latest consumer survey data is the critical test. The most intuitive measure among the batch of statistics used is the concept of stability. By examining how many neighborhoods would change their assignment, the stability of a solution was assessed. From an analysis of multiple solutions with different numbers of segments, the solution with 65 segments proved to be the most stable.

"Although the demographic landscape of the United States has changed significantly in some areas since Census 2000, the stability of the Tapestry segments is further confirmed as residents of some neighborhoods have evolved and moved into other segments," says Lynn Wombold, chief demographer and manager of data development, Esri. "Tapestry Segmentation stands as a solid affirmation of the proven segmentation methodology that has been developed and enhanced by Esri's data development team for more than 25 years."

How to Access Tapestry Segmentation

Tapestry Segmentation is available as a database in a variety of geographies, formats, and deliverables and is included with the following Esri products:

  • In the standard data package at the census tract level in ArcGIS Business Analyst desktop software
  • At the block group level in the ArcGIS Business Analyst Segmentation Module
  • In Address Coder 9.3 geocoding software with optional add-ons at the block group and ZIP+4 geography levels
  • In ArcGIS Business Analyst Server
  • In reports and maps from Business Analyst Online, Esri's Web-based analysis solution

Analysts in all types of organizations can use Tapestry Segmentation to answer the who, what, where, and how questions to develop more targeted campaigns that will raise response rates, analyze customers and prospects more precisely, notify constituents more accurately, define merchandise mix by consumer types, and allocate advertising dollars more effectively.

More Information

For more information about Tapestry Segmentation, visit www.esri.com/tapestry.

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