Trade Area Analysis, Development and Mapping Trade area analysis and mapping describe the characteristics of the area around a store or network of stores. Without accurate trade area definitions, you cannot measure the key statistics that impact a store's performance. Use trade area analysis to aid site selection and target marketing. Trade area analysis and mapping tell you: •Where a store's customers are coming from •How many customers you have in a trade area •Where to look for for more customers Benefits of Trade Area Analysis •Identify gaps or overlaps in the market coverage of your existing store network, and make corrections by opening, closing or moving stores •Make better site selection …show more content…
The dots indicate the locations of demographic samples. Red colored dots fall within the 5-mile radius. Note that samples located across the river would be included in the 5-mile demographic summaries for this site. Gravity Models: Gravity models, or spatial interaction models, define a trade area based on its attractiveness relative to other trade areas. These models provide an approximation of store trade area by putting the distribution of all locations (including competitors) into a geographical context and evaluating each location's relative attractiveness. Typically, a distance decay curve is used to model the spatial interaction of individual locations. Often size of the store, or store sales if available, is used to drive the attractiveness parameter. Gravity models are more sophisticated than simple radial approximations, but they still do not account for logistical barriers and they are limited by the availability and accuracy of competitor data. Moreover, gravity models basically are sophisticated algorithms, which may not be appropriate for non-technical analysts.
and Mapping
Trade area analysis and mapping describe the characteristics of the area around a store or network of stores. Without accurate trade area definitions, you cannot measure the key statistics that impact a store's performance.
Use trade area analysis to aid site selection and target marketing.
Trade area analysis and mapping tell you:
•Where a store's customers are coming from
•How many customers you have in a trade area
•Where to look for for more customers
Benefits of Trade Area Analysis
•Identify gaps or overlaps in the market coverage of your existing store network, and make corrections by opening, closing or moving stores
•Make better site selection …show more content…
The dots indicate the locations of demographic samples. Red colored dots fall within the 5-mile radius. Note that samples located across the river would be included in the 5-mile demographic summaries for this site.
Gravity Models:
Gravity models, or spatial interaction models, define a trade area based on its attractiveness relative to other trade areas. These models provide an approximation of store trade area by putting the distribution of all locations (including competitors) into a geographical context and evaluating each location's relative attractiveness. Typically, a distance decay curve is used to model the spatial interaction of individual locations. Often size of the store, or store sales if available, is used to drive the attractiveness parameter.
Gravity models are more sophisticated than simple radial approximations, but they still do not account for logistical barriers and they are limited by the availability and accuracy of competitor data. Moreover, gravity models basically are sophisticated algorithms, which may not be appropriate for non-technical analysts.