CH09 Trading-Area Analysis Flashcards
trading area (p. 222)
a geographic area containing the customers of a particular firm for specific goods or services
trading-area overlap (p. 223)
when the geographic area containing the customers of a particular firm for specific goods or services (aka trading-area) of 2 or more stores overlap
think of stores as a venn-diagram, emphasis on overlap
geographic information system (GIS) (p. 224)
digitized mapping with key location-specific data used to graphically depict trading-area characteristics (i.e., population demographics, data on customer purchases, and listings of current, proposed, and competitor locations)
Eg. netflix’s “house of cards”, they knew it would be successful before investing money into the production of the series through market research
primary trading area (p. 227)
deals with the size and shape of trading areas: part 1
50-80% of customers
secondary trading area (p. 227)
deals with the size and shape of trading areas: part 2
15-25% of customers
fringe trading area (p. 227)
deals with the size and shape of trading areas: part 3
all remaining customers, leftovers :(
destination store (p. 228)
a store customers will go out of their way to shop at over any other stores for a particular reason (eg. carries certain products,”exclusive distribution”, etc.)
- have a better assortment, promotion, and image
- generate trading-areas larger than competitors
eg. dunkin donuts, “it’s worth the trip!”
parasite store (p. 228)
retail outlets that do not generate their own customer traffic (no real trading-area of their own); they rely on the existing flow of customers from nearby businesses or events
eg. magazine stand in office building, it relies on the business people working in the office for its own sales
analog model (p. 230)
a model involving revenue estimates based on similar stores, competition, expected market share, size, and population density
simplest model–basically excel spreadsheet
regression model (p. 230)
a model that looks at population size, average income, transportation barriers and traffic patterns
we know this from stats and marketing research
gravity model (p. 230)
a model that looks at distance and shopping selection at given location
uses reilly and huff’s model
Reilly’s law of retail gravitation (p. 231)
a traditional means of trading-area delineation
explains how consumers choose between competing retail centers
point of indifference (p. 231)
the geographic breaking point b/w 2 cities or communities at which consumers are indifferent to shopping at either store
Huff’s law of shopper attraction (p. 231)
a spatial interaction model that predicts consumer behavior in relation to retail locations
In a small town with two shopping centers, Mall A is larger (100,000 sq ft) but located 5 miles from the town center, while Mall B is smaller (50,000 sq ft) and only 2 miles away. Using Huff’s law of shopper attraction, we find that the probability of consumers choosing Mall A is about 39%, while Mall B has a higher probability of 61%. This illustrates how, despite its size, Mall A’s greater distance makes it less attractive to shoppers compared to the closer Mall B.
economic base (p. 233)
the industries and activities in a region that generate income by exporting goods and services outside the local economy, thereby bringing in new wealth
