Logical 07030 - Customer Segment Independent Characteristics

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Subject Area Concepts

The Customer topic (the parent of this subject area topic) introduce the concept of independent consumer-customer characteristics.  Independent characteristics are innate customer properties and traits that describe them independently of observed behavioral interaction with the retailer.  This subject area presents entity types that describe customer demographic, psychographic, geographic and interests/activities in great detail.  A controlled vocabulary maintained by the retailer defines the attributes that describe consumer-customers.  The controlled vocabulary is implemented as a set of reference tables.  This approach ensures that all independent characteristics used to describe customers as owned attribute are consistent with named categories used to segment customers.

ARTS Approach to Consumer Customer Segmentation

ARTS approaches the segmentation of consumer-customers by first identifying, defining and enumerating values for different kinds of characteristics using reference tables.  The use of reference tables enables retailers to establish a controlled vocabulary for describing their consumer-customers.  The reference tables are applied to Person and Organization entity types as foreign keys (which is how the controlled vocabulary is enforced).  ARTS supports a set of characteristics applicable to individual Person party types and a separate set of characteristics applicable to Organization party types.

The reference table entities for individual person characteristics are contained in the Controlled Vocabulary for Person Characteristics (light yellow) block.  Person characteristics are informally grouped into a demographic, psychographic, geographic, activity/interest, diet and health condition categories.  Collectively the entities provide a very detailed description of the individual person.  The characteristics identified, named and enumerated in each reference tables are associated to a person through foreign key relationships as shown in the Person entity type.

The reference table entities for organization characteristics are contained in the Controlled Vocabulary for Organization Characteristics (pink) block.  It contains reference tables that define enumerated values for characteristics that apply to organizations.  The controlled vocabulary principle and foreign key implementation technique used for person characteristics applies to organization as well.

Composite Segmentation

The Person and Organization entity types contain atomic-level detailed characteristics that retailers may use directly for classification and analysis.  In addition to this atomic level treatment of describing people and organizations, ARTS provides a set of segmentation entities that allow retailers to aggregate the atomic level characteristics into composite segments.  These entities are contained in the Composite Segment (light blue) block.  Composite segments are named sets of customer characteristics and enable retailers to identify, name and classify people and organizations using combinations of atomic level characteristics.  The PRIZM market segmentation service offered by A.C. Nielsen is a good example of how individual customer characteristics may be aggregated into named segment like "Upper Crust", "Pools and Patios", etc.  With this structure, ARTS enables retailers to define composite segments specific to their business.

Composite segments are provided to aggregate different kinds of person and organization characteristic including:

Demographic composite segment (CompositeDemographicSegment);

Psychographic composite segment (CompositePsychographicSegment);

Health composite segment (CompositeHealthSegment);

Geographic composite segment (KeyCustomerGeographicSegment);

Key individual customer composite segment (KeyIndividualCustomerCompositeSegment) - a composite of composite segments that applies to individual key customers.  This composite of composites is important because it combines demographic, psychographic, and health composite segments into a single named  "genus" segment for marketing and analysis purposes; and

Key organization customer composite segment for organizations (KeyOrganizationCustomerCompositeSegment).

By design, the way these composite segments are used and controlled is determined by the retailer.  ARTS is providing a flexible data model.  Retailers need to define and impose reasonable constraints to ensure that they have a practical composite segmentation strategy.

Entity-Attribute-Value Extensibility(EAV)

In addition to the predefined person and organization attributes, this subject area contains entity types that allow retailers to add their own attributes to those provided in the base tables.  The extensibility is implemented using an EAV structure.  While flexible this kind of structure should be used only for attributes that apply only to a subset of persons, organizations, households and anonymous parties.  EAV relational designs do not perform well on densely populated tables.  They are included in the ARTS model to handle outlier (sparsely populated columns) scenarios.  Where retailers have a need to add owned attributes that apply all persons, organizations, households and anonymous parties they should append the columns to the appropriate tables as owned attributes.

Customer Segmentation Based on Behavior

Logical 7030 paints only a partial portrait of retail consumers-customers.  Retailers must also capture and analyze customer behavior as a prerequisite to understanding their prospective, active and inactive customers.  Because consumer-customer behavior is tied closely to the concept of conversions (i.e. consumer transitions from prospects to visitors, visitors to shoppers and shoppers to customers) behavioral segmentation is addressed in Logical 07040 - Customer Segment Dependent Behavior under the Customer topic.