Census Data Assists Business Where It Counts: Accurate Demographics : Research: The nationwide count yields unequaled demographic information for marketing strategists.
When Southern California residents fill out their 1990 census forms this spring, most will assume that they’re participating in more than just another marketing survey. The census, after all, is carried out by the federal government under a constitutional mandate, and its avowed purpose is to count the population so that political representation and government funds can be properly distributed.
But the census also serves as a comprehensive study of American consumers, producing reams of information on the income and life styles of people who live in a certain county or on a particular city block. It’s the kind of demographic information that makes marketing strategists drool, and no other data source can touch the census in terms of its scope and accuracy.
It’s no surprise, then, that census information is sold and resold and reshuffled for an incredible array of business purposes. “Virtually every business uses census data,” said Mark Baldassare, a professor of social ecology at the University of California, Irvine who uses the census extensively himself. “It’s omnipresent.”
Retailers use census information in deciding where to locate new stores. Banks use it in determining how to market certificates of deposit. Health-care companies use it to plan new services. Maura Eggan, marketing director for South Coast Plaza, puts it simply, “The census shows where our customers are, and in what numbers.”
The basic census questionnaire--which will be sent to every home in the country by April 1--simply records the number of people in a household, their ages, sex, marital status, race and the type of housing in which they reside. That’s useful information for any marketing department.
But even more mouthwatering is the information that comes from the so-called long form, or sample form--sent to one out of every six households, which involves 45 additional questions that elicit detailed information on household income, mortgage payments, commuting patterns, energy usage and many other matters.
The volume of information collected in the census is so staggering, however, that making good use of it can be difficult.
The Census Bureau, which spends $2.6 billion collecting the information, does not slice and dice the data to fit every possible use, and not many businesses have the computer equipment or manpower to crunch the numbers themselves.
The basic data set has another liability: With 10 years between censuses, it gets old. And it takes the Census Bureau so long to compile everything--the basic 1990 “head count” should be ready by year-end, but much of the more detailed data will not be available until 1993--that some of the information is old even before it’s published.
Solving these two problems is how the raft of independent information vendors make their livings. Companies such as Donnelley Marketing Information Services, National Planning Data Corp., Urban Decision Systems Inc. and National Decision Systems function as what Jeri Denniston, marketing manager at National Decisions Systems in Encinitas, calls “value-added resellers of census data.”
For a price, these firms will provide demographic data for any population area. Thinking of a new store at a certain intersection? A profile of the population within a 2-mile radius of that intersection--or a 20-mile radius, or a 200-mile radius--is just a phone call away. “We repackage, reformat and resell the data in bite-sized chunks,” said Jim Paris, senior associate at Los Angeles-based Urban Decision Systems Inc.
The Census Bureau tabulates data in a geographic hierarchy that begins with city blocks and moves through groups of blocks, cities, counties, states and the nation as a whole. But, for example, pulling out the precise block groups that are necessary to define a certain area can be a painstaking process for the unequipped.
The information vendors also continually update the census information and develop projections by using sophisticated statistical techniques and other sources of information varying from state Department of Finance surveys to postal delivery records. Donnelley also incorporates information collected by other units of parent company Dun & Bradstreet, such as A. C. Nielsen and Dun’s Marketing Services.
And for customers who want it, the information companies will go even further and overlay highly detailed life style profiles onto the demographic profiles. They’ll tell you not only how much money people in a certain neighborhood make, how much education they have, and how many cars they own (information that comes directly from the census), but also what make of car they’re likely to drive, how often they eat out, and what vacation destinations they frequent (information extrapolated from marketing and sociological studies).
Sometimes the census data is several times removed from its original source. Several years ago, Mel Curland needed more Volvos for his booming Mission Viejo dealership, but he was having trouble persuading executives in Sweden to give him a larger allocation. The tremendous affluence and high growth rates in southern Orange County, it seems, were not very obvious to Stockholm.
Curland needed figures to show that the people in his market area fit Volvo’s profile of the typical Volvo customer.
He got those figures from Market Profiles, a Costa Mesa consulting company, which had, in turn, purchased them from Urban Decision Systems, which itself had bought them from the Census Bureau and then updated them with some of its own data. Curland said he ultimately got the additional cars.
Larger businesses, however, often get closer to the primary source. Census information can be purchased directly from the Census Bureau in printed form or on computer tapes, and this year for the first time some data will be offered on optical disks, as well.
Buying the tapes--at about $175 each--is a practical option only if a company has a mainframe computer and some in-house programming capabilities, but for big companies that’s not too big an obstacle.
Jim Stiles, marketing research manager at FHP Inc., a health maintenance organization in Fountain Valley, said his company has purchased directly from the Census Bureau as well as from outside providers, but that it is now relying more heavily on the latter. “The bureau is a data dumper. You can filter it yourself, but it gets to be a headache,” he said. “The vendors will organize it for you.”
FHP, Stiles added, uses the information for a broad variety of purposes. If the company is considering entering a new market area, it will look at the profile of the population there and see how it compares with areas where the company currently does well. In an existing market area, the company will compare the characteristics of members and non-members to see who is using the services.
FHP also uses census data classified by ZIP code to assist in its targeted mailing efforts, an application that is extremely valuable for any company that sells its products or services via the post office.
And though the information vendors claim that their updates are extremely accurate--and that the new data from the 1990 census is therefore not a huge event--some of the users are not so sure. Stiles noted that the projections get weaker and weaker every year beyond the census and that staying up-to-date is especially difficult in a fast-growing and fast-changing area such as Orange County.
The 1990 census form, although mostly unchanged from 1980, contains a few innovations that will make it even more useful for local businesses. For example, the multiple-choice question on housing value now uses $500,000 or over as the top classification; the old category of $200,000 or over was virtually useless in much of Southern California.
Bankers are excited that the census will for the first time ask about second mortgages, one of the hottest areas of bank lending.
And though everyone will have to wait a couple of more years for all the information, the data promises to be more accessible than ever before. Not only are there more information vendors doing more things with it, but the Census Bureau itself is also working to disseminate the data in more usable forms.
Larry Hugg, an information specialist with the Census Bureau’s regional office in Van Nuys, noted that some information will now be available not only in published reports--the basic source for seven out of 10 users--and computer tapes, but also on optical disks that can be read by properly equipped personal computers.
In addition, the data is available on-line through some electronic information services, and the bureau will produce printouts of data that is not contained in published reports.
And considering what you get, it’s not very expensive. Summary reports in published form cost from $29 to $50, and in 1980 the entire census data bank--711 mainframe computer tapes--could be purchased for $124,425, said Paris of Urban Decision Systems. Hugg said there will be “thousands” of tapes for the 1990 count, so it might be a bit more expensive.
VALUABLE DATA: 1990 is the year of the census, and that’s a boon for marketing strategists. The nationwide count yields unequaled demographic information.
