Chapter 12 Services Key Issue 2. Distribution of Consumer Services Central place theory ...
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Transcript of Chapter 12 Services Key Issue 2. Distribution of Consumer Services Central place theory ...
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Chapter 12Services
Key Issue 2
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Distribution of Consumer Services Central place theory
Market-area of a service Size of market area
Market area analysis Profitability of a location Optimal location within a market
Hierarchy of services and settlements Nesting of services and settlements Rank-size distribution of settlements
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Central Place Theory Central Place: a market center for the
exchange of goods & services Centrally located to maximize
accessibility Compete against each other Creates a regular pattern of settlements
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Central Place Theory Central Place Theory: explains how
services are distributed & why a regular pattern exists
1930s Walter Christaller, Germany
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Market Area of a Service Market Area (Hinterland): area
surrounding a service from which customers are attracted
Circle drawn around node of service Territory inside is its market area
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Market Area of a Service People usually choose to get services
from nearest location Circles often overlap or leave gaps Squares remove gaps, but then distance
from center varies Hexagons are best shape Geographers use hexagons to indicate
market areas
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Market Areas as Hexagons
Fig. 12-5: Hexagons are often used to delineate market areas because they are a compromise between circles, which have edges equidistant from the center but leave gaps, and squares, which don’t leave gaps but whose edges are not equidistant from the center.
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Size of Market Area Market areas vary: range & threshold Range: maximum distance people are
willing to travel to use a service Travel short range for everyday
services: groceries, laundromats, fastfood
Long distance range for sporting events, concerts
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Size of Market Area: Range How far are you willing to travel for fast-
food? A nice restaurant? Average: 3 miles, 5 miles
How far are you willing to travel for a concert?
Retailers define range as max distance (time) that 2/3 to ¾ of customers will travel
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Size of Market Area: Threshold Threshold: minimum number of people
needed to support the service to make profit
Service provider needs to determine if enough consumers is possible
Movie theatre: Chiropractor: Thrift stores: Amusement Parks: Nightclubs: Shopping mall:
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Market-Area Analysis Retailers & Service providers use
research to determine to find best profitable location
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Profitability of a Location Range & Threshold determine most
profitable location for business Convenience Store People are willing to travel 15 mins Store must sell min $1000/week Avg. Customer spends $2/week How many customers needed? What else needs to be considered?
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Market Areas for Stores
Fig. 12-1.1: Market areas, ranges, and thresholds for department stores in the Dayton, Ohio metropolitan area. Stores are closer together in areas with higher incomes.
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Optimal Location Within A Market: Linear Settlement
Where should service be located within the market to maximize profit?
Ocean City, Maryland: Linear Best location minimizes distance for
delivery drivers & customers Mathematically in middle of population
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Optimal Location for Linear Market
Ocean City, MD Is half way down strip best location? Why/Why not? Gravity Model: predicts optimal
location is directly related to number of people in area & distance people must travel to access it
Greater number of people in area = more potential customers
Farther distance = less customers
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Optimal Location (for Pizza-Delivery Service)
Fig. 12-6: The optimal location for a pizza delivery shop with seven potential customers in a linear settlement (top) and with 99 families in apartment buildings (bottom).
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Optimal Location within a Market: Non-Linear Settlement Most settlements are more complex Gravity Model still applies:
Identify possible site Identify where potential users live Measure distance to each potential user
Use data to determine optimal location
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Hierarchy of Services & Settlements Services in small settlements are limited
because of small population Larger settlements provide more
consumer services
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Nesting of Services and Settlements Central Place Theory in MDCs: market areas
are series of hexagons Overlapping hexagons of various sizes Walter Christaller, Germany 7 sizes of settlements Smallest: Market hamlet: pop 800, 17sq miles Largest: Regional Capital city: larger numbers
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Central Place Theory
Fig. 12-7: Market areas are arranged into a regular pattern according to central place theory, with larger settlements fewer in number and further apart.
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Nesting Market Area Distances between settlements follow
regular pattern Convenience stores have smaller
thresholds, ranges, and market areas than supermarkets
More numerous
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Market Areas for Convenience Stores
Fig. 12-8b: Market area, range, and threshold for UDF convenience stores in Dayton, Ohio.
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Market Areas for Supermarkets
Fig. 12-8a: Market area, range, and threshold for Kroger supermarkets in Dayton, Ohio.
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Supermarket & Convenience Store Market Areas
Fig. 12-8: Market area, range, and threshold for Kroger supermarkets (left) and UDF convenience stores in Dayton, Ohio. Supermarkets have much larger areas and ranges than convenience stores.
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Rank-Size Distribution of Settlements Rank Size Rule: the country’s second
largest city is one-half the size of the largest
If plotting the data, it is NOT in straight line, it does not follow rank-size rule
Applies to many MDCs, not all
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Rank-Size Distribution of Cities
Fig. 12-9: Cities in the U.S. closely follow the rank-size distribution, as indicated by the almost straight line on this log scale. In Romania, there are few settlements in two size ranges.
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Primate City Rule The largest settlement has MORE than
2x the amount of people as second-ranking settlement
Ex: Denmark Copenhagen: primate city-1 million Arhus: second largest-200,000 Ex: UK London: 8 million Birmingham: 2 million
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Rank-Size Distribution Regular hierarchy (U.S.) shows society is
sufficiently wealthy to distribute goods throughout country
Some countries try to improve rank-size distribution
Limit migration to large cities Try to populate rural areas
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Periodic Markets Collection of individual vendors who offer
goods/services together on certain day(s) Set up in street/public place in morning, taken
down at end of day
Common in LDCs and rural areas of MDCs full-time retailign not supported Varies by culture Ex: 1x in Muslim countries, no market Fridays