CUSTOMER PROFILING AND LIFESTYLES

The use of lifestyle data can be very helpful in determining a retailer's core customer or the composition of their trade area. Lifestyle data provides another way of looking at the characteristics of a population. Typically, lifestyle segmentation systems combine attributes of density (urban to rural location) with attributes of demographics to define a given lifestyle.

The information in a lifestyle cluster adds a qualitative description to the typical demographic breakdown of a given population. Lifestyles combine information about where a cluster is likely to be located with its demographic make-up, income level, and socio-economic status. For example, a lifestyle cluster might identify young, well-educated, up-and-comers, living in urban environments. In addition to a profile, a lifestyle cluster might include information on that cluster's media preferences and buying habits. Behind each description are two types of data - cluster codes and geographic distributions. The descriptions below are examples of how a retailer might use the two types of data.

Lifestyle Segmentation

A retail company would provide The Strategic Edge a customer database with address and amount-of-purchase records. The Strategic Edge would then edit the database, if need be, to prepare it for "cluster-coding". Cluster coding is the process of appending a single lifestyle cluster or category to each customer record of a database. The Strategic Edge could have a customer database cluster-coded with one of several different lifestyle segmentation systems. The coded customer database could then be analyzed by The Strategic Edge to determine a customer profile.

Once a customer profile has been determined from a customer database, there are many uses of geographic lifestyle data. Geographic lifestyle data are assembled much like Census demographics at different levels of geography. Generally, lifestyle data are assembled at block group, census tract, zip code, and county geographies. For each geography, a distribution of lifestyle clusters is given. Population and households would be assembled for each lifestyle cluster in each distinct geographic region.

USING LIFESTYLE DATA

A customer profile based on lifestyles combined with geographic data can be incorporated lifestyle data into an analog database or a mathematical model to be used for forecasting sales, a market screening used for store expansion planning, or to target certain lifestyle clusters for advertising. Lifestyle segmentation systems provide another way to analyze retail performance and to benchmark that performance in new markets.

The Strategic Edge, Inc.
1899 Orchard Lake Road, Suite 105
Sylvan Lake, MI 48320
Phone: 248-322-5555
Fax: 248-322-5564
Email: TSE@thestrategicedge.com