The document discusses trading area analysis, which involves analyzing geographic areas containing potential customers for a firm. Key benefits include uncovering customer demographics, identifying opportunities and strategies, and determining promotional focus. Important factors to analyze include population characteristics, labor availability, proximity to suppliers, competition, and regulations. The goal is to evaluate and select the most desirable trading area for a retail store location.

1. Trading Area Analysis
Dr. Gopal Thapa
Tribhuvan University
Email:thapazee@gmail.com

2. Benefits of Trading Area
 Consumers’ demographic and socioeconomic
characteristics are uncovered.
 Reveals opportunities and the strategy necessary
to succeed
 The focus of promotional activities is ascertained.
 Helps to identify media coverage patterns of
proposed or existing locations.
 A retailer learns whether the location will serve
new customers or take business from existing
ones.

3. Benefits of Trading Area
 Whether competitors want to open nearby stores if
the firm does not do so itself.
 The best number of stores for a chain to operate in
a given area is calculated.
 Geographic weaknesses are highlighted.
 The impact of the Internet is taken into account.
 Other factors like competition, financial
institutions, transportation, labor availability,
supplier location, lega.l restrictions are reviewed

4. Trading Area Analysis
 A trading area is a geographic area containing the
customers of a particular firm or group of firms
for specific goods or services.
 It is the first step in the choice of retail store
location
 which describe and evaluate alternative trading
areas and
 then decide on the most desirable one.

5. Characteristics of Trading Area
 Population size and characteristics
 Availability of labor
 Closeness to sources of supplies
 Promotion facilities
 Economic base
 Competition
 Availability of location
 Rules and regulations

6. Characteristics of Trading Area
▪ Population size and characteristics
▪ Total size and density
▪ Age distribution
▪ Average education level
▪ Percentage of residents owning homes
▪ Availability of Labor
▪ Management
▪ Management trainee
▪ Clerical

7. Characteristics of Trading Area
 Closeness of Sources of Supply
❖ Delivery cost
❖ Timeliness
 Promotion Facilities
❖ Availability and frequency of media
❖ Costs
❖ Waste
 Regulation
❖ Taxes
❖ Licensing
❖ Operations

8. Characteristics of Trading Area
 Economic Base
❖ Dominant industry
❖ Extent of diversification
❖ Growth projections
 Competitive Situation
❖ Number and size of existing competitors
❖ Evaluation of competitors
❖ Strengths and weaknesses
 Availability of Store Location
❖ Number and type of location
❖ Access to transportation
❖ Owning versus leasing opportunities