Describe the psychological profiling clustering system
Course:- Other Subject
Reference No.:- EM131355071

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Other Subject

Locating the Next Red Lobster Restaurant

From its first Red Lobster in 1968, the chain has grown to 705 locations, with over $2.6 billion in U.S. sales annually. The casual dining market may be crowded, with competitors such as Chili's, Ruby Tuesday, Applebee's, TGI Friday's, and Outback, but Red Lobster's continuing success means the chain thinks there is still plenty of room to grow. Robert Reiner, director of market development, is charged with identifying the sites that will maximize new store sales without cannibalizing sales at the existing Red Lobster locations. Characteristics for identifying a good site have not changed in 40 years; they still include real estate prices, customer age, competition, ethnicity, income, family size, population density, nearby hotels, and buying behavior, to name just a few. What has changed is the powerful software that allows Reiner to analyze a new site in 5 minutes, as opposed to the 8 hours he spent just a few years ago. Red Lobster has partnered with MapInfo Corp., whose geographic information system (GIS) contains a powerful module for analyzing a trade area (see the discussion of GIS in the chapter). With the U.S. geo-coded down to the individual block, MapInfo allows Reiner to create a psychographic profile of existing and potential Red Lobster trade areas. "We can now target areas with greatest sales potential," says Reiner. The U.S. is segmented into 72 "clusters" of customer profiles by MapInfo. If, for example, cluster #7, Equestrian Heights (see MapInfo description below), represents 1.7% of a household base within a Red Lobster trade area, but this segment also accounts for 2.4% of sales, Reiner computes that this segment is effectively spending 1.39 times more than average (Index = 2.4/1.7) and adjusts his analysis of a new site to reflect this added weight.


Psyte 2003

Snap Shot Description


Equestrian Heights

They may not have a stallion in the barn, but they likely pass a coral on the way home. These families with teens live in older, larger homes adjacent to, or between, suburbs but not usually tract housing. Most are married with teenagers, but 40% are empty nesters. They use their graduate and professional school education - 56% are dual earners. Over 90% are white non-Hispanic. Their mean family income is $99,000, and they live within commuting distance of central cities. They have white collar jobs during the week but require a riding lawn mower to keep the place up on weekends.               

When Reiner maps the U.S., a state, or a region for a new site, he wants one that is at least 3 miles from the nearest Red Lobster and won't negatively impact its sales by more than 8%; MapInfo pinpoints the best spot. The software also recognizes the nearness of non-Red Lobster competition and assigns a probability of success (as measured by reaching sales potential). The specific spot selected depends on Red Lobster's seven real estate brokers, whose list of considerations include proximity to a vibrant retail area, proximity to a freeway, road visibility, nearby hotels, and a corner location at a primary intersection. "Picking a new Red Lobster location is one of the most critical functions we can do," says Reiner. "And the software we use serves as an independent voice in assessing the quality of an existing or proposed location."

Discussion Questions-

1. Visit the Web site for PSTYE 2003. Describe the psychological profiling (PSYTE) clustering system. Select an industry, other than restaurants, and explain how the software can be used for that industry.

2. What are the major differences in site location for a restaurant versus a retail store versus a manufacturing plant?

3. Red Lobster also defines its trade areas based on market size and population density. Here are its seven density classes:

Density Class


Households Per SQ Mile    


Super Urban






Light Urban



First Tier Suburban



Second Tier Suburban








The majority (92%) of the Red Lobster restaurants fall into three of these classes. Which three classes do you think the chain has the most restaurants in? Why?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Other Subject) Materials
How does the 4th Amendment apply to police entry into a person's home? What is needed for police to obtain a warrant to search a home? Under what circumstances can police ente
What is likely to be the main difference between a traditional Hindu understanding of the cycle of reincarnation versus the typical belief about reincarnation in the United St
Before becoming president, Thomas Jefferson viewed the westward migration of Americans with...  apprehension because he believed the country was growing too large to be govern
What information about race and ethnicity in the United States has helped you better understand or relate to specific minority groups? Have you learned something new about you
Compute the company’s net sales for the year. Compute the company’s total cost of merchandise purchased for the year. Prepare a multiple-step income statement that includes se
Determine the maximum axial load at the base of the intermediate column B. Assume roof load is equal to floor load and use 1.2 D + 1.6 L load combination. Ignore self-weight
Identify two forms of police deviance cited in the Rampart Independent Review, found in the Internet link above. Begin your search in the Table of Contents of this review foun
Choose one of the texts we've read thus far (one of the poems by Whitman, Hughes, or Campo; the essay by Campo; or the stories by Gilman or Corin) and focus on one important