There are three major trends altering Canada’s geodemographic landscape: population growth, the aging of the Baby Boom and the increasing ethnic diversity of the nation’s cities. But what does it all mean? Clearly, the demographic structure of a population determines the needs of consumers. But demographics are more important than sheer numbers. They bring with them a history of people as they age and move through the lifecycle.

Demographic trends can change the nature of a population. There are ten million Baby Boomers now approaching 65 years old, but many show no signs of wanting to retire. With Canadian Blood Services, you see high blood donation rates from people in their 40s and 50s, so these are good days for the society because of all the Boomers. But in ten years, those donation rates will be pulled down by demographics. So you need to get underneath what’s happening. The devil is in the details.

We think it’s important to help each store understand who their customers are and what they want. But to become a customer-centric retailer, we realized that we needed a holistic view of who that customer is. We wanted to bring a geodemographic lens into our consumers, to look at their urbanity, lifestage and level of affluence.

What resulted were six different segments. One was called The Older Affluent and consisted of customers who, as a result of their success in life, are quite time starved. To meet their needs, we launched a Home Theatre Installation Service that helps them when purchasing home theatre systems. Another group, called Young & Trendy, consisted of early adopters who were seeking a quick shopping trip. Because most customers in this segment travel via public transportation, both our delivery service and our financing programs help meet their needs. In a recent market test, we’ve listened to customer feedback and introduced a few baby monitors as a new category. Looking at this data for each store has helped us validate and scale customer insights successfully.

Travel destinations are now competing on a global basis to attract visitors. But traditional segmentation models, often focused on demographics—age, marital status, income and education—provided us with an incomplete picture of our customers. We wanted to know why our customers made travel choices and what different activities meant to them. So we set about creating a new segmentation model based on social values, travel motivations, and travel behaviour—one that would provide a fundamentally different and more powerful way of understanding our customers.

Starting with a survey framework from Environics Research Group, we came up with an online survey involving 25 questions which segments the respondents into nine Explorer Quotient (EQ) groups, with names like Free Spirit, Authentic Experiencer, Cultural Explorer and Virtual Traveller. For example, our Free Spirit group consists of people who travel constantly and look for luxury. The Authentic Experiencers like to visit vast natural wonders and integrate into the local culture. An online quiz was developed for our website so that visitors could answer a few questions and find out what kind of Explorer they are. Then we can offer them information on Canadian tourism experiences to fulfill their travel motivations.

For instance, in promoting travel to St. John’s, Newfoundland, we can offer different opportunities for different EQ segments. If someone requesting travel information is classified an Authentic Experiencer, the copy may begin, “Stroll along the winding streets and multicolored saltbox houses.” For a request from a Free Spirit, the story may say, “With more licensed establishments per square foot than any place in North America…” The EQ not only helps the Canadian Tourism Commission understand its customers better, but also provides the opportunity to customize our communication and tailor an experience to what each customer is seeking. In support of the Canada Brand, the EQ is playing a central role in shaping the CTC’s activities—marketing, product/experience development, public and media relations, and research.

If you go back to Martin Luther, the Protestant reformation and the use of the printing press, the church has been one of the early promoters of marketing technology. We just haven’t kept up to pace in the last decades. Since 1960, our membership has declined by 38 percent. And our research showed that people weren’t very aware of the United Church.

So we asked ourselves, “How can we help congregations address the questions of who we are and how can we better serve our neighbours?” We wanted the kind of information that Environics Analytics uses for a traditional trade area report to help our congregations connect with the neighbourhoods around them.

For us, it became a tool to help build relationships. It helped us develop strategies to welcome new members. It helped us initiate public events that corresponded to the core values of our communities. And it showed us where our churches needed to strengthen their message to their members. Perhaps most important, it got our congregations to connect with the neighbourhoods around them. The approach helped us clarify our sense of purpose and calling by giving us a deeper understanding of the people within our congregations.

How many ways are there to ask for money? There are 160,000 not-for-profits all trying to raise money, and the average donor in Canada supports 14 causes. For years, The Cancer Research Society’s fundraising did well. But around 2000 or 2001, the program took a nosedive. The donors weren’t renewing, and senior management wanted to get better results in order to support more research.

In 2004, the program finally turned around; Still, all acquisition was done through trade lists from other charities. Our mailings would get between a 2 percent to 16 percent return. But we were looking for more growth. So we tried everything, from plain letters in an envelope to expensive premiums. What made it difficult was that we didn’t know who the donor was. Conventional wisdom in the fundraising business says that the average donor is a 65-year-old woman with middle to low income and schooling. But when we looked at the transactional data from the best 180,000 donors and classified them by PRIZM CE codes, we found three types of donors. One was called Educated Urbanites. These donors are middle aged, have children, own houses and have a higher than average schooling. And they have an average income of $99,000—up in the stratosphere compared to the typical donor.

After we identified these people and found the right postal codes where they lived, we used social values to better understand how they thought. We found that they are conscientious, like connecting with others, believe that all environmental phenomena are interrelated and like to have control over their lives. And they were unlike anyone we’d normally mailed with lists of our typical donors.

So in the spring we mailed over 600,000 pieces using three different letters to our three groups and a control letter. The results were amazing. With our English-speaking prospects, our revenue per name increased by 19.2 percent and generated 13.5 percent more donors. With the French prospects, the revenue per name went up 68.6 percent and number of donors increased by nearly 59 percent. And no incentives were used. Naturally, what we plan to do with our next mailing is more of the same, picking the winning elements.

There are people who say that our experiment in multiculturalism is a failure. But when I took a look at the demographic and polling data, it looks like the glass is half full. Thanks to all the people coming to our country, Canada is no longer known as a country of geographic immensity but one of ethnic diversity. Nineteen percent of Canadians are foreign born, second only to Australia. We have the highest rate of acceptance of immigrants in the history of the world. In Toronto there are 14 foreign-born groups—that is, migrants who all share the same country of origin—with populations of over 50,000.

Yes, there are many challenges associated with immigration—both at the level of individuals and families, and at the level of the society that must help these people succeed in school and in neighbourhoods, and find employment commensurate with their qualifications. (This is something Canada is having some trouble with.) But nine out of ten recent immigrants say that they’re happy with their life. They love Canada. It’s better than where they came from. And their kids are taking this place by storm. The second-generation immigrants out-earn the population at large who are third-, fourth- and fifth-generation Canadian. The longer you’ve been here the more likely you are to complain about the place—the more Canadian you become.

We should not adopt assimilation and we shouldn’t adopt integration. We should continue to celebrate multiculturalism. We have challenges in our country, but multiculturalism is working. Saying you’re a citizen of Canada is like saying that you’re a citizen of the world. There is no core into which you assimilate. It means coming here and joining the experiment and inventing what we will become.

The tradition of retail location decision making has involved intuitive, subjective seat-of-your-pants approaches. But over the last ten years, with the increased availability of data and software, it’s changed. There are pressures to adopt structured, objective approaches. The increasing competition from U.S. chains and threat of saturation are causing the decisions to become more research driven. And the costs of investment are increasing.

Still, site location decisions are often seen through two very different views within an organization. The analysts and those who come out of market research talk about the need for census data and geodemographics to make a decision. But the real estate people come along and say, “We found this great property and we can get a great deal on a mall location.” And unfortunately, too many deals get done this way. But the good news is that there’s a real opportunity here for the research community. Good data makes better decisions.

Site modeling is a complex combination of science, statistics and experience-based art. There are two types of site models: those that predict sales and those that optimize the location of stores in chains while also predicting sales. Models are generally considered to be scientific and statistically rigorous, but it’s increasingly common to find ad hoc business rules put in software and offered up as “models.”

In fact, a number of variables should be used in developing site models: 1) socioeconomic and demographic variables to calculate market demand, 2) site variables such as size of store, signage, visibility, parking and location in mall, 3) situation variables like traffic, section of the city and proximity to a mall, 4) competition variables and 5) the quality of the management. To calculate the market demand when measuring a store’s performance, it’s necessary to first define the demographics in the trade area around the store where most customers live. Simple definitions of trade areas, like circles around sites, have been widely used over the last 15 years in GIS software for pure descriptive purposes (such as identifying the second highest-income trade area). But there are many better methods of defining trade areas that should be used in building rigorous models. Finally, quality data is essential to building good models. Bad data—poorly defined and measured, missing and incomplete data—guarantees that the models will have large errors in predicting new store sales. Good supply site data must include the locations of retail facilities like malls, other relevant stores such as competitors, and other facilities like sports stadiums. These variables are needed to capture the behavioural choices that people have when they shop. But because these variables are often hard to find and verify, they are often under-utilized. That’s why the most effective site models—like the ones produced by Environics Analytics that take into account the effects of competitors and cannibalization—are always custom assembled.

In this age of great change in the advertising and marketing world, the work that we’re all doing has a great impact on the return of marketing dollars. Layered on top of this change are shifting demographics—both the aging population and the impact of increased immigration. And all of us need to better understand our customers and how they’re changing in order to get the right advertising mix. The good news for marketers is that data-driven analytics are available to help manage all this change--on a product-by-product and a project-by-project basis--at the local level. And we’re happy to add to the toolkits of marketers by announcing the launch of several new products today:

• HealthScapes - a suite of data, software and services geared to the health care industry;
• WealthScapes - a similar suite of data-based products and services for the financial services sector;
• Diversity Marketing Toolkit - a collection of geodemographic tools to help marketers target their products and services to multi-ethnic audiences;
• Origins Canada - a software product capable of predicting the national origin of consumers based on their name—a boon to ethnic-oriented marketers;
• ePRIZM Targeting - under a partnership with Sympatico / MSN, this application allows clients to select 500,000 Internet users targeted by PRIZM CE segment through a consensual e-marketing list; and
• Business Analyst – with ESRI Canada, an advanced analysis tool combining ESRI's leading GIS technology with demographic and consumer data from Environics Analytics.

Obviously there’s a real need for this kind of event to share data-based marketing techniques, analytics and best practices. And we’re happy to be part of the research community to share in the discussion of the best and brightest ideas.

Finally, it’s never too early to mark your calendar for next year’s user conference: Tuesday, November 4, 2008. Plan on joining us again in Toronto to learn, network and see hands-on demonstrations of the latest information-based marketing tools and tactics.