Where You Live Gives Marketers Clues to Buying Habits

If you’ve got a wedge of brie in the refrigerator, an Infiniti in the driveway and a country club membership to your name, chances are that come Sunday morning, you’ll be watching “Face the Nation.” You may also be thumbing through your latest issues of Inc., Travel and Leisure magazines.

You may well live in one of the upscale suburbs of Los Angeles. You’re a member of a group known as the Winners’ Circle.

Or maybe you have a sports utility vehicle in the garage and a home gym in the next room. You watch “Murphy Brown” and follow the Wimbledon tennis matches. You read Time magazine, listen to all-news and adult contemporary radio stations during rush hour, go snow skiing and do most of your entertaining at home.

You probably live in a suburban neighborhood along the California coast. You are dubbed a Mid-Life Success.

If either of these “lifestyle profiles” sounds familiar, you may be wondering how somebody found out so much about you. Welcome to the world of consumer segmentation, where every questionnaire you answer, every magazine you subscribe to, every warranty card you fill out and many of the purchases you make add another piece to the picture of who you are, based on what you buy.

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And it doesn’t stop there. Chances are that your neighbors frequent the same restaurants you do, stock their pantries with the same brands of cereal, take similar vacations and tune in to the same television programs. Your address reveals a fair amount about who you are and how you spend your money.

In other words, you are where you live.

As those who keep track of this data for a living like to put it, “birds of a feather flock together.” Indeed, that adage is at the core of some very sophisticated marketing data that both reflect and influence the way we live.

Collecting and analyzing the data--and crafting the colorful nicknames that tag each lifestyle--is the $100-million-a-year business known as consumer segmentation.

David Tedrow is director of consumer segmentation for Equifax National Decision Systems in San Diego, which, together with Claritas, based in Arlington, Va., enjoys 90% of the industry’s market.

Tedrow said that when his family moved to San Diego from the East Coast, his neighborhood didn’t really change.

“The architecture, size of the lots and so forth might be different in the new neighborhood,” he said, “but the choices were still based on the quality and location of schools, how close were we to Home Depot, things like that.”

Mike Mancini, a senior vice president for competitor Claritas, agrees. “People tend to move into neighborhoods with people similar to themselves. Young marrieds want suburbs, good schools, affordability. Young singles look for hip neighborhoods in more urban areas.”

Because of these basic truths, Equifax, Claritas and a couple of their smaller competitors are able to describe and predict the lifestyles of you, your neighbors, your Kansas City cousins and your old college chums in San Francisco. Virtually anyone with a ZIP Code can be typed by the huge and complex system.

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Here’s how it works:

Claritas with its Prizm method and Equifax with its Microvision system begin by analyzing demographic data from the 1990 Census. Each adds information gleaned from Nielson ratings, Arbitrons, consumer product and opinion surveys, product warranty cards, magazine subscriptions and dozens of other public and private information sources.

What emerges is a portrait of our society broken down by what are often called “tribes.” Your tribe is your household plus those who share your ZIP Code (usually 2,500 to 7,500 households). For more pinpoint marketing, the segments can be broken into smaller geographic levels like census block (250 to 500 households) or ZIP Code plus 4 (from five to 12 households).

Members of your tribe will tend to have similar lifestyles and buying patterns, and each tribe is given a distinctive name.

At Claritas, you’d fall into one of 62 colorful designations like Money and Brains, Norma Rae-Ville, American Dreams, Kids and Cul de Sacs or possibly Shotguns and Pickups.

Equifax aims to keep the nicknames slightly more conservative. Still, you could find yourself tagged with any of its 50 lifestyle designations, including Bedrock America, Movers and Shakers, Urban Singles, White Picket Fence or Stars and Stripes.

All of this fascinates journalist and marketing analyst Michael J. Weiss, who has written extensively about Claritas and its clusters (his latest book is “Latitudes and Attitudes,” Little Brown, 1994).

In fact, Weiss maintains, “Today you can see the country not as 50 states but as 62 distinct lifestyle types.” These methods of typing, he said, “are very helpful for explaining how diverse we have become in this country. . . . [These] kinds of clusters, with names like Greenbelt Families and Big Fish-Small Pond, are a lot more reflective than just saying, ‘Oh, I live out in the suburbs.’ ”

As an example, Weiss cited two groups of rural dwellers. The first, called New Ectopia, is made up of people who moved to the country but kept their urban tastes. “They take art and drawing classes, and they tend to drive imported cars,” he said.

“On the other hand, another basically rural lifestyle type known as Shotguns and Pickups has not gone to college, takes no adult education classes, and their idea of a status car is a Cadillac, not a Lexus.”

If you’re a business person considering opening an art supply store or a Cadillac dealership, this can be invaluable information.

Equifax client Brinker International, which develops new restaurant ideas, or “concepts,” is a case in point. Mark Acosta is chief market analyst for Brinker.

“We try to figure out where our customers live and place the restaurants there,” Acosta said. “Equifax has really been helping us understand who our customers are.” Chances are that if Chili’s (one of Brinker’s Los Angeles area restaurant chains) is a regular haunt, you fall into one of these lifestyle categories: Upper Crust, Urban Singles or Good Family Life. Acosta said these groups tend to be among Brinker’s best patrons.

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Finding the most congenial neighborhoods for businesses is only one of several ways consumer segmentation can produce useful marketing data.

Say you’ve got a product that may appeal to widely divergent potential customers. Who are they? Where do they live and how do you reach them?

Burglar alarms are a good example. Wealthy upscale suburbanites are probably the largest market for the devices. These mostly two-income families are away from home much of the time and install alarms to prevent burglars from making off with their valuable goods while the house is empty.

The second market for burglar alarms tends to be single females who live in high-crime or high-mobility rental areas. Their motive for purchasing alarms has nothing to do with protecting valuable property. It is fear that someone will break in and do them physical injury while they are at home.

One product, two customers. They don’t live in the same neighborhoods, they don’t consume the same media, they don’t have similar family structures and, above all, they don’t buy the product for the same reason. Armed with this information, burglar alarm marketers can reach the correct neighborhoods with carefully designed advertisements that will have unique appeal to these dissimilar groups.

You can also see consumer segmentation data at work in the aisles your local supermarket.

“Every product has a unique profile,” said Mancini, and knowledge of who is likely to buy that product helps manufacturers decide how to stock store shelves. “Stores in certain neighborhoods should have three feet of imported beer shelf space as opposed to six,” Mancini said. “That goes for Cheerios and Frosted Flakes as well as beer, and whether it should be on the top or bottom shelf.”

If this precision in predicting and targeting your buying habits makes you nervous, you’re not alone. “We’ve done studies on consumers’ sense of privacy, and we’ve found that the first knee-jerk reaction is fearing a loss of control over information about them,” said Equifax’s David Tedrow. “Consumers may not like the idea of collecting data on them, but they love the fact that local stores are stocked with products they want to buy.”

If you’re also chafing under the notion that your lifestyle can be predicted according to your neighborhood, just think of it as anthropology in action. Robin Page of Page & Partners Ltd. in Atlanta originated the “tribes” concept and is considered a grand old man of the consumer segmentation business.

“Buying patterns play an essential role in setting social rank in the United States,” Page said. “Here there are no social classes: rank is won by effort and demonstrated by consumption.”

Page makes a vigorous case for the “birds of a feather” concept and dismisses the idea that neighborhoods change significantly when people move. “That’s bull,” he said. He maintains that although people regularly move in and out of neighborhoods when their lifestyles change, the character of a neighborhood will remain the same.

According to Page, several factors make the vast majority of neighborhoods highly stable: schools, real estate values, job opportunities and tax structures among them. “Neighborhoods change very glacially,” he said.

He admitted that dividing the nation into colorful stereotypes based on lifestyle is more art than science but quickly declared that even if it’s not entirely foolproof, the system is based on ironclad truths.

“When a person moves to a neighborhood,” Page said, “they’re doing it because they want to be near their perceived peers.” And once they arrive in the new neighborhood, according to Page, people become even more like their new neighbors. “People do as the Joneses do,” he said. “The lady decides to have this kind of curtains because she saw them in the home of someone she admires. That’s how people develop their taste, through emulation.”

Weiss concurs that our surroundings influence our lifestyle choices. “It has a big impact on people’s lives, what products they see in the stores, what stores they have nearby, what commercials they see on their favorite shows, because businesses all use this data to make these decisions,” he said.

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And think again about those commercials you see (or zap) as you watch your favorite television programs. “We know for each of these [lifestyle] segments what TV shows they watch,” said Equifax’s Tedrow. Advertising time on two shows with the same or similar Nielsen ratings (say “Roseanne” and “Seinfeld”) may cost the same.

But because each show typically appeals to a different audience, advertisers armed with consumer segmentation data can make more cost-effective decisions about how to allocate expensive media dollars.

“It also helps advertisers decide what kind of images they should put in their commercials,” Weiss said, [whether it should be] “yuppies finishing a tennis game and having an imported beer [or] a blue-collar worker who just finished building a road and wants to relax . . . with a domestic beer.”

Maybe by now you’re convinced that you may have something more than a street name in common with your immediate neighbors, but you’re feeling resistant to the idea that your spending habits are up for grabs by those with designs on your money.

Relax, Weiss said. He’s quick to point out that there are still considerable limitations to this sophisticated marketing system. “This idea that we’re all tied up in consumption is a somewhat myopic view,” Weiss said. “I think Americans have an independent free spirit and control over our actions.”

Besides, he said, “Marketing is an inexact science. If you send a mailer to everyone in the community, you’d maybe get a 1% return. If you target the mailing, you might get a 5% return.” That’s a huge improvement in return rate, Weiss noted, but he added, “That still means 95% have ignored it.

“Marketers realize they don’t have that much effect,” Weiss said, “so they’re always looking for that little lift, that edge, trying to figure out how . . . you influence people.”

By getting them where they live; that’s how.

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You Are Where You Live

BURBANK 91504 Drinks: Tequila Drives: Toyota Reads: People Watches: Entertainment Tonight Eats: Taco Bell For Fun: Home Photography

CALABASAS 91302 Drinks: Gourmet Coffee Drives: Mercedes, BMW Reads: Wall Street Journal Watches: Masterpiece Theatre Eats: Pita Bread For Fun: Country Clubs

COSTA MESA 92626 Drinks: Miller Light Drives: Imported Subcompact Reads: Money Watches: Seinfeld Eats: TGI Fridays For Fun: Hiking / Backpacking

CULVER CITY 90230 Drinks: Imported Beer Drives: Acura, Mercedes Reads: Vanity Fair Watches: Meet the Press Eats: Brie For Fun: America On-Line

LAKEWOOD 90712 Drinks: Cognac/Brandy Drives: Mazda or Toyota Trucks Reads: New York/Shape Watches: Pay per View Concerts Eats: Entenmann’s Snacks For Fun: Ice Hockey, Gambling

WHITTIER 90602 Drinks: Coors Drives: Nissan Reads: National Enquirer Watches: Hard Copy Eats: McDonald’s For Fun: Health Club