Barry Leventhal: Birds of a Feather Still Flock Together – the continuing usefulness of geodemographics
22 January 2016

Geodemographics – the analysis of people by where they live – is an approach that been around for the best part of 40 years. Is it still be relevant today, when marketers have access to vastly more timely and specific data about consumers?

In 1979 there was just one neighbourhood classification in the UK. Nowadays, the geodemographics market is highly sophisticated and evolved – in total, around 40 information products are now on offer. Segmentation systems are available at different levels of geography, some going down to household and individual levels. As well as general-purpose systems, there are products designed for specific industries, such as the financial services, health and leisure sectors. And the market goes beyond classifications into raw and derived data products, such as small area estimates of income and retail spending potential. These different types of information products are discussed in my new book.

Why is geodemographics still relevant in the era of big data?

We all know that, over recent years, a huge amount of information has become available about each individual – covering their demographics, purchases they have made and their online browsing behaviour. This information is timely, detailed and specific to that individual; yet it becomes easier to lose sight of the contextual data that can help to explain social influences to which consumers are subjected, as well as their motivations and aspirations. Geodemographics can provide some of this contextual capability that is missing from big data.

Furthermore, in many markets – such as grocery purchasing, credit cards, savings and investments – consumers are not necessarily 100% loyal to a single brand; they will typically spread their transactions across multiple companies. A customer database may capture the purchasing behaviour on that brand, but cannot know what the customer has done elsewhere. Geodemographics can provide a complete and holistic view of each customer and predict their total market expenditure across all brands.

As predictive analytics extends into applications which go beyond targeting sales, such as different types of risk assessment and fraud detection, it becomes important to have information that tells you more about each individual. Geodemographic variables are straightforward to append onto each customer, and are always worth examining along with database attributes. In my experience, the results have been informative and useful on many occasions and in many contexts.

Therefore, my advice would always be to examine geodemographics alongside the other data sources available to you, and do not necessarily rely on big data alone for targeting your advertising and campaigns – big data can identify the specific timely opportunity, while geodemographics can help you to understand the context and plan the message to deliver. After all, would you want to deliver the same message to two website visitors, if you knew that one lived in an up-scale wealthy neighbourhood and the other in a down-market poor area?

Barry Leventhal, director of BarryAnalytics and chair of the MRS Census & Geodemographics Group.

Click here for more information about Barry’s new book, Geodemographics for Marketers.

Any views or opinions presented are solely those of the author and do not necessarily represent those of the MRS Census and Geodemographic Group unless otherwise specifically stated.