Webber, R; (2004) The relative power of geodemographics vis a vis person and household level demographic variables as discriminators of consumer behaviour. (CASA Working Paper Series 84). Centre for Advanced Spatial Analysis (UCL): London, UK.

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Abstract

Geodemographics is a field of study which involves the classification of consumersaccording to the type of neighbourhood in which they live. As a method of segmentingconsumers it has long been of value to direct marketers who, being often unable toidentify the age, marital status or occupational status of people in mailing lists, found it auseful means of applying selectivity to their mail shots. By analysing the behaviouralcharacteristics of consumers in different types of neighbourhoods they found they couldimprove business performance by targeting promotional activities to names and addressesfalling within specific types of postcode. From direct marketing the application ofgeodemographics spread to the targeting of door to door distribution and customercommunications and to the retail industry where it was found to be useful input into theprocess of deciding where to site new outlets. Government is increasingly using suchmethods to improve the targeting of its own communications to tailor local servicedelivery to the particular needs of local communities.During the 25 years since geodemographics was first introduced few users have had aclear understanding of precisely neighbourhood differences come about. Are differencesin consumption patterns at neighbourhoods level simply the predictable result ofdifferences in the age, household composition, educational status or occupational profileof their residents? Or do additional, incremental neighbourhood effects operate? Whendeciding neighbourhoods to live in do people select ones whose values and consumerpreferences are broadly similar to their own? Or is it only after they have moved thattheir behaviours change, as they become subject, consciously or not, to the prevailingethos of the new community in which they find themselves?To set these alternative explanations this study analyses a random set of consumerbehaviours covered by the Target Group Index, one of a number of market researchsurveys whose respondents have been coded by the type of neighbourhood in which theylive; it uses a statistic to measure the extent to which the Mosaic geodemographic systemis effective in discriminating on these behaviours; it then measures the relativeeffectiveness of other frequently used household and person level demographics inpredicting of these behaviours; finally it compares the predictive efficiency of differentdiscriminators.The conclusion that can be drawn from the exercise is that, across these behaviours aswhole, the type of neighbourhood in which a consumer lives is a significantly morepredictive piece of information that any person or household level discriminator (such asage or social grade). By implication therefore it is almost certain that significantneighbourhood effects must operate for many of the behaviours tested. However therelative discriminatory power of geodemographics and person and household leveldiscriminators varies considerably from behaviour to behaviour. Even when takingmeasures of status which one might have expected to be highly correlated, such as socialgrade, terminal education age or household income, there are considerable differences intheir relative predictiveness across most consumer behaviours.

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