THE CUTTING EDGE : Weak on Geography? Try Mapping It Out
Cellular One, a Bay Area mobile communications company, had lots of customers and plenty of capacity. The one thing it didn’t have was a way to match the two. As a result, some customers got cut off in mid- sentence, while others struggled with inferior connections.
That was before Cellular One embraced Geographic Information Systems, a way of linking geography with non-geographic information. GIS lets users see business data such as sales, phone calls and store locations on a map, juxtaposing that information with, say, demographic data. Business decisions that once required reams of statistical tables and a healthy dose of imagination are laid out visually.
With the installation of a GIS-based network management center in Santa Clara last fall, Cellular One was suddenly able to deploy its cloud of cellular coverage where customers were actually making the calls, delivering better service while making more efficient use of its resources.
Once restricted to big companies with access to mainframe computing power, GISnowadays is spreading like wildfire, thanks to the growing power of desktop computers and to innovations in GIS software. The falling price of desktop-based GIS programs--nearly 70% during the past three years--is leading to a revolution in the analysis and display of business data.
Cellular One is far from the only business using this powerful tool to answer the question: Where are the customers? Kodak, Arco and Coldwell Banker are a few of the many large corporations that use it to find market niches, place new stores, assess ZIP-code demographics for direct mailings, dispatch repair teams and even analyze power-consumption data within a building.
Small businesses can use GIS too, although this segment is often called “desktop mapping.” Sales of PC-based software in this genre grew 24% in 1992, and an estimated 37% in 1993, when they reached $115 million, according to Daratech, a Cambridge-based market research company.
In February, MapInfo--the largest vendor of desktop mapping software--went public. Older companies with mainframe products are entering the desktop market, and new companies have brought out new GIS products in the last few months.
With the decline in computer prices and increase in their speed and power, GIS solutions are already within reach of even a small company. Three years ago, a mapping software cost upward of $10,000, according to Daratech; now a desktop installation is around $3,000. Within the last year, smaller companies such as Scan/US have brought out Windows-based geomarket analysis packages for less than $1,000.
Daratech assesses the “core market"--GIS software, hardware sold by vendors and support service--at $953 million in 1993. But including all data, technical support, hardware and software, companies spent $5.5 billion on GIS technologies.
A primary use of GIS is in site selection. Ken Green, senior analyst in charge of volume prediction at Arco, uses it to decide where to buy land for new Arco stations and AM/PM outlets. In the past, Arco would have turned to a demographic analyst for a market study of a location, but now Green can simply highlight a possible venue with his mouse and show the roadways, traffic patterns and existing Arco stations.
In making real estate decisions, Green knows that downtown Los Angeles has more potential gasoline customers, but the question is, as he puts it, “is eastern Washington going to have a higher yield given what we pay for the land? With mapping software I am able to show how many potential customers are within a two-mile ring, or I can show the effects of a freeway.
“Another market project we used the software for involved a change in our beverage contract with Coke to a setup that included both Coke and Pepsi. “There was reason to believe that installation of new, larger machines that included both Coke and Pepsi would result in a significant increase in sales, but we could not install the machines everywhere at once. I worked with the marketing department and used GIS software to create a map of the counties with the highest drink sales. That set the agenda for the program.”
Coldwell Banker used GIS “for one client in Phoenix where the market demographics within two miles of each store were considered critical,” said Celeste Cummings, a senior systems analyst for the firm. “GIS allowed us to determine which stores were pulling from the same market, in a sense cannibalizing customers from each other. This allowed the client to decide which stores to close and where to open new ones.”
GIS-based analysis offers the clarity of a map display and the deeper understanding of geographic and spatial analysis. At Coldwell Banker, this means that instead of handing a voluminous text-based report to a client, agents are able to become more involved with the analysis. “When the data appears on a map, it is easy to see where you’ve got holes,” said Cummings. “The weak spots just jump out at you.”
Often, the geographically linked information changes the potential product market. Todd Schwartzrock, director of marketing for Revere National Corp., a billboard concern, finds that his new mapping system is pointing to new clients who were previously not approached.
Although outdoor advertising has long used lifestyle data to place billboards, Revere uses the mapping software in conjunction with a traffic engineering firm that tracks license plates of cars passing its billboards.
The results are target-marketing as a science. In the past, Schwartzrock’s pitch to a client would have involved some generalizations about who the ad would appeal to and what sorts of viewers might see the billboard. Now he can say with confidence who passes that location, where they live and what sort of buying patterns that neighborhood has.
“It affects the kinds of clients we actually approach in the use of our media,” Schwartzrock said. “We are moving away from the traditional use--alcohol and tobacco--and toward retail, entertainment, and packaged goods. MapInfo allows us to do this with more than just intuitive claims.”
Targeting specific neighborhoods was the interest that launched a relationship between the Southern Baptist Sunday School Board and Los Angeles-based mapping firm Scan/US. The Sunday School Board--which manages over $250 million a year in revenue--is the world’s largest Protestant religious publisher, with over 38,000 churches in its conventions. Working with Scan/US, it built the Southern Baptist Data Consortium, which adds demographic data and the locations of churches and congregations to maps.
“GIS helps the churches understand how the community has changed and what they can do to reach the community,” said Earl Nobels, director of the Sunday School Board. “As urban systems spread out tentacles--highways--housing usually follows. The core of the city will then lose population, and racial and ethnic changes will follow. So you may have a church that has been there for 25 years, now battling to survive. It has to serve a whole different group of people.”
GIS has enabled some congregations to make the tough choices necessary to survive. One predominantly white church in a major metropolitan area saw its congregation shrink from 1,500 to fewer than 100. In the same community was a black church that was pressed for space. Nobels conducted an analysis with Scan/US to show where the religious communities were located, and armed with this information, the white church decided to donate its facilities to the black church.
The daily diet of tough decisions at the Federal Emergency Management Agency made GIS a natural. FEMA started using the MapInfo program after Hurricane Andrew touched down in 1992. The agency was facing 240 square miles of devastation with no street signs and damaged roadways.
“We set up a raw street grid and then added to it whatever visual markers existed,” explained Tom Mulhall, manager for FEMA Response and Recovery Information Systems at its Miami office. “You couldn’t say ‘turn right at 120th Street.’ You had to say ‘right at the water tower, left at the collapsed shopping center.’ ”
Powerful notebook PCs allow FEMA field operatives to continually send in new data and receive redrawn maps several times a day.
During the California wildfires last summer, FEMA used GIS to map areas of damage and decide where relief should go. FEMA estimates that this took a three-week process and converted it into a matter of hours.
TECH TIPS: What to Look for With GIS
GIS packages are available for PCs, workstations and mainframes. At a minimum, you’ll need a 486 IBM-compatible PC or a Macintosh II. Either should have at least 8 megabytes of RAM, high-resolution graphics and 100MB of free hard-disk space. Most GIS packages come with some basic data but expect users to buy additional data for their specific needs.
Some desktop packages:
* Scan/US, $695 ((310) 820-1581) For Windows, comes bundled with basic demographic data for the entire United States.
* MapInfo, $1,295 ((800) 327-8627) The largest vendor of Windows-based GIS software, MapInfo sells many GIS add-ons and also makes a Mac version.
* Atlas GIS for Windows, $1,595 ((800) 472-6277) Atlas is also a major supplier of data formatted for its software.
* Businesses with bigger needs might consider a mainframe or workstation installation with the help of a consultant. The two largest GIS companies, Intergraph in Huntsville, Ala., and ERSI in Redlands, Calif., specialize in the mainframe market and also have PC products.
A good source of information is the monthly magazine GIS World ((303) 223-4848).