Market Selection and Retail Location Analysis
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Questions and Answers

What is an exclusivity clause in a retail lease?

  • A clause that guarantees a fixed payment for the lease term.
  • A term that allows a reduction in rent based on competitor performance.
  • A provision that grants the retailer sole rights to sell a specific line of merchandise. (correct)
  • A condition that allows only certain types of merchandise to be sold.

Which area would likely have the highest rental costs for mall space?

  • Storage areas.
  • Spaces in the back of the mall.
  • Spaces near restrooms.
  • Food court areas. (correct)

What typically characterizes fixed payment leases?

  • Payments are contingent on sales revenue.
  • Payments vary based on customer traffic levels.
  • Payments increase with inflation.
  • Payments remain constant regardless of performance. (correct)

What is a guaranteed traffic rate in the context of mall rentals?

<p>A stipulation for rent reduction if traffic does not meet predetermined levels. (A)</p> Signup and view all the answers

Which of the following could be classified as an 'other expense' in a mall lease agreement?

<p>Utilities for common usage service areas. (B)</p> Signup and view all the answers

What does a Gantt chart primarily illustrate?

<p>Project scheduling and timelines (D)</p> Signup and view all the answers

Which of the following is a strength identified in the SWOT analysis?

<p>Black is the color of outer space (D)</p> Signup and view all the answers

In the Business Model Canvas, which of the following is NOT one of the sections?

<p>Cost Analysis (C)</p> Signup and view all the answers

Which color in the weaknesses section of the SWOT analysis symbolizes something positive?

<p>Yellow represents ripe lemons (D)</p> Signup and view all the answers

Which of the following best describes the 'Opportunities' component in a SWOT analysis?

<p>Positive external factors for growth (B)</p> Signup and view all the answers

What is the relationship between store size and trading area?

<p>Larger stores attract customers from further distances. (B)</p> Signup and view all the answers

What role does distance between competing stores play in trading areas?

<p>Increasing distances between stores leads to larger trading areas. (B)</p> Signup and view all the answers

Which of the following factors does NOT influence a trading area's characteristics?

<p>Accessibility to public transportation (A)</p> Signup and view all the answers

What is considered a '100-percent location' for a retail store?

<p>A site not suitable for any other use. (C)</p> Signup and view all the answers

Which characteristic is important in evaluating site conditions?

<p>Number and types of vehicles passing by. (B)</p> Signup and view all the answers

What does demand density indicate for retailers?

<p>Concentration of potential demand for goods. (D)</p> Signup and view all the answers

Which of the following is NOT a typical criterion for site evaluation?

<p>Number of nearby schools. (C)</p> Signup and view all the answers

What is the Impact of eminent domain law on site availability?

<p>It enables governments to seize property for community benefits. (A)</p> Signup and view all the answers

What is the primary focus of market identification in retail location analysis?

<p>Identifying the most attractive markets (A)</p> Signup and view all the answers

Which of the following is NOT a criterion for market identification?

<p>Profitability (B)</p> Signup and view all the answers

What does accessibility in market identification refer to?

<p>The extent to which marketing can target a segment (A)</p> Signup and view all the answers

Which type of retailer reaches customers outside of a physical store?

<p>Nonstore-based retailers (C)</p> Signup and view all the answers

Which of these retail environments is also known as Temples of Consumption?

<p>Shopping Centers and Malls (A)</p> Signup and view all the answers

What is meant by substantiality in the context of market identification?

<p>The market segment's size and economic worth (D)</p> Signup and view all the answers

Which of the following is an example of a store-based retailer?

<p>Shopping malls (C)</p> Signup and view all the answers

In site selection for retail, what does the term 'fixed store location' signify?

<p>A permanent retail position that customers travel to (B)</p> Signup and view all the answers

What characterizes freestanding retail locations?

<p>They usually sit along major traffic arteries without adjacent competitors. (B)</p> Signup and view all the answers

What is the purpose of a Geographic Information System (GIS)?

<p>To store, analyze, and visualize geographic data. (D)</p> Signup and view all the answers

What does the Index of Retail Saturation measure?

<p>The demand for a product relative to the supply of retailers. (B)</p> Signup and view all the answers

What does the Buying Power Index combine to evaluate a market's potential?

<p>Effective buying income, retail sales, and population size. (C)</p> Signup and view all the answers

What happens to the trading area size as consumer mobility increases?

<p>The trading area size increases. (D)</p> Signup and view all the answers

Which factor primarily affects the size of a store's trading area?

<p>Customer information and shopping habits. (D)</p> Signup and view all the answers

What distinguishes nontraditional retail locations from traditional ones?

<p>They occupy unique spaces such as airports and hospitals. (A)</p> Signup and view all the answers

Which statement about retail gravity theory is accurate?

<p>It assumes higher population leads to more merchandise availability. (B)</p> Signup and view all the answers

Flashcards

Market Identification

The process of identifying the most attractive markets for a retailer.

Measurability

The existence of objective data on the attributes of the target market (e.g., age, gender, education).

Accessibility

The extent to which marketing efforts can be specifically targeted at a particular market segment.

Substantiality

Whether the target market is large enough to be profitable.

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Target Market

The specific segment of the market that the retailer chooses to focus on.

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Store-Based Retailers

Retailers operating from a fixed store location, requiring customers to travel to the store.

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Nonstore-Based Retailers

Retailers that reach customers at home, work, or other locations without a physical store.

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Business District

An unplanned shopping area typically centered around a geographic point where transportation converges.

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Freestanding Location

A retail store located in a stand-alone building, usually along major traffic arteries, without nearby competing stores.

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Nontraditional Location

Retail stores located in unconventional places, such as airports, terminals, schools, or hospitals.

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Geographic Information System (GIS)

A computer system that collects, stores, manages, analyzes, and displays geographic data.

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Retail Gravity Theory

A theory that predicts the number of customers attracted to a store based on the population of the area and the relative attraction of other stores.

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Index of Retail Saturation

A measure of the total demand for a product in a specific area compared to the existing supply of stores.

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Buying Power Index

A metric that combines income, retail sales, and population to measure the overall spending potential of a market.

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Trading Area

The geographic region where most customers of a store or business district reside.

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Competitor Analysis

Evaluating the number, location, and competitiveness of direct competitors in the area. This helps understand the market landscape and potential challenges.

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Lease Length

The duration of a lease agreement, which can significantly impact costs and flexibility.

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Exclusivity Clause

A provision in a lease that grants a retailer the exclusive right to sell certain merchandise within a defined area.

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Guaranteed Traffic Rate

A clause in a lease that reduces rent if a shopping center fails to meet a predetermined traffic volume.

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Anchor Clause

A lease provision that reduces rent if an anchor store (a major retailer attracting customers) does not open on time.

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Trading Area Size

The geographical area from which a store draws its customers. It's influenced by factors like the store's size, merchandise assortment, and competition.

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Trading Area Boundaries

The limits of a store's trading area, often defined by natural or man-made obstacles like rivers, mountains, or highways.

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Demand Density

Measures how concentrated potential customers are for a specific retailer's goods and services within a given area.

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Supply Density

Indicates the number of existing retail establishments (competitors) in a specific area.

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Eminent Domain

The government's right to take private property for public use, even if the owner doesn't want to sell.

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100-Percent Location

An ideal retail location where there is no better use for the site than the planned store.

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Traffic Characteristics

Factors related to vehicle and pedestrian traffic near a potential site, including volume, congestion, access, and physical barriers.

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Types of Neighbors

The types of businesses located near a potential site, which can influence customer traffic and brand image.

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Gantt chart

A visual representation of a project schedule, showing tasks, durations, and dependencies across a timeline.

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SWOT analysis

A strategic planning tool that identifies a company's internal strengths and weaknesses, and external opportunities and threats.

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Strengths

Internal capabilities, resources, or advantages that give a company a competitive edge.

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Weaknesses

Internal limitations, shortcomings, or vulnerabilities that hinder a company's performance.

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Business Model Canvas

A strategic framework used to develop and visualize a company's business model, outlining key elements like customer segments, value propositions, and revenue streams.

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Study Notes

Market Selection and Retail Location Analysis

  • Market selection involves identifying the most attractive markets.
  • Site analysis evaluates demand and supply for each market.
  • Site selection involves choosing the best available site(s).

Market Identification

  • Criteria:
    • Measurability: Objective data on target market attributes (e.g., age, gender, education, religion) exists.
    • Accessibility: Marketing efforts can target specific market segments uniquely (e.g., TV, radio, websites).
    • Substantiality: The target market is large enough to pursue economically.
  • Target Market: The market segment a retailer chooses to target through their marketing efforts.

Reaching the Target Market

  • Store-Based Retailers: Operate from fixed locations requiring customer travel. Types include: business districts (CBDs), shopping centers/malls, freestanding, and non-traditional.
  • Nonstore-Based Retailers: Reach customers outside store locations. Types include: street peddling, mail order, direct selling, internet (e-commerce), and automated merchandising systems.

Store-Based Retailers

  • Business District (CBD): Unplanned shopping area around public transportation hubs.
  • Shopping Centers/Malls: Centrally managed, planned districts with complementary merchandise offerings and anchored stores.
  • Freestanding Location: Along major traffic arteries, without adjacent competing stores.
  • Non-Traditional Location: Stores in airports, terminals, schools, or hospitals.

Geographic Information System (GIS)

  • A geographic information system (GIS) is an integrated computer hardware and software system for storing, managing, analyzing, editing, outputting, and visualizing geographic data.

Retail Location Theories

  • Retail Gravity Theory: As community population increases, it will offer more merchandise and serve as a drawing power to nearby customers.
  • Index of Retail Saturation: This reflects total demand for a product, determines if an area is over- or under-supplied, and assesses the availability of current retailers to meet demand.
  • Buying Power Index: Combines effective buying income, retail sales, and population size to assess a market's potential.

Site Analysis

  • Size of the Trading Area: Area where customers live and are likely to travel for a business or district.
    • Customer spotting analysis maps demographic information and attitudes, shopping habits to predict store catchment area.
    • Factors impacting trading area size include store size, consumer mobility, distance from competing stores, and geographical barriers like natural and man-made obstacles.
  • Description of the Trading Area: Factors include income levels, age, family status, race, culture, religion, population density, urbanization, and housing types; alongside lifestyles, retail opportunities, and financial/media habits are crucial.
  • Demand and Supply Density: This measures potential demand for a retailer's goods and how much services concentrate in an area (e.g., census tracts, ZIP codes). It also highlights existing retail establishments and their locations helping assess sites for potential new businesses

Site Selection

  • All retailers aim for 100% location (no better use), considering site nature, traffic characteristics, neighborhood types, and lease terms. Factors for site selection include:
    • Site Availability: Determine availability after demand-supply density analysis and consider Eminent Domain Law (government seizing property).
    • Nature of the Site: Is it a vacant space, a vacant lot, or a planned center?
    • Traffic Characteristics: Vehicles & pedestrian flow, street congestion, accessibility, and physical barriers.
    • Type of Neighbors: Number and type of existing stores, direct competitors, other merchants.
    • Terms of Purchase or Lease: Lease length, exclusivity clauses, guaranteed traffic, anchor clauses, payment terms.

Additional Summary

  • Best locations are expensive.
  • Specific data examples: mall rentals in the Philippines cost more in Metro Manila than in provinces and certain areas might command higher prices based on location.

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Related Documents

Market Selection and Retail Location Analysis PDF

Description

This quiz covers the essential aspects of market selection and retail location analysis, focusing on the identification of attractive markets. It discusses criteria for market identification and how store-based and nonstore-based retailers reach their target markets. Test your knowledge on these crucial retail concepts.

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