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Retail market segmentation,[object Object],Prof. Raghavendran V,[object Object]
Retail Location,[object Object],One of the important decisions that a retailer has to make is on location of the retail outlet.,[object Object],TYPES OF RETAIL LOCATIONS:,[object Object],Various options are available to the retailer for choosing the location of his store. The Choice of the location of the store again depends on the target audience and the kind of merchandise to be sold. A store location may be classified as:,[object Object],Freestanding/ Isolated store,[object Object],Part of a business district,[object Object],Part of a shopping center,[object Object],2,[object Object],Prof. Raghavendran V,[object Object]
Isolated store or a Freestanding Location:,[object Object],Prof. Raghavendran V,[object Object],3,[object Object],A freestanding location is a store located along a major traffic artery, without any other competitive retailers around. The biggest advantages of such a location is that is no competition around. ,[object Object],Due to above rentals are always low, parking facilities are available,[object Object]
Part of a Business District,[object Object],Prof. Raghavendran V,[object Object],4,[object Object],A retail store can be located as a part of a business district. A business district is a place commerce in the city.,[object Object],A CBD is the main centre of commerce and trade in the city. It is characterized by peak land rates and intense developments,[object Object],SBD is one, which has evolved over a period of time, with the spread of population within the city. It is characterized by a good mix of retailers, the stores are generally smaller than  those in the CBD & public,[object Object]
Part of a Shopping center,[object Object],Prof. Raghavendran V,[object Object],5,[object Object],A shopping center id defined by International council of shopping centers as a group of retail & other commercial establishments that is planned, developed, owned and managed as a single property. They has defined 8 basic types of shopping centers, they are:,[object Object],Neighborhood SC, Community SC, Regional SC,,[object Object],Super Regional center, Fashion/ Specialty center, Power, Theme and Outlet center,[object Object]
Steps involved in choosing a retail location,[object Object],Prof. Raghavendran V,[object Object],6,[object Object],Step1: Market Identification,[object Object],Step2: Deterring the market potential,[object Object],Demographic features of the population,[object Object],The characteristics of the households in the Area,[object Object],Competition & compatibility,[object Object],Laws & Regulations,[object Object],Trade Area Analysis,[object Object]
Prof. Raghavendran V,[object Object],7,[object Object],Step3 & 4: Identify Alternate Sites and Select the Site,[object Object],[object Object]
Accessibility of the market is also a key factor
The total number of stores and types of stores that exist in the area
Amenities available
To buy or to lease
The product mix offered,[object Object]
The Herfindahl-Herschman Index,[object Object],Prof. Raghavendran V,[object Object],9,[object Object],It is commonly as HHI, is a commonly accepted measure market concentration. The HHI is determined by adding the squares of the market shares of each competitor within the relevant product & geographic market.,[object Object],For Ex: HHI is 2600 (302+302+202+202= 2600),[object Object],It takes account of a large number of firms of relatively equal size.,[object Object]
Prof. Raghavendran V,[object Object],10,[object Object],The regulatory authorities in the US, believe that markets are concentrated when the HHI is above 1800, moderately concentrated when the HHI is between 1000 & 1800, and unconcentrated when is below is 1000. ,[object Object]
The index of retail saturation,[object Object],Prof. Raghavendran V,[object Object],11,[object Object],Another commonly used measure of market attractiveness is the Index of retail saturation. This index is based on the assumption that if market has a low level of retail saturation, the likelihood of success is higher. This theory considers the number of stores exist in a market. If a few stores are there, then it unable to satisfy the customers,[object Object]
Prof. Raghavendran V,[object Object],12,[object Object],Saturation is calculated in terms of existing retail facilities and their use.,[object Object],IRS= (H*RE)/ RF,[object Object],H= No of Households in that area,[object Object],RE= Annual retail expenditures for a particular line of trade/ household in that area,[object Object],RF= The total Square footage of that particular line of trade in that area, including the proposed store.,[object Object]
Reilly’s Law of Retail Gravitation,[object Object],Prof. Raghavendran V,[object Object],13,[object Object],When two cities complete for retail trade area from the immediate rural (suburban) areas, the breaking point for the attraction of such trade will be more or less in direct proportion to the population of the cities and inverse proportion to the square of the distance from the immediate area of each city.,[object Object],Mathematically it is denoted as…,[object Object],(Ba/Bb)= (Pa/Pb)*(Da/Db)2,[object Object],Ba & Bb are cities which draws for business.,[object Object],Pa & Pb are population density from a & b city respectively,[object Object],Da & Db are the distance to the intermediate place.,[object Object]
Central Place Theory,[object Object],Prof. Raghavendran V,[object Object],14,[object Object],It describes that central place as centre of commerce of a village, town or city, which comprises of a cluster of retail organization. In this theory there are 2 important concepts– the range and the threshold,[object Object],Range is distance, wherein customer is willing to travel to for particular product.,[object Object],Threshold is the minimum amount of consumer demand that exist for a store to survive.,[object Object],So technically, Range should be > threshold for store to economical,[object Object]
Huff’s Model of trading Area Analysis,[object Object],Prof. Raghavendran V,[object Object],15,[object Object],Its popularity and longevity can be attributed to its conceptual appeal, relative ease of use and applicability to wide range of problems, of which predicting consumer spatial behavior is the most commonly known. The probability (Pij) that consumer located at ‘I’ will choose to shop at store ‘j’ is calculated according to formula.,[object Object],Pij=Aαj Dij–β / ∑ nj=1 Aαj – Dij-β,[object Object]
Prof. Raghavendran V,[object Object],16,[object Object],Aj= measure of attractiveness of store j, such as square footage,[object Object],Dij= Distance from i to j,[object Object],α= attractiveness parameter estimated from empirical observations,[object Object],β= distance decay parameter estimated from empirical observations,[object Object],N= total number of stores including store j,[object Object]
Market Segmentation,[object Object],Prof. Raghavendran V,[object Object]
Definition,[object Object],A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. ,[object Object],[object Object]
it is homogeneous within the segment (exhibits common attributes)
it responds similarly to a market stimuli
it can be reached by a market intervention,[object Object]
of segments can be measured. Differential,[object Object],[object Object]
reached and served.
 Segments must be large or            profitable enough to serve.Actionable,[object Object],[object Object]
 Must be able to attract and serve                  the segments.,[object Object]
Segmentation: Geographic Criteria,[object Object],Geographic variables ,[object Object],region of the world or country, East, West, South, North, Central, coastal, hilly, etc. ,[object Object],country size/country size : Metropolitan Cities, small cities, towns. ,[object Object],Density of Area Urban, Semi-urban, Rural. ,[object Object],climate Hot, Cold, Humid, Rainy. ,[object Object]

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