Strategic Planning ● Economic and Community Development ● Marketing Strategies

A TCI Book Review

The Clustered World – How We Live, What We Buy, and What it all Means About Who We Are Michael J. Weiss Little, Brown and Company, New York, 2000, ISBN 0-316-92920-4

This book is all about geodemographics – the art and science of mixing demographic information with small units of geography, and christening the result with a handy brand name identity that encapsulates the essence of the people who live there. The result is the labeling of neighbourhoods with handles like “Blue Blood Estates” (rich and upscale, naturally) and “Hard Scrabble” (pretty much the opposite of rich and upscale).

The basic premise of geodemographics is that ‘birds of a feather flock together’, and so understanding the average characteristics of geographic areas down to the zip code or postal code level can be an efficient way of marketing. Not surprisingly, the companies that specialize in geodemographics do a lot of business with direct-mail marketers. Michael Weiss is a journalist who has been following the evolution and use of cluster systems for over a decade. He has written a couple of previous books on the subject (‘The Clustering of America’, in 1988 and ‘Latitudes and Attitudes’, in 1994). He clearly is a fan of geodemographics, even in the face of criticism of the technique:

“Despite my long love affair with clusters, I cannot deny the chilly reception they’re met with in some circles. Some critics object to the whole “pigeonholing” process of being tagged as bar-hopping, Volkswagen-owning, MTV-viewing members of the Bohemian Mix cluster, with predictable views on politics and the arts. Still others complain that the clusters are used by marketers – especially junk mail and telemarketers – in increasingly intrusive campaigns that cross the lines of privacy and propriety. But after years of covering the industry, I take some comfort in the benign nature of the clusters, in the fact that they’re designed to explain patterns of group behaviour without the need to delve into individual households. And I recognize that the basic clustering concept, that people in the same neighbourhood tend to behave (or at least consume) in the same way, goes back to cave-dweller time. The clusters simply help describe our diverse world today – the good, the bad, the dull, the outlandish.” (p.8)

Despite concerns, there appears to be enough truth to the idea to make geodemographics a valuable tool for some applications. For example, Weiss discusses how geodemographics was used successfully in the 1996 presidential campaign for Bill Clinton. Another example in the book is the use of the technique to identify areas with a greater than average number of smokers, which then became the target locations for a public health anti-smoking messages. Still another example was the identification of areas with higher than normal telephone use – as targets for a marketing campaign to sell a call waiting service. So clearly, the ‘averaging’ of the characteristics of entire neighbourhoods into clusters with certain attributes can be an efficient marketing tool in certain circumstances.

Weiss discusses how geodemographics is being used on an international basis. He describes several systems in the book:

• in the US: the PRIZM system, developed by the firm Claritas Inc., which categorizes each US zip code into one of 62 different types (‘PRIZM’ stands for ‘Potential Rating Index for Zip Markets’)

• in Canada: the PSYTE system, offered by Compusearch Micromarketing Data and Systems, which divides Canadian households into 60 categories • in Britain: the MOSAIC system, offered by Experian Micromarketing, which divides Britain into 52 clusters, which can be aggregated upward into and 12 lifestyle groups

• elsewhere: the MOSAIC system has also been adapted for use in France (52 clusters), Germany (38 clusters), Japan (39 clusters), South Africa (38 clusters) and Spain (37 clusters)

While there is an entire chapter on Canada, and another describing the MOSAIC system in Europe and elsewhere, most of the book focuses on the USA. In fact, the latter half of The Clustered World is devoted to a detailed profile of each of the 62 US cluster types. Each profile describes the general lifestyle and habits of households in that cluster; shows purchase patterns that are either much higher or much lower than the American average (in terms of an index where the American average is 100 basis points); and lists sample neighbourhoods (i.e. zip codes) that ‘fit the profile’. An example follows:

The Clustered World provides an interesting perspective on the current state of the art and science of geodemographics, and makes for quite an interesting read. For US residents, it is particularly interesting: they can go to the Claritas website, (located at http://yawyl.claritas.com/ ), type in their own zip code, find out the 5 most common clusters found in their neighbourhood, and cross-reference them with the profiles published in the book. Hours of fun!

IF YOU HAVE ANY COMMENTS ON THIS REVIEW (I.E. DISAGREEMENTS, ADDITIONAL PERSPECTIVES, ETC.) OR SUGGESTIONS FOR FUTURE BUSINESS BOOK REVIEWS, WE'D LIKE TO HEAR FROM YOU! CONTACT US AT jlinton@consulttci.com
 

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