What is Geodemography?

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The geodemographer acquires raw data from the census of population and housing and a myriad of other secondary information sources describing small geographic places such as ZIP Code delivery areas or collections of city blocks, for example. These data are heavily preprocessed to render them statistically useful by editing their errors and omissions, projecting and interpolating them in time, space and tabular detail, indexing and standardizing them in comparison to a variety of benchmarks and transforming their measures and scales

Geodemographic raw data are fundamentally summary statistics that describe small geographic areas in terms of the number and characteristics of persons, households, business establishments, farms and institutions located in them. After preprocessing and analysis, they are used to isolate trends, rank-order attributes and profile the key characteristics of these small areas, to segment and classify the areas and their constituent populations and to predict or estimate a vast scope of aggregate and individual human behaviors and conditions.

Secondary small area context data provide the independent variables in geodemographic analysis which are linked geographically to data measuring a wide variety of dependent variables.  Such dependent variables typically include retail or direct sales of consumer goods, sample survey items measuring individual consumers' behaviors, attitudes, expenditures and preferences for specific products and services, responses to political polls, health data, vital statistics, charitable contributions or participation in government programs.

Given such integrated data, the geodemographer builds statistical models that predict the potential actions and estimate the characteristics of households and persons both individually and collectively in their neighborhoods throughout the United States given the salient characteristics of their local geographic contexts.

The outputs of geodemographic analysis consist in part of reports or screens showing demographic and economic profiles and market segment distributions of customers or potential consumers. Also produced are data series giving geodemographic estimates of sales potential for small areas in rank order that support selection of promising retail site locations, for example.  These data are also readily displayed on maps using a variety of GIS (Geographic Information Systems) software. Geodemographic outputs are also appended to individual address records in customer files or mailing lists for the purpose of selecting the most promising targets for promotion or action based upon their geodemographically predicted commercial potential.

The foundation of geodemography, as noted above, rests on the public data which periodically report on the cross-sectional social and economic characteristics of small areas in great detail and with surprising accuracy and consistency in spite of the ever present possibility of procedural, methodological and subjective error. The value of geodemographic procedures lies in the new and powerful decision making information which is produced by models that link these secondary data to current transactions and primary observations of consumer behavior.