There’s a new marketing strategy in town: the economic barbell, where a company looks at the high and low ends, ignoring the traditional middle class focus of so many consumer-oriented industries. And GIS technology can help those with business intelligence degrees navigate the tricky path from business as it has been to business as it might become.
For an example, look at Frito-Lay, a division of PepsiCo, which is moving beyond the middle class. Frito-Lay president Tom Greco calls it market “bifurcation.” Instead of counting on the big middle of the American consumer economy, he’s counting on splitting focus between two distinct markets, because, as Ann Mukherjee, the company’s chief marketing officer, says, “the rich are getting richer and the poor are getting poorer.” That’s hardly a novel observation. But it’s a serious change when Frito-Lay, which is an important part of PepsiCo’s operations, starts to put that into practice. The issue is growth.
According to Goldman Sachs, as reported by the Wall Street Journal story, the part of the snack industry targeting the lower end of the economic spectrum is predicted to grow by four percent this year. The premium part of the market has grown seven percent in the last two years. The middle? Expect about two percent growth.
Not that the middle market goes away — far from it. But it won’t drive the growth the company needs. In that sense, Frito-Lay is a lot like another brand icon. Procter & Gamble is also working a bifurcated strategy, only for slightly different reasons. P&G found that as the economic hammer came down on the country (household assets for Middle America grew at 2.4 percent annually from 2001 to 2007 and then dropped 26.2 percent by 2010), many middle class shoppers moved to less expensive products.
Other companies — A.J. Heinz, Citigroup, Family Dollar Stores, and Kellogg are staking out the areas that make most sense for them. How do you manage that effectively? Use geographic information systems, or GIS. The technology allows complex analysis of wide ranges of data that have a connection to geography. A company using GIS can look at household incomes, purchasing intentions, and their own sales by location. Managers can see what geographic regions house the most active purchasers and then look at what products specifically that people buy.
Such patterns will help show if, for a given product line, there seems to be a bifurcation happening and, if so. What the company’s most attractive offerings seem to be. That can help managers create new strategies to deal with the systemic societal changes.