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- CASES AND ANCILLARY CASES
- ANNOTATED OUTLINE INSTRUCTOR NOTES
- II. Factors Affecting the Demand for a Region or Trade Area
- E. Span of Managerial Control
- B. Locational Advantages Within a Center
- IV. Estimating Demand for a New Location
- B. Factors Defining Trade Areas
- C. Demographic Data and GIS Vendors
- D. Measuring Competition
- VI. Methods for Estimating Demand
- C. Huff’s Gravity Model
- D. Choosing the Best Method(s)
- ANCILLARY LECTURES AND EXERCISES
- Analyzing a PRIZM TM cluster report
- How to get more value from PRIZM TM
- Hard Scrabble Hard Scrabble neighborhoods represent our poorest rural areas. Heavy Industry
| CHAPTER 8
SITE SELECTION CONVERSION NOTES
CASES AND ANCILLARY CASESCASE 13: Hutch: Locating a New StoreSynopsis: This case deals with a large chain of popularly priced women's apparel stores that are generally located in small towns in the Southeast, Midwest, and eastern fringe of the Southwest. The company strategy is to sell to women between the ages of 18 and 40 who are in the lower-middle to middle income range. The principal issue is which of two available locations the manager should choose as the location for the next store. The manager is given information on the demographics, lifestyles, and income of the populations for the trade areas of the proposed locations. He is also provided with environmental information and descriptions of each center's characteristics. The principal objective of this case is to give students an opportunity to use concepts learned in class to make location decisions. A second objective is to make students aware of the available secondary data sources obtainable from marketing research companies such as Claritas/UDS Data Services. Finally, the case encourages the use of both qualitative and quantitative information in the student's decision. This case should be used after students have been exposed to location strategies. The questions at the end of the case focus the student's attention on the proper sequence.
ANSWERS TO DISCUSSION QUESTIONS AND PROBLEMS 1. What are the shapes and sizes of the trade area zones of a shopping center near your school? The specific shopping center chosen is dependent upon each student. No matter what the choice is, however, students should identify the primary, secondary, and tertiary zones. The factors to be considered include accessibility, shopping center type, and location of competing malls. 2. When measuring trade areas, why is the analog approach not a good choice for a retailer with several hundred outlets? The analog approach could just as easily be called the similar store approach. This is divided into three steps. First, the current trade area is determined by using a technique known as customer spotting in which customers are identified and their locations are plotted on a map. Second, based on the density of customers from the store, the primary, secondary, and tertiary trade area zones are defined. Finally, the characteristics of a current store are matched with potential new store locations to determine the best site. The common method of defining retail trade area potential for retail chains with greater than 20 stores is multiple regression analysis. Although multiple regression analysis uses logic similar to that of the analog approach, it uses statistics rather than judgment to predict sales for a new store. The first two steps in multiple regression analysis are the same as those in the analog approach. But then, a mathematical equation is derived. Using “canned” statistical packages, three steps are followed to develop the multiple regression equation:
Select appropriate measures of performance, such as per capita sales or market share. Select a set of variables that may be useful in predicting performance. Solve the regression equation and use it to project performance for future sites. Since the analog approach is “manual,” rather than using computer-aided statistics, it is cumbersome to use when the retailer has more than 20 or so stores. 3. True-Value Hardware Stores plans to open a new store. Two sites are available and both in middle-income neighborhood centers . One neighborhood is 20 years old, and has been well maintained. The other has recently been built in a newly planned community. Which site is preferable for True-Value? Why? Due to the high cost of home maintenance, middle-income neighborhoods are good candidates for a store such as True-Value. The neighborhood that is 20 years old is a good choice, because the homes there will need repairs and continual maintenance. Since the homes in this neighborhood have been well maintained, the indication is that the homeowners do need supplies that True-Value carries on a regular basis. The newly planned community may also be a good location, since new homes also will require regular maintenance. In addition, True-Value will carry supplies that new homeowners need, such as picture hangers and other similar items. A new community also has the advantage of having a customer base that is not already loyal to any particular store. Thus, being the first hardware store may help them to develop a long-term customer base.
In general, consumers would prefer to shop within their area(s) of primary residence so as to minimize travel and other times. The more a consumer has to travel to obtain a product, the more the actual physical and opportunity costs (of time) for the consumer- something the consumer would do only for lower priced products or for unique merchandise. Due to these shopping behaviors of most consumers, trading area polygons assume that a majority of the consumers would come to a store or center from areas closest to it, while number of consumers arriving at a store or center would decrease as with increasing distance from the store or center. The idea of concentric circles makes sense since consumers may arrive from any direction. An alternate method could be to use city blocks especially in well-laid, planned or newer cities. Here, city squares could be used, since the major streets traversed run north-south and east-west. Depending on the trade area being considered, either method could be used, but adapted to the specific region by considering the major roadways, travel conditions, natural and artificial barriers as well as the type of store for which the analysis is being done. 5. Marisol Perez is a graduate student at Florida State University. She is supporting herself by working at a mental hospital. Mary Petrey also lives in Tallahassee, Florida, but never went to college and works in a factory. Both make $20,000 per year, are single, and 21 years old. Would they be in the same ACORN cluster? How do you think they spend their disposable income? ACORN is a market segmentation system that classifies neighborhoods in the United States into distinctive consumer groups, or market segments. Since Marisol and Mary come from different educational backgrounds and possibly, lead different lifestyles, we can speculate that Marisol and Mary do not live in the same ACORN neighborhood. ACORN assumes that basic characteristics of people within a block group, such as income, home value, occupation, education, household type, age and other key determinants of consumer behavior would be similar. In this case, Marisol and Mary differ on the important characteristics of education and occupation. Marisol with more of an upstanding job and college education might be living in a different block as compared with Mary, with a factory job and no college education. How they spend their disposable income may also be different. Marisol will most likely spend her money more freely on clothing, high tech appliances, dining out and extra curricular activities. Mary will spend her income on more functional items.
The analog approach is also called the similar store approach since it attempts to match the current store's trading area characteristics with potential new areas having similar characteristics. Retailers would use this approach when it is indeed possible to identify trading areas with similar characteristics. Also, the analog approach works best when a retailer has a relatively small number of outlets (say, 20 or fewer). As the number of stores increases, it becomes more difficult to organize the data in a meaningful way. The regression approach is best when there are multiple variables expected to explain sales, since it is difficult to keep track of multiple predictor variables when using a manual system like the analog approach. However, more number of data points (i.e., prior stores) are needed for the regression results to be reliable. Also, proper training is needed to run regression analysis and interpret the results. In general, the analog approach may provide a better qualitative assessment of good or poor potential locations, while the regression approach provides a quantitative average of potential in an area. 7. Burdines (a division of Federated Department Stores, Inc. ) has made a strategic decision to only operate in Florida. In fact, they are known as “The Florida store.” Evaluate this strategy. By focusing in one area, specifically Florida, Burdines is able to have complete managerial and logistic control. There will be less errors, and more careful supervision. Second, Burdines will be located very close to their distribution center, cutting down on distribution costs. Third, there are large marketing benefits to concentrating in one area. Burdines is able to focus specific advertising and promotions to target Florida customers. By being only in the Florida area, their efforts can be concentrated on understanding specifically the Florida target market. Finally, Burdines will gain name recognition by being one of the only stores that specializes in that area. 8. Some Specialty stores prefer to locate to or close to an anchor store. But, Little Caesars, a take out pizza retailer typically found in strip centers, wants to be at the end of the center away from the supermarket anchor. Why? Little Caesar’s prefers to locate away from the supermarket anchor for several reasons. In terms of parking, spaces in front of supermarkets are quite often the first places to be taken. By locating away from the anchor, Little Caesar’s assures its customers of convenient parking. Locations at the end of the center also are usually close, convenient and visible to the street. Visibility from the street is also important to Little Caesar’s. 9. Retailers have a choice of locating on a mall’s main floor or second or third level. Typically, the main floor offers the best, but most expensive locations. Why would specialty stores such as Radio Shack and Foot Locker choose the second or third floor? These two stores are destination stores with a national reputation. When people are in the market for an electronic “dohickey” or athletic shoes, they will search out the stores that carry them. As such, the customer will be willing to walk to a second or third floor. Stores like these do not necessarily need to be in a highly visible area {with the highest rent). 10. A drugstore is considering opening a new location at shopping center A, with hopes of capturing sales from a new neighborhood under construction. Two other shopping centers located nearby, C and E, will provide competition. Using the following information and Huff's probability model, determine the probability that residents of the new neighborhood will shop at shopping center A.
Assume that b = 2 and NNR = New Neighborhood Resident P(NNR/A) = 3,500 ÷ 4 2 (3,500 ÷ 4 2 ) + ( 1,500 ÷ 5 2) + (300 ÷ 32)
218.75 + 60 + 33.33 P(NNR/A) = .70 OR 70% probability that a resident of the new neighborhood will purchase drugstore products at a drugstore in Shopping Center “A.” ANCILLARY LECTURES AND EXERCISESLECTURE # 9-1: PRISM TM : UNDERSTANDING CONSUMER BEHAVIOR AND LIFESTYLES------------------------------------------------- Instructor’s Note: The purpose of this lecture is to supplement the annotated outline on PRIZM_ that appears in Chapter 9. After a brief introduction, it is suggested that the instructor ask the students what types of people live in the different segments. Instructors might want to use this lecture as a stimulus to a class discussion on the topic. Transparency Master 9-15 can be used with this lecture. ------------------------------------------------- IntroductionThe consumer market has become increasingly fragmented and difficult to understand. Demographics alone do not fully explain why some people are good prospects and others are not. PRIZM TM was developed by Claritas Corporation to help marketers analyze and describe consumer behavior and lifestyles. PRIZM TM will make a trade area come alive, portraying it in a way that is easy to see and understand. Through an extensive analysis of up-to-date demographics and actual consumer behavior, every neighborhood in the United States is assigned to one of 40 PRIZM TM clusters, or lifestyle groups. Each cluster is named to provide instant recognition of the area and types of people living there. The theory behind PRIZM TM is, in the words of the age-old saying, that “birds of a feather flock together.” Once settled in a neighborhood, they tend to behave similarly in terms of the products they buy, the stores where they shop, and the broadcast and print media they read, hear, or watch. Analyzing a PRIZM TM cluster reportThe first step in analyzing a PRIZM TM report is to focus on the distribution of clusters in the trade area. Which clusters have the highest concentration of households in the market area? Are the dominant clusters from the same Social Groups? If so, there will be some common denominators of lifestyles in the market. Users of PRIZM TM need to be on the lookout for patterns that emerge from the mix of clusters in the trade area. How to get more value from PRIZM TMPRIZM TM is extremely valuable if businesses know which clusters are important to their business. By PRIZM TM -analyzing a customer file, users will be able to: See who the best customers are and how to reach them. Compare the lifestyle clusters of the customer base as a whole to those of the individual trade areas. Assess the potential demand in new markets by identifying areas with high concentrations of the clusters dominating the customer list. See TM 9-15. Following is a complete listing of all PRIZM TM groups. Agri-BusinessAgri-Business is geo-centered in the Great Plains and mountain states. These are, in good part, prosperous ranching, farming, lumbering, and mining areas. Back-Country FolksBack-Country Folks abounds in such remote rural towns, geo-centered in the Ozark and Appalachian uplands. It is predominantly white, strongly blue-collar, and leads all clusters in concentration of mobile homes and trailers. Black EnterpriseBlack Enterprise neighborhoods are nearly 70% black, with median black household incomes well above average and with consumption behavior to match. Blue Blood EstatesThese are America’s wealthiest socioeconomic neighborhoods, populated by upper-class established managers, professionals, and heirs to “old money,” accustomed to privilege and living in luxurious surroundings. Blue-Chip BluesBlue-Chip Blues, ranked fourth in married couples with children, is similar to Young Suburbia on most dimensions save social rant, its predominant high school educations and blue-collar occupations being reflected in fewer high-end incomes and lower home values. However, high employment and double incomes yield similar discretionary spending patterns, and make this cluster an outstanding market. Blue-Collar NurseryBlue-Collar Nursery leads the nation in craftsmen, the elite of the blue-collar world. It is also first in married couples with children and households of three or more. Bohemian MixBohemian Mix is America’s Bohemia, a largely integrated, singles-dominated, highrise hodgepodge of white-collars, students divorced persons, actors, writers, artists, aging hippies, and races. Coalburg & CorntownCoalburg & Corntown fits a popular image of the Midwest, being concentrated in small peaceful cities with names like Terre Haute, Indiana and Lima, Ohio, surrounded by rich farmland, and populated by solid, blue-collar citizens raising sturdy, Tom Sawyer-ish children in decent front-porch houses. Downtown Dixie-StyleDowntown Dixie-Style has a Southern geo-center, with high concentrations in three dozen Southern metros. These middle-density urban neighborhoods are nearly 70% black. Unemployment is high, with service occupations dominating amongst the employed portion of the labor force. Emergent MinoritiesEmergent Minorities is almost 80% black, the remainder largely composed of Hispanics and other foreign-born minorities. The struggle for emergence from poverty is still evident in these neighborhoods. Furs & Station WagonsFurs & Station Wagons is typified by “new money,” living in expensive new neighborhoods in the greenbelt suburbs of the nation’s major metros, coast to coast. These are well-educated, mobile professionals and managers with the nation’s highest incidence of teenage children. God’s CountryGod’s Country contains the highest socioeconomic status white-collar neighborhoods located primarily outside major metros. These are well-educated frontier types who have opted to live away from the beg metros in some of our most beautiful mountain and coastal areas. Golden PondsGolden Ponds includes hundreds of small, rustic towns and villages in coastal resort, mountain, lake, and valley areas, where seniors in cottages choose to retire amongst country neighbors. Grain BeltGrain Belt shows a higher concentration of working farm owners and less affluent tenant farmers. Tightly geo-centered in the Great Plains and mountain states, these are the nation’s most stable and sparsely populated rural communities, with one in five of the nation’s farmers. Gray PowerPrimarily concentrated in sunbelt communities of the South Atlantic and Pacific regions, these are the nation’s most affluent elderly, retired, and widowed neighborhoods, with the highest concentration of childless married couples, living in mixed multi-units, condos, and mobile homes on non salaried incomes. Hard ScrabbleHard Scrabble neighborhoods represent our poorest rural areas. Heavy Industry,Heavy Industry is hard-hit by unemployment. It is chiefly concentrated in the older industrial markets of the Northeastern U.S. quadrant and is very Catholic, with an above-average incidence of Hispanics. These neighborhoods have aged and deteriorated rapidly during the past decade. There are fewer children, and many broken homes. Hispanic MixHispanic Mix represents the nation’s Hispanic barrios. These neighborhoods feature dense, row-house areas containing large families with small children, many headed by solo parents. Levittown, U.S.A.The children are now largely grown and gone. Aging couples remain in comfortable, middle-class, suburban homes. Employment levels are still high, including double incomes, and living is comfortable in Levittown, U.S.A. Middle AmericaMiddle America is composed of mid-sized, middle-class satellite suburbs and towns. It is also centered in the Great Lakes industrial region, near the population geo-center of the United States. Mines & MillsIndustry is king in Mines & Mills, including both light and heavy industry. The cluster gathers hundreds of mining and mill towns scattered throughout the Appalachian mountains, from New England to the Pennsylvania-Ohio industrial complex and points south. It ranks first in total manufacturing and blue-collar occupations. Money & BrainsMoney & Brains are typified by swank, shipshape townhouses, apartments, and condos. Money & Brains has relatively few children and is dominated by childless couples and a mix of upscale singles. New BeginningsNew Beginnings is represented in nearly all markets, but shows its strongest concentrations in the West. It provides new homes to many victims of the divorce boom in search of new job opportunities and lifestyles. The predominant age is 18-34; and the mode is pre-child, with employment concentrated in lower-level white-collar and clerical occupations. New HomesteadersNew Homesteaders is much like God’s Country in its mobility, housing, and family characteristics. The big difference is that these neighborhoods are nine rungs down on the socioeconomic scale, with all measures of education and affluence being significantly lower. It shows peak concentrations of military personnel, and has a strong Western skew. New Melting PotThe original European stock of many old urban neighborhoods has given way to a new immigrant populations, often with Hispanic, Asian, and Middle-Eastern origins. These trends have formed a “New” Melting Pot, which includes many traditional Melting Pot areas along with new immigrant neighborhoods. As a result, New Melting Pot neighborhoods are situated in the major ports of entry on both East and West Coasts. Norma Rae-VilleNorma Rae-Ville is concentrated in the South. These neighborhoods include hundreds of industrial suburbs and mill towns, a great many in textiles and other light industries. They are country folk with minimal educations, a high index for blacks, and lead the nation in non-durable manufacturing. Old Yankee RowsOld Yankee Rows is well matched to New Melting Pot in age, housing mix, family composition , and income. It is, however, dominated by high-school-educated Catholics of European origin and has comparatively few minorities. These are well-paid, mixed blue- and white-collar areas, firmly geo-centered in the older industrial cities of the Northeast. Pools & PatiosPools & Patios once resembled Furs & Station Wagons, being upscale greenbelt suburbs in a late child-rearing mode. But today, most of these children have grown and departed, leaving aging couples in empty nests too costly for young homemakers. Good educations, high white-collar employment levels, and double incomes assure “the good life” in these neighborhoods. Public AssistanceWith 70% of its households black, Public Assistance represents the Harlems of America. These are the nation’s poorest neighborhoods, with twice its unemployment level, and nine times its share of public assistance incomes. Rank & fileRank & file contains many traditional blue-collar family neighborhoods whose children have grown and departed, leaving an aging population. This cluster shows high concentrations of protective-service and blue-collar workers living in aged duplex rows and multi-unit “railroad” flats. It leads the nation in durable manufacturing. Share CroppersShare Croppers is deeply rooted in the heart of Dixie. Traditionally, these areas were devoted to such industries as tenant farming, chicken breeding, pulpwood and paper milling, etc. But sunbelt migration and a ready labor pool have continued to attract light industry and some population growth. Shotguns & PickupsShotguns & Pickups aggregates hundreds of small, outlying townships and crossroad villages which serve the nation’s breadbasket and other rural areas. It has large families with school-age children, headed by blue-collar craftsmen, equipment operators and transport workers with high school educations. These areas are home to many dedicated outdoorsmen. Single City BluesThis cluster represents the nation’s densely urban, downscale singles areas, found in most major markets, including those of the new West. Many are located near city colleges, and the cluster displays a bi-modal education profile. With very few children and its odd mixture of races, classes, transients, and night trades, Single City Blues could be described as the poor man’s Bohemia. Smalltown DowntownA hundred-odd years ago, our nation was laced with railroads and booming with heavy industry. All along these tracks, factory towns sprang up to be filled with laborers in working-class row-house neighborhoods. Many can be seen today in Smalltown Downtown, mixed with the aging. Tobacco RoadsTobacco Roads is found throughout the South from Virginia to Texas. These areas are above average for children of all ages, nearly a third in single-parent households. There is some light industry, but poor unskilled labor predominates. Dependent upon agriculture, Tobacco Roads ranks at the bottom in white-collar occupations. Towns & GownsTowns & Gowns contains hundreds of mid-scale college and university towns in non-metropolitan America. The population is three-quarters locals (“towns”) to one quarter students (“gowns”), giving this cluster its name and unique profile. It shows extreme concentrations of age 18-24 singles and students in group quarters, very high educational, professional, and technical levels in contrast with modest incomes and home values, and a taste for prestige products. Two More RungsJust behind Pools & Patios in affluence, Two More Rungs has a high concentration of foreign-born European ethnics and is somewhat older, with even fewer children. It is also more dense, with a higher incidence of renters in multiple-unit, high-rise housing, and has a northeastern geo-center. Two More Rungs neighborhoods show a high index for professionals and somewhat conservative spending patterns. Urban Gold CoastUrban Gold Coast is altogether unique. It is the post densely populated per square mile, with the highest concentration of one-person households in multi-unit, highrise buildings and the lowest incidence of auto ownership. Other mosts: most white collar, most childless, and most New York. Urban Gold Coast is the top in Urbania, a fit address for the 21 Club. Young InfluentialsYoung Influentials are young metropolitan sophisticates, with exceptional high-tech, white-collar employment levels. Double incomes afford high spending, and lifestyles are open, with singles, childless couples, and unrelated adults predominating in expensive one- and two-person homes, apartments and condos. They are skewed to the new West. Young SuburbiaYoung Suburbia is found coast to coast in most major markets. It runs to large, young families and ranks second in incidence of married couples with children. These neighborhoods are characterized by their relative affluence and high white-collar employment levels. As a result, they are strong consumers of most family products. [Source: PRIZM TM Clusters by Claritas Corporation, Urban Decision Systems brochure.] Directory: sites sites -> Answer True False 2 points Question 2 sites -> 587 Return function, r i(X) r i(0) r i(1) r i(2) r i(3) 1 0 2 4 6 Thermal Station, I 2 0 1 5 6 3 0 3 5 6 10 sites -> Glossary for Chapter 1 Algorithm sites -> North Carolina Inclusion Initiative Mapping Where Children with ieps are Being Served Purpose sites -> Northern England’s set-jetting locations sites -> Physical custody of 1033 program property accountibility form statement of Physical Custody: By signing for the below 1033 property I am a Law Enforcement Officer of the aforementioned Law Enforcement Agency sites -> Nstructions for Acquiring Excess Equipment online, through the 1033 Program sites -> Memorandum of agreement Download 99.57 Kb. Share with your friends:
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