Wang czhao 2006 6 3 trade area delimitation

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Unformatted text preview: “what if” scenarios c D. Wang & C.Zhao, 2006 6 3 TRADE AREA DELIMITATION TECHNIQUES Converse Breakpoint 1. Technique • In addition to distance, use the variable attractiveness to delimit trade area Dy = DXY 1+ AX AY 2. Assumptions • Same as Thiessen polygon • DOES NOT assume all centers are equal in attractiveness • Additional assumption: some measure of size (e.g. number of stores, number of employees, etc) is an adequate measure of attractiveness of stores Huff Model What is the probability that the consumers in this area will shop at one of a number of stores based on the relative utility of stores? Pij = Pij = uij uij Sj db ij Sj j db ij 1. Technique 2. Assumptions • all stores in the area are possible destinations; i.e., overlapping markets • consumers can be assigned to centers based on calculated probabilities • the variables are still limited to distance and size 3. Application • evaluate what the present market should be for stores • much more powerful use of the model is to evaluate proposed changes; both the private and public sectors would have much interest in the impact of such changes Critique of normative approaches • • • • • all normative models are theoretical in nature if our assumptions are weak, then our model is flawed if assumptions are met, then models are robust and effective cheap and easy to apply sometimes, the real world scenario does not yet exist so we have little choice but to use predictive normative models c D. Wang & C.Zhao, 2006 7 4 3.2 SITE SELECTION TECHNIQUES Behavioral Approaches Customer Spotting (Market Penetration) Techniques Advantage Attempt to measure the actual performance (penetration) of store rather than hypothetical cases, retailers identify where the customers actually come from Disadvantage labour intensive, expensive Obtaining the data survey, ballot, contest, delivery addresses, credit card(best way, as credit information is also collected), air-miles FSA Forward Sortation Areas • designed to direct mail • can pay post office to get data (collected from tax return) Data Mining • Look for patterns • Wal-mart is the leader in this field Note: the best way to collect data is to use credit card issued by the company (collect personal credit information) Market Penetration By using the customer spotting data in conjunction with some measure of potential customers for areas around t...
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This document was uploaded on 01/28/2014.

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