Download PODRUČJA PRIMJENE GEOMARKETINGA

Implementation of geographic information technology in
marketing – GIS marketing
Jurišić, M., Ravlić, Sanela, Lončarić, Ružica, Pugelnik Irena
Abstract
Technological progress and the use of computers have enabled numerous changes in
all areas of human life including the field of cartography and marketing. Although
developed independently from each other, marketing as science and geographic
information systems (GIS) are experiencing an upturn from the last quarter of the 20th
century onwards. With current technology as an enabler, society's reliance on more
precise and accurate spatial data is rapidly increasing, even though citizen
awareness of this trend is to some degree lagging its implementation (Morrison,
1995.). Moreover, the introduction of GIS in the mapping process has produced a
completely new type of user different from the traditional map user (Capriolli, 2003.).
The process of globalization and rapid technological progress are solid
foundations for the fusion of the above mentioned sciences in the area named
geomarketing. The concept of GIS systems is not a novelty on the market, but
wider use in business decision making has not taken the expected momentum.
Several reasons have caused the current situation. Users, including businesses,
yield before the tool's complexity and often seem not to recognize its possibilities
and its vast potential on the market. It is often seen as a tool used by Google Maps
or services such as Navigation Systems in cars (GPS). Although Google is used as
a provider of useful information to the companies for the development of maps,
specialized software for geomarketing analysis allows companies to build far more
complex content that will be able to visually present and analyze given data. Also,
the main application in business sector is within the area of urban planning and its
area of logistics but the possibilities are vast and GIS tools should be utilized more
in the future.
Key words: geographic information technology (GIS), geographic information
system marketing (GISM), marketing mix
Importance of GIS in marketing mix elements
Every company bases its performance and potential success on carefully designed
elements of marketing mix that are expressed in conceptual form that includes
product, price, distribution and promotion. Geographic information is the key to
better decision-making; just about everything a community, business, or public
agency does, whether in day-to-day operations or long-term planning, is related to its
geography (Lennox et all, 2012.). Closer examination of four marketing mix elements
together with three additional elements included in the marketing of services People, Process and Physical evidence (Boom and Bitner, 1981.), brings us to the
conclusion that geographical position and the answer to the question "where" has a
strong influence on each of the marketing mix elements. A great asset of GIS as a
marketing tool is that it is not primarily focused on the customer but on the producer
thus the company. Unfortunately, as a resource it is underused when it comes to its
utilization for better positioning of companies on the market. A great omission in the
business strategy would be not to integrate geospatial information in decision making
and everyday business since geo information could be a highly relevant resource for
future success.
As never before, all aspects of business, sales and marketing are intertwined,
integrated with each other and within society thus it is crucial to create a holistic
approach to the market, its sales and marketing efforts (Mcdonald and Hugh, 2002).
By using GIS as a tool, companies could make more timely and cost effective
decisions. Finding the optimal and most efficient way of doing business is one of the
company's goals due to adverse market conditions and business risks that all types
and sizes of firms are facing. The method and tool that could provide more
comprehensive and holistic approach, where decisions are additionally supported
by visual solutions, chosen direction propped by quantitative and qualitative
explanations is the GIS. The fact that certainly favors the use of GIS as a business
tool is the range of free or reasonably priced digital spatial data available to
entrepreneurs. There are sources such as digital atlas of Croatia (cities depicted
down to street and house number level), census which provides a large number of
attributive data (socio-economic and demographic data at the county, town and
village level, population, age, number of family members, professional
qualifications). Moreover, companies often have considerable spatial data in their
databases (information obtained during the signing of the contract, different
subscriptions, information collected through credit cards or customer clubs) that can
be utilized for better planning of marketing mix components, i.e. for the further
development of the company.
Understanding the demographic and other characteristics of target group members
connected to spatial data is crucial when calculating the return of investment and
possible success and growth of the company.
The advantages of using GIS tools in marketing
GIS may be characterized as a computer-based system consisting of hardware,
software, data and applications allowing for integrated digital capture and editing,
storing and organizing, modeling and analyzing, presenting and visualizing spatially
referenced data of multiple time-dependent and time-independent media (Bill, 1999.).
We can observe it as more than a computer database and a set of tools. GIS is a
philosophy of information management and integration of spatial analysis techniques
and digital spatial data with computer technology.
There is almost no human activity where there is no need for spatial display and data
analysis. GIS is not a system that will state what to do, but provide an opportunity for
a better organization and analysis of information as well as support for making the
right decision (Jurišić and Plaščak, 2009.). Geospatial data are not intended to be
miniature replicas of ‘reality’ (Veregin, 1999.). The sole application of GIS is
intended to improve information management, contribute to higher quality of
parameter analysis and to increase efficiency of companies. The need for better
service, greater accessibility and better understanding of consumers slowly but surely
will, in the long run, encourage companies to use geomarketing.
Producers of geospatial data are aware of the limitations of these data (Veregin,
1999.) but also the power that lies within the integration of different data types and
possibilities to make simple and more complex inquiries regarding the location of an
object or possible suitability of an area or a terrain for a certain cause. Possibilities
offered by GIS tools are particularly evident in the data modeling when answering
complex "what if" questions. An example is the answer regarding road construction
and its impact on the traffic. The user is granted with the possibility of visual
presentation thus a better understanding of analysis and/or simulation results.
Ultimately, it will probably lead to better problem solving or selection of the most
optimal solution for companies. Complexity of layers in the map is an important
asset. Data are incorporated from various sources such as land registry departments;
urban plans and associated planning acts that define the area plans and space usage;
areas of particular significance; guidelines for the development of an area,
preservation of natural and/or cultural heritage; database of state roads, regional roads
and the pathways of local importance.
In addition, GIS comprises spatial data of regional importance that contain
infrastructure of public companies: Utilities (water, sewer, garbage, landfill sites and
cemeteries); transport (road, traffic signaling); Electric Power Grid (high, medium,
low voltage network); Water Management (watercourses, wells, water management
facilities); Energy (gas).
Geomarketing
Geomarketing allows the formation of spatially oriented databases and establishment
of a correlation between geographic location and any information which can be
assigned to spatial dimension. It is primarily focused on modeling and analysis of
information for decision-making and visualization of strategic information, which
should result in the selection of the best possible business action.
Based on these analyses, strategic decisions on the market are made based on the
objectives, mission and goals of the company. So, the market to be served and
products to be developed are determined, as well as prices, locations of activities,
promotional activities, and the implementation of the strategic plan of activities is
monitored and evaluated. (Jurišić and Plaščak, 2009). The scope of geo-marketing is
wide and opportunities are ranging from sales management (analysis and selection of
potential location, market segmentation, monitoring of market shares, sales network
optimization, optimization of routes, etc.) to the marketing management
(demographic and socio-economic analysis, identification of customers and their
characteristics, presentations, reports, etc.).
Geomarketing can also process internal company data (addresses of clients, sales
figures, etc.) and data that are characterizing consumers (age, qualifications, etc.)
with a spatial analysis of consumer activity which ultimately can serve as a
foundation for decision-making and determine the direction of the business or
marketing mix elements.
The far sighting firms while conducting the marketing do not limit it to the simple
‘geosegmentation’ and ‘geopositioning’, but try to take into account all peculiarities
of geographic environment of the place, including its regional development
perspectives, economic-geographical location, and environmental awareness of
population (Anderson, 2004.).
Geomarketing systems
Geomarketing consists of marketing support systems and decision making (MDSS);
Geographic Information System (GIS); the geographical database (linked to GIS);
Expert System (ES) and database (associated with the ES). MDSS (Marketing
Decision Support Systems) consists of information technology, marketing data and
abilities for data modeling that allows the system to predict the outcomes of various
scenarios and marketing strategies and also to answer the "what if" questions. With
the MDSS a company can collect and interpret relevant information and turn them
into the basis for management level decisions. Marketing support system and
decision-making associated with GIS form a geomarketing system to support the
decision-making - Geomarketing Decision Support System (GDSS), which enables
the analysis of geographic information by including the spatial components in models
[bib.irb.hr/datoteka/246399.lsinosic.pdf ].
Expert System (ES) is a computerized system that mimics the human ability to make
decisions. It is designed to solve complex problems based on knowledge as an expert
and not by following the programmed templates that is common in conventional
programming. ES is one of the first successful forms of AI software. When using GIS
tools, by selecting the object or feature on the map, the corresponding row in the table
with the attributes is selected and vice versa. After the attributes are associated with
the data layer, it is possible to use the analytical abilities of GIS in the form of
selective display of certain facilities in the area based on the established criteria.
GIS tools provide a way to represent the different data in a cartographic and
implementation databases (Cliquet, 2006). It displays a three-dimensional surface
(the globe) on two-dimensional surface (computer monitor). By using GIS tools,
marketing analysis can provide information from which it is clearly visible what
product and/or services are the most suitable according to the needs of the target
group members in a specific area.
Geomarketing in companies
Companies are investing substantial financial amounts in the promotion and
promotional campaigns which is certainly a good reason for finding the most efficient
advertising channel. Companies are doing everything in their power to ensure that
advertisements reach a potential customer. It is the sole aim of advertising. The main
objective of all commercial campaigns is to increase brand awareness and create a
greater consumer preferences toward a product or service. Geomarketing provides the
possibility to enhance business performance through a better understanding of
consumers and their socio-demographic categories (age, gender, profession, etc.).
Being aware of the fluctuating trends in consumption, in terms of today's fast pace
open market economy, is of undeniable importance for the company since it can gain
advantage while exploiting that market potential. Geomarketing provides the
company with a possibility to perceive the market in a new way because it has the
power to display the data in a different, animated way which is impossible in case of
tables and graphs, hence can serve as a common foundation of different spatial data
when it comes to distribution channels, competition, presentation of the socio-
economic statistics, behavioral data on the targeted area. The knowledge about
customers helps the company to attract new customers, expand markets, increase the
frequency of purchase and revenue per purchase, lower operational costs, ensure
customer satisfaction and inspire long-term customer loyalty. Datasheets or similar
numerical displays do not have nearly as much impact on the business as a
presentation of business data using maps. The success of geomarketing will depend
on the use of high-quality digital maps that serve as key building blocks for visual
presentation of data. Today, there are software programs on the market which can
create geographic reports (Neomapper, Easy Chart, 3D GEO) that provide an
overview of the market in real time and thus can highly facilitate decision-making in
marketing strategy. Programs as Neomapper, by creating maps as visual support to
business strategy provide the company with a very powerful tool in the optimization
of its business.
An example of business problem solving - reducing the cost of marketing
campaigns using GIS tools
Task:
Printed advertisements, promotional leaflets and direct marketing will be used for the
new marketing campaign. Based on the location of targeted consumers, possible
customers and potential business partners how to best optimize marketing channels?
Solution:
Using the display of traffic in a given interval on the map, it is possible to spot the
areas that are underutilized and represent an opportunity that company could benefit
from by investing additional efforts in marketing. It is possible to reduce costs and
increase efficiency of the funds provided for marketing activity by using this method.
An illustration of the problems and potential areas of activity helps the adjustment
and modification of marketing strategy of the company to the actual conditions in the
targeted area. [www.neomapper.com]. On the basis of geomarketing analysis, the
company selects a way in its media strategy to enable its product to reach a greater
number of so-called useful individuals or consumers. Choosing the right media
company will spread the advertising message across the desired geographical area at
a lower cost. The company cannot influence the spatial distribution of demand but
may strive to meet the needs of the targeted market in geographical area by placing
its products. When demand involves consumer behavior and their preferences for the
product, behavioral data and preferences get spatial dimension.
Picture 1: Turnover and income from distributive trade
Source: (https://bib.irb.hr/prikazi-rad?&rad=796991)
Conclusion
Geomarketing allows analyses of measurable parameters that ultimately provide
better marketing performance of a company. The use of spatial data provides the
creation of useful cartographic representations in marketing and other decisions.
Geomarketing is the key to decoding the significance that territory has on the way
that companies operate. A better understanding of the connection between the
consumer and the space (geographic location) opens many possibilities for innovation
in the approach to marketing which might increase the competitiveness and other
advantages of enterprises on the market.
The main advantage of GIS tools is the adequate adaptation to the needs of
consumers, finding the most profitable future markets through access to
demographic, socio-economic and other relevant circumstances in the targeted area.
From all the aforesaid we can conclude that the role of geomarketing can have a
major impact on all strategic decisions made by a company since it can give a great
contribution to the understanding of customers, attraction of new customers, market
expansion, increase of the frequency of purchase and revenue per purchase, reduction
of operational costs and higher level of satisfaction and long-term customer loyalty.
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WEB sources:
www.gzo.hr/index.php?l=fotogrametrija
www.spvp.zesoi.fer.hr/seminari/2006/NinaBrcko_KakoradiGoogleEarth.pdf
www.sales-and-marketing-for-you.com/marketing-mix-structure.html
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