Customer Profiling: Understanding loyal customers to achieve market growth

Introduction

Four years ago, Janice Brown and Steven Bent opened the first Living in the Green Lane store in the Minneapolis-St. Paul area. Building on the success of that store, they expanded their retail concept to become a "green" living center and opened two additional stores. Their marketing strategies have focused on green consumers who are motivated either by environmental concerns or the economic savings available from green technologies (Schaefer 2007). In general, green consumers are characterized by higher-than-average levels of income, education, and home value (Kannan 2007).

Each of the three stores has been successful, and each has developed its own Living Green loyalty club for its best customers. Total membership in the club totals nearly 1,800 customers. These customers shop at Living in the Green Lane stores frequently and account for a substantial percentage of the firm's revenues.

Based on this success, Janice and Steven plan to expand the enterprise in two ways: by seeking greater penetration of the market areas served by current stores and by opening Living in the Green Lane stores in new geographic areas of the United States. To maximize the impact of these efforts, they wish to focus both strategies on potential customers who match the characteristics of current Living Green loyalty club members.

Janice and Steven have charged you, in your position as Living in the Green Lane's business geographic information system (GIS) analyst, to create profiles of current Living Green customers to support these two growth strategies. That will be your task in this SpatiaLAB.

Location

Minneapolis-St. Paul core-based statistical area (CBSA)

Time to complete the lab

Four to six hours

Prerequisites

An understanding of the importance of customer profiling using lifestyle segmentation in the process of designing enterprise growth strategies

Access to Esri Business Analyst Desktop Premium 10

Data used in this lab

Tapestry Segmentation data

Demographic and sales data

Market Potential Index values from GfK Mediamark Research & Intelligence, LLC (GfK MRI)