Prizm

PRIZM, short for Potential Rating Index by ZIP Market, is a geodemographic consumer segmentation system developed by Claritas (a Nielsen company). It classifies U.S. households into 66 distinct segments, grouped into 14 social groups, based on a combination of demographic, socioeconomic, and psychographic variables. The system links each ZIP code to a segment profile, allowing marketers to analyze consumer behavior and purchase propensity at the ZIP-market level.

Methodology: PRIZM draws on U.S. Census data and proprietary consumer survey data to derive variables such as age, income, education, home ownership, family status, ethnicity, urbanicity, and lifestyle indicators. Each ZIP Code is assigned to a segment; profiles describe typical household characteristics, living environments, and consumer preferences for categories like travel, technology, and family activities. Updates refresh segments and incorporate more recent data; versions include PRIZM Premier and subsequent iterations.

Applications: Used in market research, media planning, direct marketing, retail-site selection, and geographic targeting; helps advertisers tailor messages and product assortments to relevant neighborhoods; supports audience targeting in digital campaigns when integrated with location data.

Limitations: ZIP-level aggregations may mask intra-ZIP variation; the approach relies on inferred behavior from aggregates; data lags may reduce accuracy in fast-changing markets; stereotyping or misinterpretation risks exist if segments are treated as precise descriptors rather than general tendencies; primarily used in the United States.