Chapter 12Services

Key Issue 2

Distribution of Consumer Services Central place theory

Market-area of a service Size of market area

Market area analysis Profitability of a location Optimal location within a market

Hierarchy of services and settlements Nesting of services and settlements Rank-size distribution of settlements

Central Place Theory Central Place: a market center for the

exchange of goods & services Centrally located to maximize

accessibility Compete against each other Creates a regular pattern of settlements

Central Place Theory Central Place Theory: explains how

services are distributed & why a regular pattern exists

1930s Walter Christaller, Germany

Market Area of a Service Market Area (Hinterland): area

surrounding a service from which customers are attracted

Circle drawn around node of service Territory inside is its market area

Market Area of a Service People usually choose to get services

from nearest location Circles often overlap or leave gaps Squares remove gaps, but then distance

from center varies Hexagons are best shape Geographers use hexagons to indicate

market areas

Market Areas as Hexagons

Fig. 12-5: Hexagons are often used to delineate market areas because they are a compromise between circles, which have edges equidistant from the center but leave gaps, and squares, which don’t leave gaps but whose edges are not equidistant from the center.

Size of Market Area Market areas vary: range & threshold Range: maximum distance people are

willing to travel to use a service Travel short range for everyday

services: groceries, laundromats, fastfood

Long distance range for sporting events, concerts

Size of Market Area: Range How far are you willing to travel for fast-

food? A nice restaurant? Average: 3 miles, 5 miles

How far are you willing to travel for a concert?

Retailers define range as max distance (time) that 2/3 to ¾ of customers will travel

Size of Market Area: Threshold Threshold: minimum number of people

needed to support the service to make profit

Service provider needs to determine if enough consumers is possible

Movie theatre: Chiropractor: Thrift stores: Amusement Parks: Nightclubs: Shopping mall:

Market-Area Analysis Retailers & Service providers use

research to determine to find best profitable location

Profitability of a Location Range & Threshold determine most

profitable location for business Convenience Store People are willing to travel 15 mins Store must sell min $1000/week Avg. Customer spends $2/week How many customers needed? What else needs to be considered?

Market Areas for Stores

Fig. 12-1.1: Market areas, ranges, and thresholds for department stores in the Dayton, Ohio metropolitan area. Stores are closer together in areas with higher incomes.

Optimal Location Within A Market: Linear Settlement

Where should service be located within the market to maximize profit?

Ocean City, Maryland: Linear Best location minimizes distance for

delivery drivers & customers Mathematically in middle of population

Optimal Location for Linear Market

Ocean City, MD Is half way down strip best location? Why/Why not? Gravity Model: predicts optimal

location is directly related to number of people in area & distance people must travel to access it

Greater number of people in area = more potential customers

Farther distance = less customers

Optimal Location (for Pizza-Delivery Service)

Fig. 12-6: The optimal location for a pizza delivery shop with seven potential customers in a linear settlement (top) and with 99 families in apartment buildings (bottom).

Optimal Location within a Market: Non-Linear Settlement Most settlements are more complex Gravity Model still applies:

Identify possible site Identify where potential users live Measure distance to each potential user

Use data to determine optimal location

Hierarchy of Services & Settlements Services in small settlements are limited

because of small population Larger settlements provide more

consumer services

Nesting of Services and Settlements Central Place Theory in MDCs: market areas

are series of hexagons Overlapping hexagons of various sizes Walter Christaller, Germany 7 sizes of settlements Smallest: Market hamlet: pop 800, 17sq miles Largest: Regional Capital city: larger numbers

Central Place Theory

Fig. 12-7: Market areas are arranged into a regular pattern according to central place theory, with larger settlements fewer in number and further apart.

Nesting Market Area Distances between settlements follow

regular pattern Convenience stores have smaller

thresholds, ranges, and market areas than supermarkets

More numerous

Market Areas for Convenience Stores

Fig. 12-8b: Market area, range, and threshold for UDF convenience stores in Dayton, Ohio.

Market Areas for Supermarkets

Fig. 12-8a: Market area, range, and threshold for Kroger supermarkets in Dayton, Ohio.

Supermarket & Convenience Store Market Areas

Fig. 12-8: Market area, range, and threshold for Kroger supermarkets (left) and UDF convenience stores in Dayton, Ohio. Supermarkets have much larger areas and ranges than convenience stores.

Rank-Size Distribution of Settlements Rank Size Rule: the country’s second

largest city is one-half the size of the largest

If plotting the data, it is NOT in straight line, it does not follow rank-size rule

Applies to many MDCs, not all

Rank-Size Distribution of Cities

Fig. 12-9: Cities in the U.S. closely follow the rank-size distribution, as indicated by the almost straight line on this log scale. In Romania, there are few settlements in two size ranges.

Primate City Rule The largest settlement has MORE than

2x the amount of people as second-ranking settlement

Ex: Denmark Copenhagen: primate city-1 million Arhus: second largest-200,000 Ex: UK London: 8 million Birmingham: 2 million

Rank-Size Distribution Regular hierarchy (U.S.) shows society is

sufficiently wealthy to distribute goods throughout country

Some countries try to improve rank-size distribution

Limit migration to large cities Try to populate rural areas

Periodic Markets Collection of individual vendors who offer

goods/services together on certain day(s) Set up in street/public place in morning, taken

down at end of day

Common in LDCs and rural areas of MDCs full-time retailign not supported Varies by culture Ex: 1x in Muslim countries, no market Fridays