After creating profiles, the next step is to use these profiles to identify the segments who are your best customers so that you can better understand them and find more customers like them. In Business Analyst, you do this by creating target groups of segments that can then be used in reports, maps, and charts to further analyze customers and markets.
Target groups are segments that are selected and grouped together because you want to target these segments for further analysis. Usually the segments in a target group are selected based on similarities these segments share. Two examples of target groups are the Tapestry LifeMode Groups and the Tapestry Urbanization Groups. ESRI combined all 65 segments into 12 LifeMode groups based on lifestyle and life stage composition. For example, Group L5 Senior Styles includes the 9 segments with a high presence of seniors. ESRI also combined all 65 segments into 11 Urbanization Groups based on geographic and physical features such as population density, size of city, location in or outside a metropolitan area, and whether or not a segment is part of the economic and social center of a metropolitan area. For example, Group U1: Principal Urban Centers I includes 8 segments that are mainly in densely settled cities within major metropolitan areas.
The best way to create target groups is to identify target segments based on your customer profile. By using the Tapestry customer profiles, you can identify your target customers using a combination of two factors: Index and Percent of Customers. These two factors, in different combinations, can define your Core, Development, and Niche target groups.
Segments with a high percentage of your customer base are indicators of your Core Segments. Core Segments are those that not only make up a large percentage of your customer base but also have an above average index, indicating likelihood to be a customer. Customers in this segment make up a larger percentage of your customer base than the percentage that they make up of the market area. These segments represent loyalty and good opportunity.
Developmental segments are the segments that make up a significant percentage of your customers and of the market area but do not have an above average index. Developmental segments are important because they represent a significant portion of your customers but also represent areas with households that have not yet been reached. They represent potential for loyal customers.
Niche segments are those that do not make up a significant percentage of your customers but do have an above average index. Households in these segments are very likely to be good customers, but they do not make up a large percentage of your current customer base. Niche segments represent opportunities when exploring new market areas for expansion and growth.
Using Create Target Groups, you can identify and create target groups based on your customer profile to be used in reports, maps, and charts to find and target other geographic areas that have a high concentration of your target segments.