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Research Ideas

An Investigation of Geographical Information System in Retail Marketing

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GIS • GIS is essential for solving business planning problems

having spatial dimensions

• Developed due to dissatisfaction with socio-economic groupings– ‘mass’ marketing ‘niche’ marketing: requires more spatially

disaggregated information about both consumers and competitors.

– The growing establishment of customer databases.

– For competitive advantage and business effectiveness

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Current Developments

• The business planning segment is presently the fastest growing share of the GIS market. One reason is that over 80% of business data has spatial nature (Wallick, 1984)

• Advent of more powerful, cheaper IT is driving product development and adoption.

• GIS plays a greater role in decision making process for merchandise and service retail firms.

• Now many GIS systems (OR) models, often industry specific

• The most exciting challenges in location analysis relate to planning for retail and service firms.

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How marketers can take the advantage of GIS

• Better processing spatial data, thus constituting an information industry that can generate wealth by adding value.– Trade area delineation: population within a certain area.

– Geodemographics: analysing patterns of demand across one area and from one area to another.

– Direct estimation: deriving demand structures for areas.

• Sometimes “a map is worth than thousands of words”

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Current issues

• Technology is too complex to be understood by end-users

• Modelling procedures are severely lacking

• inefficiencies regarding decision making

• Furthering corporate acceptance of geographic principles

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Technology is too complex to understand regarding to end-users

• A fairly simple command structure with a graphical interface and the ability to answer complex spatial questions.– Powerful and flexible analysis capabilities combined with ease

use.( a few button and an answer)

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Modelling procedures are severely lacking

• Current models: – Analogue techniques

– Regression techniques

– Catchment area analysis

– Spatial interaction models

– Location-allocation and optimisation models

– Trial and error

• Integration of these models into a spatial decision support system(SDSS), aimed to increase the spatial analytical functions of GIS, are not yet clear.

• Most of these models has its own drawbacks.

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Drawbacks• Analogue techniques:success is dependent on whether similar sites are found across town or across

the country. Effective modelling depends on whether trading characteristics can be transferred from geographical locations. New markets with unusual demographics and competitive profiles may not match any markets in the analog base(Buxton, 1993)

• Regression techniques: it does not consider interaction at a spatial level. It evaluates sites in isolation without considering competition or the affects of the corporations networks of stores and distribution on future store revenues.

• Location-allocation and optimisation models: this technique does not take into consideration any form of competition other than from its own network sites

• The above models including catchment area analysis and spatial interaction models only consider existing outlets within a market and rarely have a flat playing field where there are no existing outlets.

• Trial and error approach: the technique is highly subjective and relies on the experience of key individuals. In many instances it is a very time consuming and expensive technique. It also may be impractical to visit al potentially feasible sites.

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Inefficiencies regarding decision making

• There is a limited degree of attention to examine the societal context which influence the efficiencies of GIS in business decision making.– Collaboration, organisational communication relating to GIS

adoption in business firms.

– Users insights and qualifications

– The consideration of data accessibility, data protection when adopting GIS in decision making system.

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Furthering corporate acceptance of geographic principles

• Does geodemographic modelling lead to redlining or other forms of geographical exclusion or, on the other hand, more efficient niche marketing and better, specialised location and investment decisions?

• To what extent GIS is an integral component of the formulation, implementation, and evaluation of any marketing strategy plan.

• What are the implications of widespread use of spatial interaction and location-allocation models in corporate geography for competition,

and for corporate welfare.

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Why carry out this research

• To date, no many systematic, theoretically grounded study of GIS implementation across multiple private-sector organisation has been published.

• An in depth understanding and investigation of the above problems so as to identify the most cost effective and successful marketing strategy for businesses regarding GIS application.

• A modelling will be designed based on the data collected and applied with the collaboration retail industry, thus to identify the usefulness

and efficiencies of GIS into decision making.