Geomarketing as a way of expenses decrease


Geomarketing is rather new discipline in the sphere of marketing allowing to make reasonable decisions for business development, expansion and management of a marketing network by means of geospatial data analysis.

Importance of geospatial data analysis is caused by a variety of reasons: they include heterogeneity of demand depending on the territory which leads to inconstancy of revenue and is a consequence of various quantity of the households living in one place, their structure of expenses and distinctions in lifestyle, and heterogeneity of the offer depending on the shopping facilities located in a certain territory.

Thus, application of geomarketing is important for any company which is engaged in customer service, in particular for shopping facilities (shopping center, retail network and so forth), banks and insurance companies, public catering objects, gas station, pharmaceutical companies and so forth.

Wider circulation of geomarket researches became possible due to development of geographic information systems (GIS). Such programs include data sets or layers with information about streets, residential areas, industrial zones, administrative regions, etc. GIS are used in total from DBMS containing information about locations of the company and competitors, quantity of the households living in a certain radius and their income, directions and density of pedestrian and transport streams, number of clients and sales level at competitors, etc.

Use of GIS allows to carry out analysis of necessary geospatial data (including in dynamics) by means of mathematical calculations and to present results in the evident form. The conducted geomarket research allows to solve the following problems:

  • to estimate current state of the network in general and its separate elements;
  • to study the potential size of clients flow;
  • to choose the optimum place for a new outlet opening;
  • to analyse influence of competitors outlets on economic efficiency;
  • to find the most perspective zones for new points placement in future;
  • to predict activity indicators of an outlet;
  • to provide efficiency of marketing campaigns with a geographical binding.

As a rule, in business-friendly times, geomarketing is more often used for expansion of the existing network and definition of the best places for a new outlet placement. However during the crisis period companies are aimed at a long-term outlook of a sustainable development and try to lower expenses as much as possible. Thus, today geomarket researches are often used for identification of the least effective points among the existing ones for the purpose of further network reorganization.

So, the leading optics producer in Germany needed to optimize sales. Due to the decreasing growth rates the company has made the decision to define what outlets could potentially improve their parameters and what of them have to be refused. As a result of the analysis the existing outlets have been divided into various groups depending on their location and potential revenue. As a result the company succeeded to distribute effectively the marketing budget among the outlets for the profit from investments maximizing, and their work loading and expenses were reduced by 20%.

As we see, geomarket researches use can considerably increase the overall performance of a distribution network. However collecting, processing and data analysis for the specific objectives solution of the company within the research is a complex and difficult process which demands involvement of skilled and qualified specialists capable to make certain recommendations about further actions of the company in the changing market conditions.