Some of EA's data are modelled to postal codes and Forward Sortation Areas (FSAs).
Postal Codes
Postal geography, defined by Canada Post, facilitates mail delivery. The smallest unit is the postal code, which is an alphanumeric code representing a series of addresses. The technical term for a postal code is FSALDU, which stands for Forward Sortation Area Local Delivery Unit.
Let’s break down this sample postal code: L5C 1L7
L5C = Forward Sortation Area
1L7 = Local Delivery Unit
Postal codes start with the letter A in Newfoundland and work their way to X in the North. Quebec postal codes all start with letters G H and J. All Montreal postal codes begin with H. Ontario has K L M N and P. All postal codes in the City of Toronto begin with the letter M. The Northwest Territories and Nunavut are denoted with an X.
Point Data
Postal codes play a vital role in precisely identifying locations in Canada. Every address in Canada, including businesses and industrial areas, has a postal code. More than 850,000 of these are assigned to residential areas nationwide, each linked to specific coordinates.
Postal codes generally represent groups of addresses (e.g., you and your neighbours on your street may share a postal code), helping ensure insights gained from a postal code remain privacy-compliant.
So why is the postal code useful?
- They're practical – all consumers know their postal code, and they're easy to collect.
- They're small (geographically) – our clients get granular detail for robust analysis of customers and markets.
- They're actionable - they allow for the execution of marketing strategies driven by data (mailing or other campaigns, etc.).
- And best of all, they're linkable to tens of thousands of EA data points. This allows you to get a full understanding of customers through the lens of EA data!
Postal codes are crucial for targeted marketing and demographic analysis because they allow businesses to pinpoint specific areas for advertising campaigns, tailor product offerings, and analyze consumer behaviour patterns based on regional demographics. Plus, since almost everyone knows their postal code, it is an easy data point to collect!
To assign a postal code's coordinates, we use the centroid-calculated distribution of households. On average, the number of households in a postal code is 17 in urban areas, but 100s can share a single one in apartments/condos. So, if you're looking at the average age of people in a postal code, it could represent everyone living in one condo building.
Why are certain postal codes not appearing in our demographic analysis?
Some postal codes are solely business postal codes and will not show up in your demographic analysis. Look at these postal codes of PRIZM Lifestyle Stages:
Each point is tied to a postal code. Notice how two downtown Toronto FSAs contain few or no postal codes. These gaps can contain business-only postal codes, such as TD Bank Tower located in M5K.
Latitude/Longitude
Despite appearing as singular points with latitude and longitude coordinates, postal codes usually represent multiple households.
In urban areas, postal codes sit on either side of a road – for example, this area of Vancouver below. A postal code can also represent an entire apartment or condo building.
In rural areas, a single postal code can serve many communities. Look at these postal codes within this rural FSA - V0P. Each postal code covers wide areas:
If we zoom in a little more, we can see that these rural addresses with the postal code V0P 1R0 are kilometres apart. We can also see that the centroid is some distance away from the rural addresses:
Rural Postal Codes
Rural postal codes present a special challenge when used for segmentation analysis, so we recommend that our clients collect both the postal code and the community name.
Why? As we see in the example above, a rural postal code can represent many different communities. A postal code plus community name provides more accurate geocoding and PRIZM assignment.
For example, the rural postal code V0P 1R0 (shown in the image above) covers many kilometres and represents multiple communities across the area. There may be differences between the V0P 1R0 communities, and the community name gives a more accurate idea of the characteristics of the residents. Analyzing each community's profile provides more granularity than the postal code alone.
Did you spot it?
Rural postal codes are noted with a 0 for the second digit e.g., K0A 1A0.
Forward Sortation Areas (FSAs)
FSAs are polygonal regions and respect provincial boundaries, aiding in geographical organization and mail distribution.
There are 1,620 FSAs across Canada (as of July 2023) and they vary significantly in size and population density. Factors such as the presence of businesses alongside households contribute to this variation. The average number of households served by an FSA is approximately 8,000, but the number can range to 60,000 households. The image below shows how dramatically this can vary:
Notice that postal codes aren't necessarily spread evenly, and there are no standard sizes for FSAs—there is no standard number of postal codes within an FSA. FSA boundaries can appear irregular and fluctuate seemingly "randomly," reflecting Canada Post's objective to deliver mail efficiently.
Both postal codes and FSAs vary in size across rural and urban areas.
Ready to move on? Let's learn about Statistics Canada's Census Geography.