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ARP > Retail Demand > Flashcards

Retail Demand Flashcards

1
Q

What are the 4 retail demand estimation techniques?

A
  1. Direct Data
  2. Demand by person type
  3. Direct
  4. Reweighting by area from customer data
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2
Q

What is Direct Data demand estimation technique?

A

Uses observed data to predicted levels of demand
e.g. car industry - looks at previous number car sales in an area through can registration

BUT: not sophisticated

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3
Q

What is Demand by person type demand estimation technique?

A

Disaggregates population by age, sex, social class and income, and ethnicity to predict demand levels

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4
Q

What is Reweighting by area from customer data demand estimation technique?

A

Use of customer data e.g. Tesco Clubcards to access information on age, social class, household composition etc.
Can assess individual spending amount and average for area
Uses the disaggregated population data and applies it to a location

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5
Q

Elasticity of demand

A

How the quantity demanded of a good/service changes based on a change in another variable e.g. price, or distance travelled

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6
Q

Examples of inelastic products

A 
Utilities
Tax
Housing
Groceries?
People will still buy them, regardless of how much change there is to a variable
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7
Q

Examples of elastic products

A

Fast food
Cinema
Pub/’going out’

People won’t buy them if there is a change in a variable

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8
Q

Where can we get demand data?

A

Workplace data
Multipurpose trips - e.g. school run straight to shops
Demand by (new) location - need to account for train stations/airports; tourist locations; services etc.

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9
Q

Geodemographics

A

Area profiles based on population characteristics

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10
Q

Name 4 branded geodemographic classification systems

A

CACI (Acorn)
GMAP (Cameo)
Experian (MOSAIC)
OAP: Output area classification

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11
Q

Who was the ‘founder’ of geodemographics?

A

Charles Booth, 1900s

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12
Q

What did Charles Booth do?

A

Mapped London based on wealth/affluence through visual sitings

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13
Q

The Burgess Model

A

Chicago, 1920s

Models of urban social structure in a concentric circle hierarchy to try and find social order

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14
Q

Hoyt Model

A

1939
Extension of Burgess
Removed concentric circles, creating sections instead
Argued factories and lower classes lie on rivers/canals due to transportation of goods

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15
Q

Classifications since 1970s

A

Less worried about where people are, but instead focus on creating classifications that can then be mapped

e.g. CACI: Acorn has 59 categories vs. Burgess’ 6

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16
Q

What is the methodology behind geodemographics?

A

Cluster analysis

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17
Q

What are the steps in cluster analysis?

A
  1. Use data sets to find variables that are similar, and find locations so that they can be mapped
  2. Add lifestyle data, gathered from: consumer surveys, county court judgements, financial service usage - this is used in conjunction with variables used in step 1
18
Q

What is the issue with mapping geodemographics?

A

Ecological fallacy - geodemographics is an average of households

19
Q

What are the two main applications of geodemographics?

A

Customer Targeting

Demand Estimation

20
Q

How can geodemographics be used for customer targeting?

A

Can gain an understanding of customer market by having access solely to their postcode and then applying geodemographics

Create a scoring index - way of knowing how many customers from a certain geodem. compared with national average

21
Q

How can geodemographics be used for demand estimation?

A

Need to calculate PRODUCT PENETRATION (PP)

e.g. Happy Families have PP = 0.069
Town A has Happy Families pop. = 20,000
20,000 x 0.069 = 1380
Therefore the demand estimation for Happy Families in Town A is 1380 people out of 20,000

22
Q

What is product penetration?

A

How likely a company is to sell to certain geodemographic in order to calculate their target market as a proportion of the population

23
Q

What are the strengths of geodemographics in retail analysis?

A 
STRIP
Simple
Theoretically grounded
Robust
Intuitive
Powerful
24
Q

What are the weakness of geodemographics in retail analysis?

A

Data Issues - census every 10 years

Ethical questions

Ecological fallacy - bigger the spatial scale, bigger the problem

25
Q

Where do we primarily get data from in order to make geodemographic classifications?

A

The census

26
Q

What are the issues affecting future demand?

A

Population change
Household changes and New consumer types
E-commerce

27
Q

How will population change affect future demand?

A

Population increase
Immigration
Intra-urban change - migration within urban areas

28
Q

How has population increase/decrease affected certain places?

A

1991-2001: Manchester pop. declined 15% but now the fastest growing city in UK

Yorkshire predicted to increase along M1 and A1 due to road infrastructure improvements and potential High Speed rail

1990s: Industrial locations pop. declined due to deindustrialisation; SE, E. Midlands, E. England and ‘Golden Triangle’ increased

29
Q

How are household structures expected to change?

A

Smaller households - marrying later; more widows/divorcees due to pop. ageing
Greater austerity increasing income inequalities
Changing ethnicities
Ageing households
New types of consumer e.g. LGBT

30
Q

How will changing ethnicities affect retail demand?

A

Increase in immigration results in changing consumer neds
London as 15%+ pop. born overseas
Racial segregation and ‘white flight’

31
Q

Who discussed the idea of ‘white flight’

A

Taeuber and Taeuber, 1976

32
Q

How will population ageing affect demand?

A

Change in spatial locations - concentrate in rural and coastal regions
Grey market
Have control over the market - product type e.g. wheelchairs; marketing e.g. Coca-cola rebranded for this age group; store layout e.g. wheelchair access

Stockdale and MacLeod, 2013: by 2040 25% of the pop. will be >65

33
Q

How much control does the ‘grey market’ have over retail demand?

A

65+ have £100bn of spending power = 77% of all wealth - therefore have great control!

34
Q

How will new consumer types affect retail demand?

A

Example: growth of LGBT

‘Pink pound’ - retailers who are openly gay - e.g. Co-op arguably the largest retailer targeting the gay community - ‘Respect’ campaign

Marketing: IKEA offer discounts to married, and now gay couples

35
Q

How much of the population is reportedly homosexual?

A

Roughly 8-10%

36
Q

How will e-commerce affect demand?

A

12% of purchases done online

Changing demands in the types of stores needed and what is sold in them - more convenience and less superstores?

37
Q

What is spatial microsimulation?

A

Methodology used for estimating demand through ‘reweighting by area from customer data’

Merges small-area census data with national individual or household survey data to simulate a population of individuals within hosueholds

BIRKIN ET AL., 2016

38
Q

What is the Output Area Classification?

A

Joint venture between the ONS and Leeds Uni

Provides a free and ‘open’ classification system for general public use

39
Q

What is the K-means procedure?

A

Algorithm used to group areas according to similar characteristics
Used in the creation of geodemographic classification systems

40
Q

What was Vickers’ (2006) contribution to the creation of classification systems?

A

Described a hierarchical process of classification creation whereby the lowest are categorised first
Centres of the clusters are then reclustered to find a middle hierarchy and so on

41
Q

What is Response Modelling?

A

Key application of geodemographics

Before launching a new product, can be trialed at a smaller local scale to identified target market and then rolled out at a national scale in the correct consumer market locations

42
Q

What did Debenham et al., 2003 do?

A

Created a classification system to estimate future demand - what will demand be like in the proposed location in 10/15 years time?

Looked at area ‘vulnerability’ - places reliant on one or two companies

ARP (9 decks)

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