Retail Demand Flashcards
(42 cards)
What are the 4 retail demand estimation techniques?
- Direct Data
- Demand by person type
- Direct
- Reweighting by area from customer data
What is Direct Data demand estimation technique?
Uses observed data to predicted levels of demand
e.g. car industry - looks at previous number car sales in an area through can registration
BUT: not sophisticated
What is Demand by person type demand estimation technique?
Disaggregates population by age, sex, social class and income, and ethnicity to predict demand levels
What is Reweighting by area from customer data demand estimation technique?
Use of customer data e.g. Tesco Clubcards to access information on age, social class, household composition etc.
Can assess individual spending amount and average for area
Uses the disaggregated population data and applies it to a location
Elasticity of demand
How the quantity demanded of a good/service changes based on a change in another variable e.g. price, or distance travelled
Examples of inelastic products
Utilities Tax Housing Groceries? People will still buy them, regardless of how much change there is to a variable
Examples of elastic products
Fast food
Cinema
Pub/’going out’
People won’t buy them if there is a change in a variable
Where can we get demand data?
Workplace data
Multipurpose trips - e.g. school run straight to shops
Demand by (new) location - need to account for train stations/airports; tourist locations; services etc.
Geodemographics
Area profiles based on population characteristics
Name 4 branded geodemographic classification systems
CACI (Acorn)
GMAP (Cameo)
Experian (MOSAIC)
OAP: Output area classification
Who was the ‘founder’ of geodemographics?
Charles Booth, 1900s
What did Charles Booth do?
Mapped London based on wealth/affluence through visual sitings
The Burgess Model
Chicago, 1920s
Models of urban social structure in a concentric circle hierarchy to try and find social order
Hoyt Model
1939
Extension of Burgess
Removed concentric circles, creating sections instead
Argued factories and lower classes lie on rivers/canals due to transportation of goods
Classifications since 1970s
Less worried about where people are, but instead focus on creating classifications that can then be mapped
e.g. CACI: Acorn has 59 categories vs. Burgess’ 6
What is the methodology behind geodemographics?
Cluster analysis
What are the steps in cluster analysis?
- Use data sets to find variables that are similar, and find locations so that they can be mapped
- Add lifestyle data, gathered from: consumer surveys, county court judgements, financial service usage - this is used in conjunction with variables used in step 1
What is the issue with mapping geodemographics?
Ecological fallacy - geodemographics is an average of households
What are the two main applications of geodemographics?
Customer Targeting
Demand Estimation
How can geodemographics be used for customer targeting?
Can gain an understanding of customer market by having access solely to their postcode and then applying geodemographics
Create a scoring index - way of knowing how many customers from a certain geodem. compared with national average
How can geodemographics be used for demand estimation?
Need to calculate PRODUCT PENETRATION (PP)
e.g. Happy Families have PP = 0.069
Town A has Happy Families pop. = 20,000
20,000 x 0.069 = 1380
Therefore the demand estimation for Happy Families in Town A is 1380 people out of 20,000
What is product penetration?
How likely a company is to sell to certain geodemographic in order to calculate their target market as a proportion of the population
What are the strengths of geodemographics in retail analysis?
STRIP Simple Theoretically grounded Robust Intuitive Powerful
What are the weakness of geodemographics in retail analysis?
Data Issues - census every 10 years
Ethical questions
Ecological fallacy - bigger the spatial scale, bigger the problem
