Welcome to the Topic “Zip Code Analysis”
Direct marketers utilize this method of analysis to determine where their best and worst prospects are located and/or to determine how well a promotion has performed according to a five-digit ZIP code or ZIP+4 area (see nine-digit ZIP code); this method is also known as the ZIP code count. Direct marketers believe that buying patterns based on the ZIP code can be identified because they assume that people with similar consumption habits reside (or work) close to each other. Consider the following scenario: 100,000 pieces of direct mail are sent out, of which 50,000 are delivered to inhabitants of the 06905 regions, and the remaining 50,000 are delivered to residents of the 10104 area. An examination of the ZIP codes could reveal that 2500 replies came from the 06905 area, whilst the 10104 area only provided 30 responses. This suggests that future mailings should be sent to inhabitants of 06905 rather than residents of 10104, as the former is more likely to receive them. It is possible to determine the level of market penetration a marketer has achieved in different ZIP code locations by performing a ZIP code analysis on an existing client list. For instance, if there are 2,500 clients in an area with a population of 250,000 and a five-digit ZIP code, then the penetration level is 1 percent. An examination of a mailing list based on its ZIP code can also reveal the number of names that can be mailed out from any individual ZIP code area. A ZIP code analysis of a bad debt file can be used to identify, by ZIP code, groups of prospects who are most likely to be bad credit risks. This can be done by determining which ZIP codes have the most delinquent accounts.
As a community that works with geographic data, we frequently use the word “ZIP code” when referring to either a ZIP code or a ZCTA boundary. This is because the two concepts are very similar. Technically speaking, a ZIP code is a non-spatial identification that the United States Postal Service formed as a mechanism to group postal addresses. This was done so that packages could be delivered more efficiently. ZIP codes do not correspond to predetermined geographic limits and are subject to periodic revision as a result of factors such as fluctuations in population and mail volume.
In 2000, the United States Census Bureau established ZIP Code Tabulation Areas (ZCTAs) as a geographic areas corresponding to a ZIP Code. This was done due to the widespread practice of gaining an understanding of neighborhoods and regions by employing the familiar language of ZIP codes. ZCTAs are a norm in neighborhood-level geography, and their boundaries only shift once every ten years.
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Also Read: Population Growth by Zip Code
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