Research: Demographics and Location, Part 2

In my last post, I wrote about how I used a free online tool from Nielsen to research basic demographic information for potential taphouse locations.  Today I want to show how I used another free online tool to gather more detailed information about the same locations.

King County Library System

Because I am a resident of King County here in beautiful Washington State, I have access to the King County Library System.  If you are a resident of King County and are considering starting a business, run out and get yourself a library card if you don’t already have one.  Online, you can verify that you are in the KCLS service area and apply for a card, though you’ll obtain your card faster if you go into a KCLS location and fill out an application in-person.  Many of the research tools provided by the library system are not really affordable for individuals and small businesses, so kudos to KCLS for buying subscriptions and making them available to their patrons online!

If you are not within the KCLS service area, check with the library systems in your area to see if they offer SimplyMap or other similar products.

On the KCLS home page, I scrolled down and clicked on the “Databases” link found under the “Browse for…” header.  On the next page, I selected the link for “Business, Economics & Investing”.  There are a number of databases available here.  KCLS provides YouTube videos to help you use of some of these tools.  I selected the link for SimplyMap.

There was a learning curve with SimplyMap, but the YouTube video helped a lot.  I started by selecting a location.  Here is the list of locations I researched in my last post:

  • 98001 (Auburn)
  • 98002 (Auburn)
  • 98092 (Auburn)
  • 98010 (Black Diamond)
  • 98038 (Maple Valley)
  • 98042 (Maple Valley)
  • 98027 (Issaquah)
  • 98029 (Issaquah)

I clicked on the “Locations” tab, then selected “Find location by: Zip Codes” and entered the first zip from the list, 98001, then clicked the “Use this location” button.  A little box popped up at the bottom of the screen to let me know that the location was selected, but otherwise I couldn’t tell that I had accomplished anything.

Next I clicked on the “Variables” tab.  This is where I got to pick from some awesome data sets.  One of the categories listed is Consumer Expenditure — how much money people spend on things.  That sounded like something I’d like to know, so I selected it.  Then it prompted me for a “Folder”, so I selected 2010 to get the most recent map data.  The list for 2010 expanded to offer about a dozen industry types.  I chose “Food”, because it seemed to most closely match my business.  Food expanded into three subcategories, one of which was “Alcoholic Beverages”.  That expanded into two more categories, from which I selected “Away from Home”.  Finally, an actual list of variables appeared, one of which was “Beer and ale away (Household Average)”.  That sounds like some good data to me, so I selected it.  Another little box popped up at the bottom of the screen, but otherwise nothing changed.

SimplyMap - 98001 Beer Away %

There must be a better way to display this information.

It took me a while to realize that, in the background, the map had populated with the information I requested.  To actually see the map I had to close the window I’d been using to select the location and variable.  The resulting map was fugly to look at. I could have tweaked the colors in the tool if I wanted to pretty it up.  From here it was just a matter of associating the color of the zip code with the numbers in the legend, which in this case reads “52.76 – 55.22”.  Unfortunately, I have no idea what those numbers mean!

I poked around in the help and did some searching online, but I was unable to find anything to help me clarify exactly what this data means.  If you know, please leave a comment.  Because the numbers in the legend range from 0 – 100, I assumed they represent percentages. So, approximately 54% of households in the zip code 98001 went out and had a beer in the past year?  That’s what we’ll say until someone tells me otherwise.

Beer and ale away %

New column on the sheet: Beer and Ale Away %

I recorded the data for the rest of my target zip codes and stepped back for a look.  It didn’t actually go into the level of detail that I had hoped, but one thing did stand out:  Auburn looks like an even worse option than it did before.  Not only do the Auburn zip codes have lower incomes and lower spending, but when they do spend their money it doesn’t seem to be on beer.  Conversely, Maple Valley and Issaquah have beer spending habits at the top of the range.

The other variable I wanted to look at was how much money these potential customers typically spent on beer.  These numbers were even less telling.

demographics - by zip code xls - beer and ale away $

New column on the sheet: Beer and Ale Away $

Fortunately the map can be broken down into smaller chunks called block groups, and by looking at that data I can identify areas within the zip code that spend more on beer.  Theoretically, these areas are where I should be looking to locate the taphouse.

After some fiddling around, I was able to create custom locations in SimplyMap that grouped together my common zip codes.  This pic shows the block groups within the highlighted 98010, 98038 and 98042 zip codes, and the amount of money they spent on beer away from home.

SimplyMap - Maple Valley Beer Away $

This view shows better detail about who is spending the most money on beer.

There is a lot more data available here. In my next post I’ll be looking closer at the buying habits of my target markets.

Research: Demographics and Location

In my last post, I wrote about my experience researching competition for my proposed taphouse.  I did the research at the behest of my advisers at the Small Business Assistance Center and they didn’t steer me wrong.  In the process, I learned a great deal about my customers and what my competition is doing to attract them.

Next, I wanted to learn more about where I should locate the taphouse.  Until recently, my plan was to find something in downtown Auburn, but I decided that as long as I’m starting over from scratch I should also open myself to the idea of doing business elsewhere.  What do they say about what makes a business successful?  Location, location, location?  Well, that may not truly be what they say, but the sentiment is spot-on.  An otherwise great business in a poor location may never reach its potential.

To start, I looked at a few basic statistics for a number of zip codes immediately around my own.  I used a free tool provided by Nielsen, the same company responsible for TV viewership ratings.  Enter the zip code for the area of interest and you get a quick snapshot of demographic data.

Neilsen Data for 98092

More data!

I chose to examine a few specific details:

  • Population, which gives me an idea of how many potential customers live in the target area.
  • Median income, which gives me an idea of how much discretionary income these potential customers might have to work with.
  • Per-household spending, which gives me a good idea of how much money these potential customers tend to spend.

I selected the following markets:

  • 98001 (Auburn)
  • 98002 (Auburn)
  • 98092 (Auburn)
  • 98010 (Black Diamond)
  • 98038 (Maple Valley)
  • 98042 (Maple Valley)
  • 98027 (Issaquah)
  • 98029 (Issaquah)

I chose these markets for the following reasons: 1) They are close to my home, 2) They are areas I expect to have income and spending levels that will support a luxury business, and 3) They are areas I think have market space for a taphouse.  Arguably, I’ve left off a few good potential zip codes and a couple of good data points.  The good news is I can easily do this analysis again with any other zip code or data point.

Nielsen demographics by zip code XLS

Numbers and colors. This must be important.

As I did with my competition research, I created a spreadsheet to help me track and compare the data.  Using colors, I grouped the results into “neighborhoods” that make up a common market.  There’s one color each for Auburn, Maple Valley/Black Diamond, and Issaquah.

Looking at these numbers, the Issaquah and Maple Valley markets stand out as having the best overall demographics: Issaquah has the highest per-household spending and median income, and Maple Valley has the highest population but only slightly lower per-household spending.  Auburn, unfortunately for me as a hometown supporter, doesn’t pan out as well for a luxury market–there are more people, but significantly lower income and spending.

In my next post, I’ll discuss another online tool, SimplyMap, that helps me understand my demographics in different detail.