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GEO 106 (102)

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Ryerson University
GEO 106
Brad Mac Master

Lecture 1 Location analysis: search for a location that has comparative territorial advantages (location that has favorable physical, socioeconomic and political conditions for a specific type of economic activity to receive maximum profit, or to generate social well-being. What is marketing geography? It is a branch of economic geography. Marketing geography is concerned with the identification of the demand for various goods and services and with the arrangement for supply of these goods and services through an efficient distribution network. William Applebaum is regarded as the chief architect of marketing geography. Market: refers to an area with a population of consumers who have demand for consumer goods and services and have disposable income. A market also has spatial and dimension boundaries. Each group of players has different goals… Consumers: maximize private need and satisfaction with their available income, by purchasing the most satisfying goods and services (in terms of quality and price) Producers and distributors: maximize profits by using the most efficient combination of resources to produce the most profitable products Government: role is to maximize the general well being of all the citizens by using available resources to produce desirable public goods and services and to redistribute income. Government can regulate price, can prohibit supply of certain commodities and services even if there is a demand for these goods and services; call for social responsibility Urban clusters: very affluent middle aged city dwellers, with an average income of about 333 000 Winners circle: well off middle aged exurban families with an average income of about 102 000 Blue collar comfort: young prosperous blue collar families in exurbia, with an average household income of about 68 000 Cluttered nests: upper middle class multi-generational families with an average HH income of about 69 000 Young digerati: young and well off urban trendsetters making about 92 000 South Asian society: young upper middle class south Asian families making about 68 000 Acquisition: growth is obtained by purchasing another firm to gain entry into a new market. i.e. target acquired sellers in 2011 to expand into Canada. Organic growth: more traditional method where stores are opened up slowly. More stores are opened up based on performance and levels of demand in new prospective areas. Data sources: Demand side Aggregate data – census : collected by stats Canada Individual data – customer database: collected by retailers, marketing firms and researchers Supply side Aggregate data: collected by stats Canada, revenue Canada and the municipal planning department Individual data- 1. business directory: shopping center directory, yellow pages street directory 2. collected through field survey by: research institute and researchers Lecture 2: the geography of demand and expenditure pattern analysis Recent trends of consumer market change and implications for retailers: - Increase in consumer mobility - Increase in income and social polarization - Shift in consumption patterns - Change in family structure and population composition - Emergence of new consumer groups Factors that affect demand -Number of consumers - Consumer life style, preference and expectation - Disposable income (gross income – taxes) - Price of goods/services - Regulations and taxes Market size estimation 1. # of consumers * average disposable income/person 2. # of households * average disposable income/household 3. # of households * average disposable income per household * % of income spent on certain type of goods Survey of household spending: replaces two previous surveys, Family expenditure survey and the household facilities and equipment survey. This survey collects information about expenditures by households in Canada on a wide variety of goods and services - The SHS covers about 98% of the population in the 10 provinces. In the territories coverage was more restricted to, 91.7% in Yukon, 91.5 in NWT, and 68.3 in Nunavut - Sample size and Sampling method: sample is stratified multi stage sample selected from the labor force survey-sampling frame. The sample selection comprised two main steps: 1. The selection of clusters from the labor force survey 2. The selection of dwellings within these selected clusters - Clusters are selected from the following groups of areas of residence depending n the 2001 population size of the metropolitan area municipality or area in which they are located. - Urban 1 000 000 and over 500 000 – 999 999 250 000 – 499 999 100 000 – 249 999 under 30 000 - Rural Data quality Response rates varied from province to province. Selected households refuse to participate. The response rate in Ontario is the lowest. Some households participated but did not answer all questions. Missing responses were imputed using the nearest neighbor method. Values were taken from households with similar characteristics. If 30 or fewer households answered questions on spending of certain items, the data was deemed unreliable and suppressed. SHS data contents - average expenditure/household - percentage reporting - average expenditure per house hold reporting - percentage of total expenditure - median expenditure per house hold - median expenditure per household reporting Lecture 3: population projection and customer spotting Population projection: is an important part of market condition analysis, retail planners need to know not only the current level of demand but also future demand There are several methods: -Extrapolation methods - linear - exponential - Components of growth - Logistic method Linear method • P(target year) = P(base year) * (1+nr) r = {(Pt2– Pt1)/Pt1} / n the two “n’s” are different the first n is the number years between the base year and target year the second n is the number of years betwewen the two reference years used to calculate r Exponential method Does not assume a constant growth rate Assumes that the population grows exponentially P(target year) = P(base year) *e^nr r = {ln (Pt2/ Pt1)} / n n = number of year between Pt1 and Pt2 Components of growth The population of a region is determined by the adding the number of births and immigrations. And subtracting the number of deaths and emigration. Pt2= Pt1+ (births t1‐t2– deaths t1‐t2)+ (immigration t1‐t2 – emigration t1-t2) **FOR LONG TERM PROJECTION, LOGISTIC METHOD IS USED, THE UNDERLYING CONCEPT OF THE LOGISTIC EQUATION IS THAT GROWTH DECREASES OVER TIME DUE TO A REDUCTION IN AVAILABLE RESOURCES** CAUTIONS Generally speaking, population projection works better for shorter periods of time and for larger areas of geography The longer the projection period and the smaller the geographic area the less accurate the projection will be Lecture 4: retail structure analysis What is retail structure? - Refers to the composition of different types of retail activities (stores) in a given area of geography. These areas can be large or small. How to measure structural changes? Retail structure can be analyzed in a number of different ways: -Ownership structure - Business structure - Format structure - Spatial structure Why is structure analysis important? – 1. To find out if a particular structure is good or bad. A good structure is one that has a mix of stores that suit the needs of the local consumers; various stores complement each other; internal competition is minimal A bad structure is one with too many stores of the same types; too much internal competition; or oversupply of retail space 2. To improve our general knowledge about the retail economy and to calculate supply density 3. Help planner’s developers and business owners make decisions: For planners: is there an over supply of certain types of function and therefore should be controlled? Is there an under supply of certain types of functions and therefore be promoted? For developers: what facilities are oversupplied and what facilities should be built in the future to accommodate growing retail activities? For business owners: where should proposed stores be located, so that they fit into the local structure well and there is no undue competition? Retail structure is influenced by: - Invasion of American retailers - emergence of new format retailing - corporate merger and consolidation - changes in distribution system and e-tailing - “de-mailing” Impacts of foreign retailers: contributed to the demise of domestic retailers and also put pressure on other stores to reduce prices. Some retailers had to change their focus. Foreign retailers are also responsible for the loss of thousands of manufacturing jobs in Canada. It has been argued that opposition to foreign retailers is more emotional, concerning social instead of economic issues. New format stores Membership clubs: sell a wide range of consumer goods from food to clothing, electronics and household furniture. Shoppers must pay a membership fee an example is Costco and Sam’s club. Warehouse retail stores: similar to membership clubs but shoppers do not have to purchase a membership. Examples are office places, business depot home depot etc. Superstores: are very large supermarkets. They not only sell grocery but also house hold merchandise such as kitchen wares, medicines, photo finishing. These stores include Loblaw’s and walmart Discount department stores: sell the same products as the conventional department store but they use a self service format to reduce prices and profit margins. Some of them are in shopping malls others are in freestanding locations. Characteristics of new format stores: they are highly specialized. Their businesses concentrate on specific subsectors of retailing. They are much bigger than conventional stores in the same retail sub sector. They often serve the entire region by having multiple outlets at various locations in the city/region. Usually separated from shopping centers (began moving in recently). Often several new format stores are planned in a plaza called a power center aka retail park. consolidation: leads to a number of business advantages, gain greater economic scales and reduce costs through bulk buying and squeezing of manufacturers. Bargaining power has not shifted to the retailers. They play a more powerful role in “mediating the retailer-supplier relations”. Retailers only pay suppliers once the goods are sold thus reducing storage costs. the just in time system enables quick restocking. Traditional distribution systems followed a vertical integration, (producers/manufacturers, distributors importers wholesalers, retailers, and consumers Contemporary routes include methods in which the consumer can skip any part of the traditional method and purchase products or services from earlier stages in the distribution system) (factory outlets, warehouse retailers, direct sales, and internet sales) E-tailing : online shopping, its is 365 days, no restrictions for shoppers, but also has threats such as credit card scam, refunds are a hassle. E-taili
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