Factors Affecting Business Location


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Factors Affecting Business Location

  1. 1. Factors Affecting Business Location
  2. 2. Appropriate Locations for the Sale of Different Types of Consumer Goods 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•Shopping goods: Items purchased aftercomparing prices and features; should belocated where customers can easily compareprices and features. Examples: cars, clothes,appliances
  3. 3. Appropriate Locationsfor the Sale of Different Types of Consumer Goods •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
  4. 4. •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
  5. 5. Downtown Area•Centrally located and easily accessible•Offices and professional businesses•Varying rental rates depending on the town/city
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. Stand-Alone/Free Standing•Separate from other businesses•Often, but not always, located just outside shopping centers•Dependent on drive-by traffic•Must advertise•Rent usually lower
  12. 12. 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
  13. 13. 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
  14. 14. Local Competition•Direct Competition: Businesses selling thesame products or services.•Indirect Competition: Businesses offeringdifferent products or services yet competingfor the same consumer dollars.•Complementary Competition: Businessesthat sell products or services that can be usedwith other purchases.
  15. 15. Area PopulationCultural characteristics – various ethnic backgroundsVocation - what the people in that area do for a livingAge – important due to purchasing patternsIncome – how much are the people in the area willingor able to spendMobility - do they have their own transportation or arethey dependant on public transportationUnder-served consumers - people whose needs aren’tbeing met
  16. 16. Chosen Land and/or BuildingZoning – what types ofbusinesses or other structures canbuild in the area. See zoninglaws.Cost – highly popular area maycost moreTraffic patterns - congested,free-flowing, easy access, etc.
  17. 17. 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)