As Buckner explained in Chapter 2, both "location" and "site" are market concepts that are rich with broad sets of data to characterize these geographic entities. In Lesson 3, your initial inquiry into the market you selected should have demonstrated the breadth of possible viewpoints one can use for market exploration and analysis. Site selection, therefore, can be amply supported by vast sources of relevant data. The business analysis challenge then becomes choosing the right factors to analyze and in which combinations.
Here, Church's 3 Laws of Location Science guide the market analyst to selecting the best suited data. These simple rules help us to home in to the most important criteria to pick among the vast repositories available. The result will be more efficient and effective analyses (Church, pp.8-9).
Before we settle into our data selections, we will expand our perspective further by exploring a second data source, the Esri Tapestry geolocation segments. While the Tapestry data is somewhat akin to the Nielsen PRIZM data in its purpose, the two sources provide unique points of view on similar underlying historical data. In this lesson, comparing and contrasting alternative geographic data will expand our analytical perspectives and prepare us for insightful analysis using GIS systems such as Esri's Business Analyst Online (BAO).
There's an important tenet of providing a unique customer experience. A company's effort should focus on solving a consumer's need with a product or service, drawing customers to your business, and creating a satisfying experience to build loyalty.
At the successful completion of Lesson 4, you should be able to:
Lesson 4 will take us one week to complete. There are a number of required activities in this lesson listed below. For assignment details, refer to the lesson page noted.
Note: Please refer to the Calendar in Canvas for specific time frames and due dates.
4.1 Competition, Trade Areas and Site Characteristics | ||
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Requirements | Details | Access / Directions |
Read | Read the course content. | Use the Lessons menu or the links below to continue moving through the lesson material. |
Buckner, Site Selection, Chapter 2, Chapter 3 excerpts (22 pp), Chapter 5 excerpts (4 pp) | Registered students can access the reading in Canvas on the Lesson 4 Readings page. | |
Koontz, "Retail Location Theory" (pp. 174-177) Canvas, Lesson 4.1 Readings - Trade Areas and Sites | Registered students can access the reading in Canvas on the Lesson 4 Readings page. | |
Skim | Buckner, Site Selection, excerpts from Chapter 8 | Registered students can access the reading in Canvas on the Lesson 4 Readings page. |
Huff & McCallum, "Calibrating the Huff Model" (focusing on graphics on 7-27) | Registered students can access the reading in Canvas on the Lesson 4 Readings page. | |
Read | Murphy, Geography, Why It Matters. Chapter 2 "Spaces" (pp. 31-59) | The Geography: Why it Matters reading is from the required textbook for this course. |
Deliverable | No Deliverable for 4.1 | N/A |
4.2 The Competition, NAICS, (and SIC) | ||
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Requirements | Details | Access / Directions |
Read | Read the course content. | Use the Lessons menu or the links below to continue moving through the lesson material. |
Do | Site Visit to selected business. | Directions are provided in the course text. |
Business classification search in NAICS. | Directions are provided in the course text. | |
Deliverable | Post your Presentation to the forum, due Tuesday. | Submit in Canvas to the Lesson 4.2 - Your Local Business & NAICS forum. |
4.3 Exploring Your Own Market, Part 2 (Optional) | ||
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Requirements | Details | Access / Directions |
Read | Read the course content. | Use the Lessons menu or the links below to continue moving through the lesson material. |
Do (Optional) |
Exploring Your Own Market, Part 2 as practice | Canvas, Lesson 4.3, Exploring Your Own Market, Part 2 |
Deliverable | No Deliverable for 4.3 | N/A |
4.4 Locating a Coffee Shop in Atlantic City | ||
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Requirements | Details | Access / Directions |
Read | Read the course content. | Use the Lessons menu or the links below to continue moving through the lesson material. |
Optional Reading | ICIC. 2014. The Missing Link: Clusters, Small Business Growth and Vibrant Urban Economies.July 2014 | Links to the readings are provided in the course text. |
NAICS Association. 2013. How to Use NAICS & SIC Codes for Marketing. Whitepaper | Links to the readings are provided in the course text. | |
NAICS Association. 2013. Cloning Your Best Customers for B2B Marketing Success. Whitepaper | Links to the readings are provided in the course text. | |
Do | Complete Locating a Coffee Shop in Atlantic City activity. | Directions are provided in the course text. |
Deliverable | Submit Locating a Coffee Shop in Atlantic City Presentation, due Tuesday. | Submit in Canvas to the Lesson 4.4 Activity: Locating a Coffee Shop in Atlantic City drop box. |
Quiz 2: Competitive Factors in Business due Tuesday. |
Registered students can access the quiz in Canvas in the Lesson 4 module. |
4.5 Term Project Submitting Project Proposal with Abstract | ||
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Requirements | Details | Access / Directions |
Read | Read the course content. | Use the Lessons menu or the links below to continue moving through the lesson material. |
Deliverable | Submit your Project Proposal with Abstract, due Tuesday. | Submit in Canvas to the Term Project: Project Proposal with Abstract drop box. |
In striving to gain a market dominance or preference, businesses create advantages for their organization and consumers. The process drives competition and innovation to meet customer needs; often improving products or services beyond the initial designs of a company's plan. Companies analyze their market and improve strategies to gain advantages or disadvantage competitors. Interestingly enough, competition can be defined as seeking to gain or win something and contending for an achievement. Competition appears in multiple forms or environments:
a. A business Competitor, such as a corporation, firm, or commercial organization.
b. Competition between entitites, look at the pharmaceutical company direct-to-consumer (TV and Digital) advertising, or
c. Competitive environment, a market sector
Buyers, when purchasing goods or services, seek a simpler, more customized experience to select products and services that meet their particular needs. Many buyers may have exactly the same needs; but it's their choice to select where they shop, who they buy from, and which product(s) they select. A business designs products to meet needs and preferences, analyzes consumer behaviors to determine where to attract customers, and performs extensive business analysis to organize the retail experience.
Relating back to the principles of commerce, there are strategies to leveraging competitive factors in business in order to achieve and advantage:
Location analysis explores geospatial and business data to determine where to locate a business. Data is widely available and at times expensive. One must decide what is important about the geospatial and business data a company seeks; what level of detail, precision, and current information is needed. A business may use general marketplace information for strategic decisions or highly detailed to make a critical investment decision. Assumptions made in the early stages of business analysis are based on relevant information; and accurate geospatial information adds credibility to the stated assumptions.
Where - in what retail environment does a business sell products to its customers?
An online location can also be defined and optimized by selecting the best domain name for the business, launching online advertising campaigns, and employing search engine optimization (SEO) so consumers can find your business. SEO is a fundamental principle of online retail to attract as many potential buyers to a business website and e-Commerce applications.
To understand consumer behaviors and model their buying patterns, business location analysis also considers demographics, psychographics on consumer behavior, census, market information on channels and products, and geospatial data. Later lessons in the course introduce omni-channel marketing plans, use of technology and IoT to interact with customers, and integrated market research.
Companies develop tools and build databases for their Operations and Marketing professionals to view business functions in a similar format with the latest actionable data. Analytical tools include dashboards, ad-hoc analytics, extensive modeling and customer graphs. The Data Environment spans:
Geospatial analysts have a role in predictive and prescriptive analysis for a business to identify the structure for their sales, product portfolio to meet customer needs and maximize profits, and decide between competing priorities facing the company in a competitive marketplace. Predictive analysis for location intelligence is based on modeling geospatial and business information to answer a business question. Other analysts in business departments, e.g. Marketing, Business Analytics, Operations, conduct business forecasting and strategic planning using similar or different data with more focus on quantitative results than geospatial relationships. One objective of this course is to expand the knowledge, modeling skills, and experience of geospatial data scientists to provide value across an organization's structure.
One could say, "businesses measure everything." Modern companies collect data on every transaction, each event in the manufacturing process, and consumer behaviors that may impact the products the company builds. Third-party data providers collect and analyze Big Data in enterprise and relational databases, preparing reports - or access to structured data - for businesses to purchase. This saves effort and, possibly, money for a business to gain the market and consumer data they specifically require to stay relevant.
Customer relationship management (CRM) is a business of itself with software, products, dashboards, interfaces for sales and marketing, and connections to marketing campaigns. CRM always has a location component; providing a linkage of business and geospatial data to produce location intelligence. A known customer who willingly or passively provides purchasing data assists a business in market studies. Consider the questions a business may ask to understand, quantify, or verify their market position compared to competitors. Third-party providers detail and summarize consumer behavior to relate:
Every encounter with a potential customer costs a business money; whether that is through marketing, paying employees for extended hours, answering detailed customer questions, providing live customer-service, or reorganizing retail spaces to address consumer changing preferences. A current CRM provides the business detailed information about customer behaviors for market and location intelligence analysis. To understand the value of using their own customer's information, a business must only look at the wasted dollars spent on direct mail advertising campaigns that never attract a new customer or digital ads on Social Media platforms where users click "Skip Ad" and rarely access the company's product website.
A valid customer lead, pre-vetted contact information, or request for contact from a potential customer provides a company advantages over their competitors. The challenge is to recognize these leads, respond to customers, and provide the products they need or desire.
For a community, a trade area is an economic zone with generalized or defined geographic boundaries. This is a region where commercial organizations conduct business, where stores are sited for customers to purchase goods, business entitities lease or own space to engage with clients and perform services, or buildings are erected to offer space to attract commerce. A trade area may be determined by the farthest distance a consumer is willing to travel to purchase goods they need; communities often designate trade areas in a convenient location for citizens to purchase goods or services (optimizing time, effort, and value).
Murphy (2018, p.36) describes a geographer's approach to spatial arrangements:
They seek to identify and explain the significance of spatial patterns. They explore what variations across space tell us about the forces shaping biophysical and human processes. They investigate the nature and meaning of interconnections across space and scale. And they look critically at the spatial ideas and frameworks humans use to understand, navigate, and seek to change the world around them.
Buckner relates how site characteristics describe the qualities of a location rather than quantitative measures. While there is amazing competition between retailers over the "best" anchor position in a shopping mall, human factors significantly impact the potential sales of a business location. Detailed market studies consider all factors to include visibility for consumers, parking, accessibility to shop for products; and most importantly, assess the context and relation of characteristics to the community (Buckner, pp.70-73).
We find value in examining variations from place to place. Murphy discusses the interconnections across space and scale for readers to understand that a site, a store, or an event exists in relation to other places or factors. Studying the attributes of one individual place reveals a response or adaptation from the characteristics of another, proximal space. Communities and economies depend on trade, customers, competition, and development. Question how a trade area expanded in an area of the city, why certain shopping areas are busier or more profitable than others, and where consumers may prefer to shop in the future. Thinking critically of geography, technology, mobility, and human behavior, Murphy writes:
Another revolution in mobility and connectivity is looming - driven not by a single transformative invention but by a suite of technological innovations and social-environmental concerns that are likely to have profound consequences in the years ahead: driverless cars, electric vehicles of various sorts, ride-sharing, super-high-speed trains, and an increasingly pervasive internet. Collectively, these will influence how billions of people experience and comprehend the world around them.
Registered students can access the reading in Canvas on the Lesson 4 Readings page.
The Geography: Why it Matters reading is from the required textbook for this course.
You may be thinking the Buckner book can, at times, seem a bit dated. In some ways, it is—Site Selection was written in the mid-1990s as a part of a series on retail planning by Chain Store Age magazine (a great resource for LI as it relates to retail). Bob Buckner is, however, to this day, one of the key figures in market research and site selection. He and his contemporaries were and are at the frontier of pushing what modern GIS and statistical analysis can do in terms of site selection.
One way to investigate "the competition" is to determine other businesses which fall into the same classification as our business of interest. Buckner mentions Standard Industry Classification (SIC) codes in the readings. The North American Industry Classification System (NAICS) replaced SIC for the 2002 Economic Census and going forward (and correlates to codes used in Mexico and Canada—part of the North American Free Trade Association, or NAFTA). In your exploration of business classification, investigate NAICS and related topics:
Consider this activity our virtual class "field trip"—one which you'll do independently, however. You are selecting a site location, so choose something interesting; but with COVID-19 in mind, you are definitely not required to physically go to any retail establishment or store.
If you are performing a remote drive-by reconnaissance, make sure you have a way to take notes and photos with your smartphone or digital camera.
I recognize that much of this kind of research can, and is, now done online in our digital age.
BRIEFLY summarize your results in a report or presentation.
Your image (your sketch, a map clip of your location, or a digital photo) will help us visualize your site survey analysis. Please paste your image on slide or page 1.
After your site visit, include the following comments:
Please drop your PowerPoint in Canvas in the Lesson 4.2 - Your Local Business & NAICS drop box.
Due Tuesday night 11:59 pm (Eastern Time).
Follow this optional exercise to hone your BAO skills, gain additional insights to a location intelligence platform, or use to expand your understanding of site selection.
Using BAO, return to your analysis/critique of your Claritas PRIZM results. You're going to add to the demographic work you did in section 3.3 of Lesson 3 by looking at Tapestry Segmentation, amongst other reports.
Your goal here is to further strengthen the argument you made last week concerning the accuracy or inaccuracy of your Claritas PRIZM results. Again, I recommend you focus on your PRIZM segment(s) to keep this analysis simple. Also, please make sure you start with ZIP code data, only turning to smaller level geographies, if you wish, to underscore your argument.
Because this is an optional activity, there is no deliverable for 4.3.
Read the following carefully—you may wish to print this page out to use as a checklist as you complete items.
In this semi-scripted activity, you'll have a chance to practice some of the research skills you have developed so far and practice presenting your results clearly and concisely to your classmates. In addition, this activity should serve as good practice for the term project you will complete during Lessons 5-10 of the course.
You are a geospatial analyst for a small consulting firm based on the East Coast--"Retail Research" with experience in location intelligence studies. Clients Jay and Kay contacted you about starting a coffee shop business in Atlantic City, NJ. They are targeting the seaside resort of Atlantic City and would like to open a franchise. The entrepreneurs have been loyal customers of the specialty coffee chain "Campfire Coffee," a cowboy-themed coffee shop which has successful franchises located primarily in the western cities of Denver, Phoenix, Albuquerque, El Paso, Austin, and San Antonio. They are friends with the Campfire Coffee V.P. of Franchise Marketing. All think the time is right to attempt a location on the East Coast and agree that the raucous gaming town of Atlantic City might be a good place for a location, especially considering the flashy or gaudy nature of Atlantic City. Your job is to perform the initial phases of market research and analysis for Jay and Kay.
To help direct your research, the entrepreneurs have already done some legwork. Having spoken to both the local chamber of commerce and the region's business development office, they are considering two possible areas of location in and around Atlantic City:
Campfire Coffee is not ready to choose a specific site, so you needn't consider site characteristics such as strip mall or stand alone, lease options, or the like. Rather, they want to make sure that the location meets their basic trade area criteria. While they are not ready to make a site-specific decision, the group is willing to consider any specific sites if an obvious candidate shows up in your research.
The following guidelines MUST be incorporated in your analysis.
First, you must decide before continuing if you’re recommending a location:
Then, are you recommending a walk-in location or a drive-through location?
For a possible walk-in location:
For a possible drive-through location:
Create a PowerPoint Presentation from your sequence of slides/images/maps/reports with your comments annotating the presentation.
The entrepreneurs are busy developing their business plan—you must complete your presentation in less than 10 minutes, preferably in less than 5 minutes. Approximately five slides would be ideal, though, again, your only limitation is that you should complete your findings presentation in 5 minutes or less. Please include the following in your PowerPoint Presentation and drop it in Canvas in the Lesson 4.4 Activity: Locating a Coffee Shop in Atlantic City drop box.
Your grade will be based how well you make your case both in terms of evidence and presentation, albeit, again, with an informal tone.
Due Tuesday night 11:59 pm (Eastern Time). Check the calendar in Canvas for specific time frames and due dates.
Before moving on to this weeks information about the term project, please remember to return to Lesson 4 module in Canvas to take the Quiz 2: Competition, Sensors, and IoT
Due Tuesday night 11:59 pm (Eastern Time). Check the calendar in Canvas for specific time frames and due dates.
This week, you must organize your thinking about the term project by developing your topic/scope from last week into a short proposal.
Submit a brief project proposal (1 page) to the assignment box. This week, you should start to obtain the data you will need for your project. The proposal must identify at least two likely data sources for the project work, since this will be critical to success in the final project. Over the next few weeks, you will be refining your proposal.
Your proposal should include:
Refine your work and post a final proposal to the 'Term Project Discussion' board as plain text.
As you all finalizing your project proposals, consider the following aspects:
Submit your project proposal with abstract in Canvas to the Term Project: Project Proposal drop box.
Due Tuesday night 11:59 pm (Eastern Time)
Now ... don't wait for final feedback from the instructor--begin your data gathering now!
All Term Project related work and deliverables should be submitted in the Term Project module in Canvas.
Links
[1] https://www.census.gov/naics/?input=511210&year=2022
[2] https://www.naics.com/code-search/?naicstrms=grocery
[3] http://www.osha.gov/pls/imis/sic_manual.html
[4] https://sam.gov/SAM/
[5] http://www.census.gov/eos/www/napcs/index.html
[6] https://owl.purdue.edu/owl/research_and_citation/using_research/documents/20191212CitationChart.pdf
[7] https://www.census.gov/naics/
[8] http://icic.org/wp-content/uploads/2016/04/ICIC_JPMorganChase_Report-1.pdf
[9] https://www.naics.com/wp-content/uploads/2014/10/How_to_Use_NAICS_SIC_Codes_for_Marketing_NAICSAssociation.pdf?
[10] https://www.naics.com/wp-content/uploads/2014/10/Whitepaper_Cloning-Your-Best-Customers-for-B2B-Marketing-Success_NAICSAssociation.pdf?