GGR252H1 Lecture Notes - Lecture 4: Distance Decay, Organic Growth, Walmart

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10 Feb 2013
Lecture 4
Distance Decay
o Further away from a location the less the interactions with that location
The concept of range
o Range: the point at which
o There will be a point where interaction will fall to zero, because its costly
to time and money
Intervening opportunities, migration: retail interceptor rings
Identifying Service Areas (Areas of Trade)
Boundaries between competitors basic principles
o Line of Indifference target audience that is in the middle, have equal
distance from both locations, so they will go either way. (aka. Thiesson
Polygon- Dead Parent concept) (Only Factor is Distance)
o Gravity Concept- the lone if indifference will move towards the smaller
centre because people choose to go to the larger centre because they may get
better quality goods. (Distance and Size)
o Huff Model allows for probability and allows for overlapping, (distance and
size in a probability context)
o Converse Breakpoint the relative attraction, the large of the destination will
go to the more attractive
Relocation diffusion migration
Contagious diffusion AIDS, SARS, ideas
Hierarchical diffusion fashion, innovation, seen in technology
In retail
o Organic growth (contagious)- we’re in this location we spread from
here, open new stores close to the original location
o Acquisitions and Takeovers Wal-Mart took over a chain that was in
business WILKO
o http://blog.kiwitobes,com/?p=51
The Spatial Demand Curve
The higher the price the lower the purchases
Transportation cost increase with distance
The further the distance the greater the cost to the household (distance vs.
price tot household)
Greater distance, the lower the quantity purchased (distance (range) vs.
quantity purchased to household)
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