BusinessDecision - Know Your Market

Turning Data into Information

Small Business Growth and Development

CIVICTechnologies
www.librariesbuildcommunities.com
Copyright. 2007. CIVICTechnologies, Inc. Confidential and Proprietary.

Turning Data into Information 2
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Part 1: What do small businesses need and want?

How do libraries meet the challenges faced
by small business?

Small Business Connections, June 8, 2007 CIVICTechnologies
ULC Audio Conference: Copyright. 2007. CIVICTechnologies, Inc. All Rights Reserved.

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What do small businesses want? They want to be profitable.
1. Find new customers to grow

2. Identify the best location

3. Evaluate competitors

4. Control marketing costs by targeting direct mail and ad dollars

5. Meet regulatory and tax requirements

6. Learn how to manage finances

7. Learn how to operate a business day in and day out


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What do small businesses need to get what they want?
> Reliable, predictive information

Information to support their business plan
• Consumer market data
• Market segmentation data
• Geographic information systems mapping tools

Access to this information
• This positions the public library as the trusted intermediary to
bridge the data gap


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What challenges do small businesses face?
1. They don’t know what’s available

2. They don’t know where to find it

3. They can’t afford the time or money to access it


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What can the library offer to meet small business needs?

Consumer market data

Market segmentation data

Geographic information systems mapping tools


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Consumer market databases
> Focus on business to consumer market

Provide information about
• Market dynamics
• Big picture trends with forecasts

• Market characteristics
• Who and how much

• Consumer expenditures
• CEX from the U.S. Department of Labor and private market surveys

• Specific industry
• Comparing supply and demand


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Other database types
Business to business databases Focus on B-2-B relationship, not B-2-C
• DB Million Dollar Database
• InfoUSA

Original source databases Small business owners and entrepreneurs don’t
have time or interest in performing original
• Census
research
• Bureau of Labor Statistics
• Other federal and state agencies

Full text databases Articles are informational and inspirational and
provide models and case studies, but don’t find
• InfoTrac
new customers or the best place to locate a
• Newsbank store

Investment databases Great if you’ve already made your money
• Standard and Poor’s
• Morningstar
• Mergent


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Market dynamics
> Is the market growing,
static, or shrinking?

• Three time periods

• Different size study areas and
types like rings or drive times

• A whole range of data
categories


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Market characteristics
> Socioeconomic and
demographic
fundamentals

• Comparative analysis at
different local, state, and
national scales

• Range of data categories

• Easily visualized using
charts and graphs


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Consumer expenditure
> How big is the
market?

• Quantify household
spending across a range
of product and service
categories

• Customized mapping
capability enables the
data to be easily
visualized


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Market potential
> By industry product
or service category

• Cross compare categories

• Determine if there is
sufficient market size

• Compare with a national
index

• Identify amount spent per
household and for all
households in a study
area


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What is psycho-demographic market segmentation?
Classifies U.S.
neighborhoods
into 65
segments

Each segment defines distinctive households using over 80 data attributes
• Demographic, socioeconomic, residential, lifestyle preferences

Analyzed geographically
• County, city, zip code, census tract, census block group

> Tapestry is a type of market segmentation system


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Three examples of the 65 Tapestry market segments
Laptops and Lattes
• Residents are single persons who live alone or with a roommate
• Have a median income of more than $87,000
• Prefer to live in major metropolitan areas
• Choose to shop at upscale establishments

Aspiring Young Families
• Residents are young with a median age of 30 years
• Many are start-up families, either married couples or single parents, with children
• They live in large, growing metropolitan areas in the South and West
• Half are renters; many reside in townhouses

International Marketplace
• This market is the cutting edge of immigration
• Represents a blend of cultures and household types
• Most are renting apartments in multi-unit buildings, but over 30% have purchased a
home
• Primarily located in gateway states on the coasts


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Who uses market segmentation and what do they do with it?
> In a word, most big companies to be more profitable
Banking
• Profile customers by branch trade area

Retail
• Stock store merchandise by consumer type

Government
• Determine usage of services by population segments

Health care
• Develop community outreach programs

Insurance
• Create products by life-stage

Utilities
• Understand product usage by household


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And this is the dirty little secret of market segmentation

It is used by most large companies

> But not even known by small business

Public library distribution can change this equation
and level the playing field for small business


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Geographic information systems (GIS)
Sophisticated mapping tools for the non-expert
• Popular web applications are the tip of the iceberg

Thematic maps are the key

They display data from a range of databases
• Census 2000

• 2007/2011 demographic data

• Tapestry market segmentation system

• Consumer expenditures

• Retail marketplace


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Consumer market analysis and GIS
> Thematic maps are organized:
Around a site
• Enables “drill down”
• Address, street intersection, dot on
the map
• Study area analyses types
• Rings
• Drive-time
• Unique territory

In a geographic area
• Enables “breadth”
• CBSA, DMA, Congressional District,
County, City/Place, Zip Code, Census
Tract


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Part 1 Summary
> How can the library meet the challenges faced by small
business?

1.Show small business customers what’s available

2.Show small business customers where to find it

3.Provide small business customers with access to information to
support their business plan
• Consumer market data
• Market segmentation data
• Geographic information systems mapping tools


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Part 2: Case study

Demonstrate what’s available in GIS-based consumer
market and market segmentation databases


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Case study background info
> “I found
BusinessDecision on the
local library’s web site!”

• Yoga studio

• Located in Los Angeles County

• New business owner

• Woman, married with two
kids 7 and 10

• Never before owned or
planned a business

• Compiled two 3” notebooks
of BusinessDecision reports
and maps plus her own Excel
tables


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Competitor analysis
> Understand your competitors success factors and identify
their weaknesses

Who and where they are located
• Eight competitors clustered together but located five miles away

Anecdotal information
• Lesson price competitive at $15
• Value added features offered: juice bar, child care, nutrition counseling, etc.


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How big is the market?
> Number of people in
the catchment area

• Range of data categories

• Tracks change over time:
Census 2000, current year
estimate, five year forecast

• Tracks counts across study
areas (e.g., radius, drive
time)


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How many people take yoga lessons?
> Market penetration:
percentage of people
who “buy” yoga services

• Demonstrates market share
as a percent of adults


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How many people take yoga lessons?
> Market
penetration:
percentage of
people who
“buy” yoga
services

• Calculates yoga
market share
unique to each
competitor


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Target market
> Sex and age

• Women age 18 to 30ish
without kids

• Women age 30ish + with
kids

• Tracks change over time


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Target market: women
> Sex and age

• Compares age groups
for each competitor

• Allows for cross
comparisons between
competitors and age
groups


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Target market: families with disposable income for lessons
> Consumer
spending

• Detailed report on
recreation
expenditures

• Yoga lesson fees are a
subset of Fees for
Recreational Lessons

• This report indicates
market size by
expenditure and
comparison to
national average


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Target market: families with disposable income for lessons
> Consumer
spending

• Generalized report

• Enables targeting
of households by
disposable income


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Market segmentation analysis using Tapestry
1, 3, and 5 mile radii around each competitor

Identify the top segments

Compare these to alternative locations to find one that matches


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Typical segmentation report
> One mile radius
around each
competitor

• In a one mile radius,
over half of the
market, 53.5 percent
of households are
“Trendsetters”

• The top three
segments account for
80 percent of
households


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Segmentation summary for competitors and possible location
> Compare segments between competitors

Segments most likely to practice yoga
• Trendsetters
• Urban Chic
• Laptops & Lattes
• Pacific Heights


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Yoga studio site selection
Analyzed preferred and
alternative sites
• Comparable Tapestry
segments
• Target sex, age, and income
profiles

Gathered key data to feed
into business plan revenue
model
• Market size
• Market share taking yoga
lessons
• Projected revenue


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Revenue model
How much revenue will a business make, realistically?
• This is one of the most difficult things an entrepreneur has to calculate
• With consumer market and market segmentation data, there is a reliable
way to figure it out

1. Market size = number of people in one mile radius x yoga market share
23,606 people x 5.9% share = 1,392 people

2. Number of visits per month = market size x participation frequency
1,392 people x two lessons per month x 12 months = 33,408 lessons

3. Projected revenue = number of lessons x price of lessons
33,408 lessons x $15 per lesson = $501,120 projected revenue


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Part 2: case study conclusions
The library put information in the hands of an entrepreneur to
demonstrate the viability of a new business

Without the library, this patron would not have had access to the
information she needed to evaluate the potential business opportunity

“I found BusinessDecision through the local public library website. I was amazed at the detailed information
accessible to me, information I could not find elsewhere and, as it turns out, couldn’t have afforded on my own.

“BusinessDecision let me, an individual, take my business concept and test it through in-depth demographic and
Tapestry segmentation reports. The data I’ve gathered through BusinessDecision has given me the proof I needed to
develop my business plan and the confidence to seek financing to realize my dream. The library is providing an incredible
service to entrepreneurs like me by offering BusinessDecision.”

- Alexia Cirino
Library Patron, a California Public Library


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Contact information
Marc Futterman, president/ceo

Toll free: (888) 606-7600

maf@civictechnologies.com

If you would like to view this
presentation digitally visit:


www.businessdecision.info


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