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Factors affecting business location

Factors affecting business location






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    Factors affecting business location Factors affecting business location Presentation Transcript

    • Module 10 Lesson 2 Factors Affecting Business Location
            • Convenience goods : Items bought out of habit and sold in numerous outlets; should be available close to consumer’s home or along the route traveled regularly. Examples: bread, milk, gasoline
      Appropriate Locations for the Sale of Different Types of Consumer Goods
      • Shopping goods : Items purchased after comparing prices and features; should be located where customers can easily compare prices and features. Examples: cars, clothes, appliances
      • Specialty goods : Items that consumers purchase infrequently and will make an extra effort to buy; location is not a major factor since customers will go out of their way to make these purchases. Care should be taken to locate near businesses of comparable quality and prices. Examples: specific brands, designer items, or exclusive merchandise
      Appropriate Locations for the Sale of Different Types of Consumer Goods
    • Types of business locations
      • Downtown/central shopping district
      • Neighborhood shopping center
      • Community shopping center
      • Regional shopping center or mall
      • Super-regional shopping center
      • Industrial park
      • Stand-alone/freestanding
      • Home-based
    • Downtown Area
      • Centrally located and easily accessible
      • Offices and professional businesses
      • Varying rental rates depending on the town/city
    • Neighborhood Shopping Center
      • Close to residential areas to meet the convenience needs of the nearby neighborhood residents
      • Usually includes a supermarket or drug store as an anchor tenant
      • Suitable location for goods and services purchased frequently
    • Community Shopping Center
      • Serves residents of many neighborhoods
      • Combines convenience goods and shopping goods
      • One or two major stores plus 10 or more smaller stores
      • Variety or junior department store as anchor tenants
      • Rent affordable, but higher than neighborhood shopping center
    • Regional Shopping Center or Mall
      • Combines three or four anchor stores with 40 or more other stores
      • Located to serve several towns or cities in the region
      • Less accessible for some customers due to distance customers due to distance
      • Rent may be high
    • Super Regional Shopping Center
      • Extremely large - exceeds 750,000 square feet
      • Many anchor stores and hundreds of smaller stores
      • Designed to attract customers willing to travel great distances to shop
      • Rent very high
      • Not recommended for new business owners
      • Example: Mall of America
    • Industrial Park
      • Business properties developed on less expensive sections of land away from housing developments and downtown areas
      • May be subsidized by communities in order to attract industrial businesses
    • Stand-Alone/Free Standing
      • Separate from other businesses
      • Often, but not always, located just outside shopping centers
      • Dependent on drive-by traffic
      • Must advertise
      • R ent usually lower
    • Home-based
      • Located in a private residence
      • Suitable for businesses requiring little personal contact with customers or where work is picked up or dropped off
      • No rent to pay
      • Possible tax savings
    • Before Selecting a Site, Several Factors to Consider
      • Local competition
      • Area population
      • Chosen land and/or building
      • Features
      • Proximity to target customers
      • Proximity to other businesses
    • Local Competition
      • Direct Competition : Businesses selling the same products or services.
      • Indirect Competition : Businesses offering different products or services yet competing for the same consumer dollars.
      • Complementary Competition : Businesses that sell products or services that can be used with other purchases.
            • Area Population
        • Cultural characteristics – various ethnic backgrounds
        • Vocation - what the people in that area do for a living
        • Age – important due to purchasing patterns
        • Income – how much are the people in the area willing or able to spend
        • Mobility - do they have their own transportation or are they dependant on public transportation
        • Under-served consumers - people whose needs aren’t being met
    • Zoning – what types of businesses or other structures can build in the area. See zoning laws. Cost – highly popular area may cost more Traffic patterns - congested, free-flowing, easy access, etc. Chosen Land and/or Building
    • Other Features of Importance
      • Adequate space
      • Safe, well-lighted area
      • Easy access and exit
      • Adequate parking
      • Proximity to target customers
      • Proximity to other businesses (helps ensure customer traffic and may boost positive image)