Site location decisions can be made more easily when a company knows who its customers are.

Compusearch Micromarketing Data & Systems recommends a six-step process that will allow Home Store to both rank and select additional major Canadian markets and then locate an optimal site within that market.

1. Collect the six-digit postal codes of existing customers. This can be taken right from Home Store’s cash register or can be collected using a simple survey.

2. Determine the exact size and shape of the existing store’s trading area. Create a customer distribution map by plotting the postal codes of existing Home Store customers on a map. This will enable the company to determine a primary trading area. Typically, retailers use 50% to 70% of their existing customer base to describe the primary trading area of an existing location.

3. Analyze key variables that exist in Home Store’s primary trading area. Examine variables that specifically relate to the company’s business, such as expenditures on home improvement products and age of the dwellings.

4. Identify exactly who Home Store’s customers are. Profile the company’s customers by linking their postal codes to Compusearch’s Lifestyles segmentation system.

Lifestyles is a demographically driven clustering system that enables Compusearch to determine who the company’s customers are, as well as their buying patterns.

A profile can determine to what segments the company has a strong appeal, as well as areas for potential opportunity.

5. Analyze and rank other markets. Using the information obtained from the key variables in Home Store’s existing trading area, as well as its specific target lifestyles profile, search and rank all other major markets based on their concentration of the variables that are important to Home Store’s success.

6. Select a specific trading area. Using the same methodology, analyze and rank components of a specific market based on Home Store’s key variables and target group.

Divide the market into small components by using either grid squares or standard levels of geography, to determine the highest potential areas of opportunity. Other elements, such as competition and the expected draw of the store, as determined from step two, should be factored into this step.

For more information, contact Bruce Kerr, director, Retail Marketing Group, Compusearch Micromarketing Data & Systems, 330 Front St. W., Suite 1100, Toronto, Ont., M5V 3B7. Tel: (416) 348-9180, fax (416) 348-9195.