A trade area is a geographic region where a business can reasonably expect to draw customers from. The size and shape of a trade area can vary depending on the type of business, but it typically includes the surrounding towns and suburbs. Trade areas are important for businesses to consider when planning their marketing strategies, because they can help to determine where to allocate resources such as advertising dollars.
There are several ways to define a trade area. You can get customer addresses through business lists, newsletter sign-ups, and so on. Or, you can simply gather zip codes. Whatever method you choose, the trade area should be centered on the customers you want to reach most. Whether your customers are new or old, defining trade area boundaries should be based on their location. Here are some tips to make the most of your trade area.
Walk/drive time trade areas
A retailer is trying to decide where to open its next store location, and they have been analyzing their “walk/drive time trade areas” to determine which locations will perform the best. Walk/drive time trade areas are the result of driving every possible direction within a specified period of time. The business analyst then models the location’s traffic volume using an algorithm that can determine the best route for the store. This algorithm is based on real-world behavior and includes over 30 optional restrictions.
This theory measures the store’s market share by taking into account the catchment area around its store, and geospatial data such as traffic volumes and speed limits. Based on these data, a trade catchment area is created. This is a more accurate method of location selection because it accounts for factors such as terrain and obstacles. It is also more accurate than buffer-based models because the walk/drive time model takes into account the distance between a store and its customers.
Secondary retail trade area
A secondary retail trade area is a defined geographic location where a business operates. Its boundaries are determined by the polygons that constitute the primary trade area and secondary trade area. This information helps retailers understand the market and identify pockets of softness or contribution growth. For example, in an analysis of a primary trade area, businesses can identify areas that are dominated by tourists or by employees of large employers. These areas are prime for comparison shopping.
A secondary retail trade area represents the portion of the population that shops at a particular retailer that is outside of the main trade area. This area typically provides about 15 to 20 percent of a business’s revenue. A tertiary trade area, also known as a fringe area, is smaller than a secondary trade area, and it is typically seen only in urban centers. The main distinction between the two is in the proportion of consumers who are located within the primary and secondary zones.
A shoe store was looking to determine the primary and secondary retail trade areas in order to tailor product offerings and marketing efforts to their core customer base. Using consumer-reporting, the store conducted a detailed analysis of its customer profile. The results of this research revealed gaps and opportunities within the secondary retail trade area. The shoe store will use the information to develop an effective marketing and sales strategy that will bring in customers from both areas. So, where are the opportunities in Klamath?
Tertiary retail trade area
A community’s retail trade area has two layers: the primary zone, which provides about 60% to 70% of the store’s revenue, and the secondary zone, which provides the rest of the business. The primary zone also includes residential and colonial areas nearby. In addition, the secondary zone contains only about 20% of the community’s total customer base and merchandise demand. While the primary zone has the highest level of sales, the secondary zone can help local retailers differentiate themselves from the competition.
The tertiary zone, also known as the outermost ring, is composed of retail businesses that cater to occasional shoppers. It is located on the outskirts of town, where rents tend to be lower. Some examples of tertiary retail trade areas are the Granite site and the Southerton industrial area. The importance of this area cannot be overstated. Retail sales in this zone are approximately $5.5 billion in 2010 in the region.
In addition, the tertiary sector includes industries that provide services and operational frameworks to the rest of the economy. This includes the shipping and transportation industry, which has as its primary purpose moving people. Then, there are traditional service industries, such as food service providers and financial services. This industry has a significant impact on the overall economy. If a community wishes to make their marketing efforts more effective, they should consider partnering with an outside firm to document retail demand in the trade area.
In conclusion, a trade area is a region where businesses can increase their profits by trading with one another. The theory behind trade areas is that, because businesses are located in close proximity to one another, they are able to save on transportation costs and pass those savings on to consumers. Trade area theory has been used to explain the existence of shopping malls, industrial parks, and business districts.