geographic information system as a marketing tool

www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 01, November -2012 37

Geographic Information System as a Marketing Tool

Dr.Vinod N.Sambrani, Assistant Professor, Institute of Management Studies,

Davangere University, Davangere, Karnataka, India

Dr. M.S.Subhas, Professor, Kousali Inst. of Mgt. Studies,

Karnatak university, Dharwad, Karnataka, India

ABSTRACT

Today’s marketing mangers are required to make many different kinds of decisions, decisions that are

accurate. To make accurate decision, managers need inputs from disparate departments at a single

point. To be effective and efficient managers need the right kinds of tools and skills in the intelligent

use of information, especially spatial information, in decision-making. To make better decisions one

must explore the advantage conveyed by location and geographic context, which helps understand

current performance and improve it in the future. Along with the 4P’s of marketing another ‘P’ that is

processing of data, not just attribute data but spatial data has become the 5th

component of the

marketing mix. Geographic Information Systems (GIS) is a viable tool for handling spatial data. With

access to appropriate data, GIS is an excellent tool for the analysis and identification of market

opportunities. Geographic Information Systems helps in analyzing and representing the information

visually, allowing for greater understanding of the operating environment around the corporate.

Geographic Information Systems enables the analysis of the “where” because the “where” is

underexploited or sometimes unexploited in conventional information systems, which are capable of

handling only the ‘who’, ‘what’ and ‘when’ factors specific to the organisation. GIS exposes the

influence of geography on behavior, activities and processes. Adding maps allows managers to easily

visualize the geographically influenced behavior, activities and processes, communicate the same

within the organization for improved analysis and decision making. Within business, the kind of GIS

use ranges from 'just viewing' to complicated analytical processes. Three main levels on which GIS

can be used can be distinguished are operational, management (tactical), and strategic.

Keywords: Geographic Information Systems, Marketing, Visualization, Spatial overlay, Spatial Data,

Location, MapInfo.

INTRODUCTION

Organisations that seek to focus on improving margins and competitive positions are realizing that

they must look beyond the advantage they are realizing from information technology they are presently

using. More than 80 percent of all the data maintained by organisations around the world has a location

component – be it a customer address ,delivery route, administrative boundary, sales territory ,

warehouse /depot, competitors location etc. Just like the CRM–style analytical solution a decade ago,

Geographical Information Systems offers value to an organisation by using sophisticated technology

and analysis to help executives and enterprise level users make critical business decisions. Using

economics, demographics, physical geography and other data pertaining to location, GIS helps detect

patterns, risks and opportunities often difficult to see in a basic spreadsheet analysis. Spatial data can

be used in many ways, such as:

1. How big is my market area?

2. What is my share of the market area?

3. Which market area offers the greatest potential for growth?

4. How many stores can this market support?

www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 01, November -2012 Page 138

GIS provide value for marketing decision making through two mechanisms viz.

1. GIS provide a way to analyze internal or external marketing intelligence data in a format particularly

suited to marketing decision making; and

2. GIS provide the ability to integrate both internal and external marketing intelligence data to greatly

improve the effectiveness of these marketing decisions.

These capabilities result in a competitive advantage through the ability to leverage internal data and

specific knowledge of market factors through the easy application of effective visualization techniques

and the integration of external data. To the extent that the firm can internalize and institutionalize these

capabilities, the firm’s competitive advantage may become both sustainable and strategic. These

capabilities have important implications for marketing practice.

By adding demographic information to an organisation’s existing business data, maps become truly

interactive through the capability for mangers to drill down data associated with any given location.

For example what is the average income in the area where the highest performing stores are located?

How do sales vary by population level or by proximity to competitors?

The primary focus for all marketers is customers—how to identify them, keep them, reach them, and

find more like them. To accomplish these goals better than competitors, one must focus on customer

marketing applications such as acquisition, marketing, messaging, purchasing, and retention.

Understanding customers’ demographics, behaviors, and purchasing patterns increase the chances of

retaining them and finding more like them. Geographic Information System allows decision makers to

leverage their spatial data more efficiently, by visually bringing together relationship between

customers, suppliers and competitors. GIS are a powerful technology in terms of data storage, analysts

and visualization, with the ability to combine information and mapping systems as analytical and

modeling tools. Geographical intelligent systems helps business acquire and retain their most

profitable customers, increase response rates, generate more revenue, and develop efficient marketing

campaigns. GIS can be applied to many aspects of business viz. facilities management, logistrics,

inventory control, target marketing, market analysis and site location. This paper explores the role of

GIS as a new kind of marketing tool by understanding the impact of GIS on 4 P’s of marketing mix,

GIS itself being the new 5th

‘P’ of the mix.

UNDERSTANDING GIS

GIS is considered a path-breaking technology for managing natural resources and town planning in

developing countries and was considered as a geographer’s tool, but with latest generation of GIS

boasting a number of features that are likely to make them more user friendly and easier to integrate

into the total information systems within an organisation have emerged as a powerful location

intelligence tool with wide scope of application within an organisation. There are different definitions

for GIS, each developed from a different perspective. Some focus on the map connection, some stress

the database and others emphasis applications such as decision support systems. An analysis of the

acronym explains everything:

A GIS is a computer system for managing spatial data,

The word geographic implies that location of the data items are known in terms of geographic co-

ordinates (Latitude and Longitude). The word information implies that the data in a GIS are organized

to yield useful knowledge, often as coloured maps and images and also as statistical graphics, tables

and various onscreen responses to interactive queries. The word system implies that a GIS is made up

from several interrelated and linked components with different functions. Thus GIS has functional

capabilities for data capture, input, manipulation, transformation, visualization, combination, query,

analysis, modeling and output.


NAVALGUND

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The capabilities of the GIS system are expected to bring transformations in a business organization,

ranging from the way routing decisions are planned to the decisions related to opening of new

facilities. The three different views in GIS enable its use for different purposes:

1. The Database View (Non Spatial Information), also known as the geo database, describes the

world in geographic terms.

2. The Map View (Spatial Information), also known as the geo visualization view, includes

interactive maps, 3D scenes etc.

3. The Model View, also known as the geo processing view, includes the geographic data set and

operators (called tools) on this data set.

These three different views and the ability of GIS to keep spatial and non-spatial data in different

layers enables users to process data according to any combination of layers. Layer based approach

allows spatial operations like overlay, union and clipping of maps. That is “GIS turns data into

information, information into knowledge”.

Figure1: Different Themes as Layer

Figure 2: Overlapping of Layers to form Meaningful Map

NAVALGUNDDHARWAR

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Geographically organizing data allows the utilization of new data that may not have anything in

common with existing data other than location, thus churning out new data sets. This information can

be used to arrive at a decision. In this way, GIS acts as a decision making tool.

The above definition of GIS is more from a geographer’s point of view; during the course of research

the above GIS definition was reframed to suit the decision maker. Thus the new definition from a

decision makers perspective will be “GIS is a managerial decision making tool for decision making,

involving a spatial dimension as one of the variable among a set of variables considered for decision

making1”

There are two ways to visualize data in GIS viz. Raster system and Vector system. In raster system the

layers are organized in a grid of identically sized cells. The cells have a uniform length and width

(square shaped) and are called “pixels.” With raster systems, the graphic representation of features and

the attributes they possess are merged into unified data file and stored in the pixel. Points are

represented as a single pixel, lines as a series of adjacent pixels, and area as group of pixels.

In vector system the layers are represented as points, lines, or polygons. A vector layer cannot mix

types together, that is one layer cannot have both points and polygons. The layer would have to be split

into two separate layers; one for points and one for polygons. The information about points, lines and

polygons is encoded and stored as a collection of x and y coordinates. Examples of vector layers

include bus stops (point), roads (line), and lakes (polygon).

GIS offers a single solution that performs a number of different jobs at once and communicates the

results to turn data from many sources into effective, actionable information. GIS technology brings

together common database operations such as query and statistical analysis with the unique

visualization and geographic analysis benefit offered by maps. Theses abilities distinguish GIS from

other information systems and make it a valuable for use in a wide range of applications to solve

problems and plan ahead by looking at data in away that is quickly understood and shared. GIS helps

managers answer question such as:

Where things are – assets- customers- outlets- staff-tracking

What’s inside an area – potential customers – suitable distributors – territory splits?

What are nearby – competitors – resources?

What quantities – sales by area- market size- number of outlets?

How do I get there – routing- scheduling- alternative routes

What affects it – demographics of customer- drive time- competitors positioning – environmental risks.

Modeling for analyzing ‘what if’? Situations

GIS AND 4P’s OF MARKETING MIX

GIS supports common marketing decisions such as site selection and target marketing. More

companies are embracing the technology and some of these companies are developing innovative ways

to use GIS. It is important to understand how GIS technology can be used for executing activities in

the traditional marketing mix.

Product

The product component of the marketing mix involves matching the attributes of products to the

characteristics of consumer groups, consumer characteristics are geographically distributed, the effort

1 GIS Defination derived during the courses of research on “Business Graphics –A New Approach to Decision Making”,

Vinod N. Sambrani


to design and market products for consumers will rely on geographic data. GIS can be integrated in the

product design and distribution decision to get a better market share. GIS will help discover areas

where products are selling well and what are the demographic features of consumers in these areas that

drive demand? The same can also be used understand the product’s characteristics and the

demographic profile that results in low sales. This information can then be used for marketing

decisions on product line-stretching, line-filling, and line modernization.

Pricing

We all know that the price of petrol in different states across India are priced differently, similarly the

price of some fast moving consumer goods are also priced differently based on the geographic

location, that is geography influence pricing.

GIS can refine the way that spatially dependent pricing decisions are made, resulting in better

understanding of the revenues, market share, traffic, etc. GIS may then be the enabling technology to

improve pricing decision making when there are spatial components to prices.

Place (Distribution)

Distribution and location decisions are one of the first areas where GIS became widely used in the

marketing mix. GIS helps in planning routing schedule, locate sales depot, find the shortest route,

generate alternate routes form source to destination in case of problem in the shortest route. GIS can be

used as a tool to map manufacturing, clients, processing units, supplier locations, distribution centers,

and routing of vehicles. GIS can be used as a decision support for effective supply chain management.

In the GIS, the data of the processing units, the customers, the distribution centers, the suppliers, and

the topologies of the roads are stored and managed by the Geographic Information System (GIS).

GIS will answer to the following queries of the user like

1. What is the drive time from the central facility to any other location?

2. How long will it take to reach delivery locations?

3. Which customer will be in which service area?

4. How can the goods be tracked through the supply chain?

5. What will be the shortest route between two points in the supply chain network?

6. What will be the alternative path between two points other than the normally followed shortest

path?

Promotion

As with the distribution component of the marketing mix, promotion has been an area with early and

increasing use of GIS technology. One of the most important issues to be addressed in the area of

promotion is the realized efficacy of integrating internal and external data through the use of GIS.

Processing of Spatial Data

80% of corporate data is spatial in nature, GIS with its capability to manage, display, and analyze

business information spatially, is a powerful location intelligence tool. GIS helps in better decision

making since the impact of the decision on different variables can be viewed on the map. Adding maps

allows managers to easily visualize the geographically influenced behavior, activities and processes,

communicate the same within the organization for improved analysis and decision making.


Figure 3: 5P’s of Marketing Mix

GIS helps in managing the customers by

1. Creating customer profile by mapping the best customers who purchase most frequently; Target

these customers for loyalty campaigns and new promotions; Analyze “best customer” sales related to

different channels; Investigate relationships between underperforming products and customer

preferences.

2. Segment customer by grouping customers by product preferencing; Display customer subsets by

product; Analyze customer groups by sales territories and Create messages targeted to the best

segments

3. Acquire and retain customers by generating more qualified leads; Identify best prospects; Turn

prospects into buyers faster; Shorten sales cycles; Build customer relationships

4. Market via multiple marketing channels by segmenting customers by point of purchase: store, Web,

catalog; Analyze sales by channel; Map channel productivity; Understand customer channel

preferences.

5. Analyse customers by uncovering new response

markets; Target messages by segment; Analyze

purchasing power versus product mix; Map current

customers; Examine under- and over performing

markets.

6. Establish customer relationship by locating

customers on maps; Assign customer service staff to

each customer; Create customer service groups based

on product territories ; Record customer contact;

Initiate customer feedback.

7. Advertise to customers and prospects by tracking

advertising success; Map successful campaign

territories; Examine regional response to new products;

Screen product use by region.

Figure 4: Example of Creating Customers Profile

Product Pricing

Credit

Discount

Payment Methods

Retail price

Brand

Options

Packaging

Quality

Service

Style

Warranty

Place

Coverage

Distribution Channels

Inventory

Locations

Transport

Promotion

Advertising

Merchandising

Personal selling

Public relations

Processing

Using GIS

Data Collection

Data Analysis

Data Presentation


A, a study was conducted to do the sales analysis for tractor manufacturing company to understand,

which brand was faring better. The methodology followed was;

1. The base map of the taluka taken for study was digitized.

2. The different village boundaries were taken on a different layer.

3. The taluka boundary was taken on the second layer.

4. The layers were laid one over the other to get the complete map with all the villages.

5. Data about the sales of different brand of tractors sold in different talukas were collected from

the Regional Transport Office (RTO).

6. The data was collected in MS Excel and then imported into MapInfo GIS software for the

purpose of analysis and creating a thematic map.

7. The output is shown in the figure below.

8. Total number of tractors sold in each village, brand wise is presented on the map using thematic

presentation

CONCLUSION

GIS analysis is more than the use of mapping software or the ability to plot points on a map. It is the

ability to draw relationships spatially and to identify values in each relationship.

Once spatially referenced, the data can be used in many other applications, thus adding value to the

data and value to the planning process. Value affecting data such as demographics and geographically

influenced risks can easily be updated in GIS. Data visualization evolves into a means of transforming

data quickly into information, information into knowledge, knowledge into strategies for profitable

business activities. There is clearly a role for GIS in marketing. The understanding of the four elements

of the marketing mix shows that there is a geographic component to each element and it is natural to

expect that spatially oriented technologies will help with decision making in these areas. The value

addition comes through the use of GIS, along with other attribute data, which is used in decision

making.

Figure 5: Sales and Marketing Analysis for Tractor Manufacturing Companies


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