Visualizing Market Realities Using Geographical Maps

By Franck Schuurmans, Ph.D., Director, Non-Profit Practices, DSI; and
     Jaap Kap, Consultant, DSI and Business Compass

Many organizations get blind-sided by changing market realities because they lack tools to help them visualize strategic segmentation-that process by which organizations define their focus areas and investigate, evaluate, and formulate their future business framework. Using the same sets of regional statistics to make important strategic decisions, many people look at markets in ways similar to their competitors. Crunching financial and other quantified market research data, most organizational teams cobble together presentations and long reports containing complex charts, spreadsheets, and tables. Savvy strategists, however, move beyond "business as usual." Learning how to segment the market in a variety of orthodox and unorthodox ways, they choose from wide-ranging variables and perspectives to free themselves from long-help assumptions about local demographics and other data commonly identified as important to understanding market realities. In the process, they also gain deeper insights about their customers, products, distribution channels, competitors, and future organizational needs.

As part of DSI's effort to create a better strategic segmentation module for Scenario Planning Under Uncertainty (SPUU), we recently worked with several credit unions to develop visual support tools capable of communicating deeper insights about changing market realities and opportunities, particularly to people without backgrounds in finance. Focusing on the end-user's desire for a picture that could convey a thousand words, our credit union clients quickly latched on to the power of geographical maps (or "geo mapping"). As a result, we launched a pilot program (and developed our CompassMap^TM software tool) to allow each credit union to use geographic information to create a customized "visual" of their own market realities, complete with target market assessments that match their own definitions of the strategic member segments most important to future success. By "mapping" their current market-segmentation distributions, historic trends in demographic and performance metrics, and other strategically important information, our credit union partners enhanced their abilities to visualize consumer needs, market opportunities, and competitive forces. When mapped annually, they soon discovered that customized, geographical representations of strategic data can help to monitor how those same needs, opportunities, and pressures change over time. And, as the following examples illustrate, they now have yet another way to communicate some of their findings more effectively.

In the pilot program, many of our credit union executive teams employed geo mapping to assess the geographical distribution and needs of potential members in current and new target markets. Using their own criteria for population segmentation, some mapped a quantified distribution of ethnicity to measure special language requirements. Some zoomed in on particular neighborhoods, or used ZIP codes to make larger regional assessments. Still others pushed the boundaries of their studies, mapping trends over five years to visualize changing demographics across neighborhoods, cities, and regions. This then allowed them to gauge and to communicate changes in membership growth (or shrinkage) by neighborhood and to relate those changes to larger population trends.

Other participants used geo mapping to relate segmented membership distribution to branch location. Using distance and driving-time criteria, they gained quick visual profiles of branch proximity and accessibility to current and potential members. By using geographical representations rather than thick-binder presentations of household consumption against peer and national benchmarks, credit union executives gained better insight into consumer needs. Geo mapping also helped them to compare combinations of customized data with larger comparative studies.

As a final example, the following geo map of Seattle helped one credit union to see a comprehensive overview of the income and age distribution of their strategic market segments. Taking a "snapshot" of 2003, the credit union used sectored circles to represent population size and custom segmentation for each neighborhood within the greater Seattle region. Making the area of each circle proportional to the number of households in different neighborhoods, they then employed four colored segments to represent the percentage for each custom market segment, strictly defining each along householder age. "Learners" (those between 16 and 24 years of age) appear in red, while yellow, blue, and green represent, respectively, "Borrowers" (aged 24-44), "Savers" (45-64), and "Retirees" (the 65+ age cohort). In addition, they shaded each neighborhood green, with its hue proportional to that particular neighborhood's average household income.

Figure 1 - Geo Mapping Segmentation in Seattle
[click image to enlarge]

Assuming their current credit union footprint as central Seattle, the executive team quickly drew some visual conclusions. They could see expansion heading north, with a strategic emphasis on those representing transactional fee-income (from the Learners) and loan opportunities (among the Borrowers). Although the customized geo-map represents both market segments, the executive team also perceived a better opportunity to deploy 'transactional' resources in the north-eastern sector and to focus 'loan' acquisition resources in the north-western sector. This could then become a first step in creating options, for segmented market sizing and resource localization. Once mapped in a visual that vendors, board members, and managers can understand no matter their experience or professional background, organizational strategists such as our executive team members can more effectively communicate the locations, quantities, and reach of strategically important segments.

**********************************************

Whether employing demographics, consumer behavior models, lifestyle definitions, or other criteria, geo mapping not only quickly tests the logic and value of the data employed. It also challenges perceptions about changing market realities.

Geo mapping offers other side benefits as well. Visualizing data helps us focus on customers rather than products. Mapping can help us to identify important opportunities more readily. It better customizes marketing and delivery channels. It can dynamically monitor markets. And it can help us to differentiate ourselves from the competition.

With its crisp, clear, and concise visual of market realities, geo mapping can also serve as a powerful way to communicate, not only to a board of directors, but also throughout an organization and beyond it.

To learn more about geo mapping and the ways in which CompassMap™ can help you to customize and improve upon your visual understandings of current market coverage areas, candidate areas for future expansion, market segments, and demographic, customer behavior, performance, and other variables under uncertainty, we invite you to visit our site here.