Lets start with the basics NAICS stands for North American Industry Classification System. So what is this classification system, well it is used by businesses and government to classify and measure economic activity in Canada, Mexico and the United States. It has since replaced the SIC systems known as Standard Industrial Classification.
So what does all of this really mean? Well for one, the government needed a universal code system to identify each type of industry in order to properly analyze each industry. Some also refer to this as market segments. The SIC code was the first, but as with most things our industries changed requiring for the SIC code system to be revamped. Once this was done in 2002 and then recently in 2007 they made more revisions due to the ever changing industries.
Prior to 2007 the NAICS codes were not used in Mexico and Canada they had their own systems. In joint efforts to support global economy Mexico and Canada were both incorporated into the systems in 2007. The actual code is a six digit number, the first five of which are usually but not always the same in each of the three countries. The last digit is to identify national industries, the first two numbers designate the largest business sector, and the third digit designates the subsector, the fourth digit designates the industry group and the fifth digit designates the paticular industry.
So why is it important that I know any of this? Well because these systems are what was used by the Bureau of Labor Statistics and the Census Bureau to classify and analyze economic activity. There is a huge number of statistics that are directly linked with the use of this system. Having this kind of information at your fingertips can help you make better more educated business decisions. Having all of this information could potentially be very beneficial for cross referencing and analyzing target markets. In addition it offers a lot of demographical information that combined together with proper analysis could make this data very valuable.
The system can be useful in identifying the markets that you would like to target. It allows you to look more specifically and market to a smaller group allowing you to have a lower marketing budget. It provides a universal for three different countries which allows you to search for new leads in other countries without having to take the time staking effort of individually identifying certain businesses as being from one industry which if you think about it could become a costly venture.