lecture 3

Question 1

What are the 6 strategic location considerations

Answer 1

1. Flexibility
2. Competitive positioning
3. Demand management
4. Focus
5. Competitive clustering
6. Saturation Marketing

Question 2

Explain the strategic considerations Flexible

Answer 2

1. Flexibility
   Flexibility is the degree to which the service outlet can react to changing economic situations. It is important to select locations that are flexible to economic changes such as economic, demographic and competitive profile.

• select sites with inelastic demand
• locate in multiple sites to help manage the risk if one location is affected by changes.

Question 3

Explain the strategic considerations of Competitive positioning.

Answer 3

Competitive positioning is building a firm’s competitive position and market awareness through multiple locations. ( It also serves as a barrier to entry as by being there first, they will get the first mover advantage )

Competitive positioning is also acquiring and holding prime locations before the market has fully developed , keeping competitors away from gaining access to desirable locations.

Question 4

Explain the strategic considerations of Demand Management.

Answer 4

Demand management is the ability to ensure/control the quality, quantity and timing of demand.

eg. retail shop targeting high end tourists would locate in ION rather than in a suburban mall.
Quantity: more tourists
Quality: high spending
Timing: constant traffic especially during GSS

Question 5

Explain the strategic considerations of Focus.

Answer 5

Focus is offering the same narrowly defined services at multiple locations (eg. 7-11, mcdonald- having the same products and services duplicated at many locations create familiarity of what customer can expect. However, they need to be aware of cannibalization)

Question 6

Competitive clustering

Answer 6

Competitive clustering is the strategy of locating a business amongst other competitors. This is because consumers prefer to shop at areas where shops are selling the same products, allowing them to make comparisons before purchasing.

Research has shown that hotels located in areas with many competitors have a higher occupancy rate compared to those in isolation.

Question 7

Saturation Marketing

Answer 7

Saturation marketing is a group of outlets of the same firm near each other and in high traffic areas.

• aim is to plant the idea into customers minds
• customers who continue walking will get influenced and take action to buy the product
• will work best in high-density, downtown locations where human traffic is high and shops can intercept impulse customers.

Advantages: reduced advertising, easier supervision of managers, greater customer awareness.
Disadvantages: cannibalisation amongst outlets