Mapping And Targeting Customers: Ace Hardware Corporation

GIS Marketing applications:

Mapping and targeting customers: Ace Hardware Corporation is used an example to explain the GIS marketing application. GIS analysis is used to understand the current customers, market to the potential customers, identify the trade area where the store’s customers come from, and find the median income for each neighborhood close to that trade area. (Using this analysis, Ace was able to target specific neighborhoods and perform advertising and promotional programs, to lower marketing costs and increase sales.)

The first step is to create an area map using U.S. postal zip codes. The challenge here is to know which customer lives in a particular zip code. US Census Bureau releases data on Block Groups. These Block Groups

With the use of conversion tools, the Block Groups are aggregated to zip code level. After map creation, the customer addresses are plotted on the map. The ESRI’s ArcView GIS software assigns each address’s latitude and longitude coordinates, and displays them on the map using geocoding. (Using this approach, Ace came up with a map showing zip codes surrounding the store and its current customers.) After the Area map creation, it’s time to identify the Trade Area. Trade area is the geographic area surrounding a store where a vast majority of customers come from. One of the methods to do this is by drawing a circle which includes 70-80% of its customers. This method helps to avoid a too large trade area that might skew our analysis. In this circle, the radius indicates the travel time to the business (3 to 5 miles) which can help us understand the customers who are willing to travel to the store. (Ace learned that 85% of its customers came from three zip codes and not from twelve.)The final step is to create a Trade area map showing the median income for each Block group. The median income data provided