Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 1 Location, Layout, and Physical Facilities

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 2 Choosing a Location The right region of the country The right region of the country The right state in the region The right state in the region The right city in the state The right city in the state The right site in the city The right site in the city

Logic of Choosing a Location Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 4 Choosing the Region: Sources of Information U.S. Census Bureau - U.S. Census Bureau -  American Community Survey  Economic Census

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 5 American Demographics American Demographics AmeriStat AmeriStat Demographics USA Demographics USA Lifestyle Market Analyst Lifestyle Market Analyst Rand McNally's Commercial Atlas and Marketing Guide Rand McNally's Commercial Atlas and Marketing Guide Choosing the Region: Sources of Information

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 6 Sourcebook of County Demographics Sourcebook of County Demographics Sales and Marketing Management’s Survey of Buying Power Sales and Marketing Management’s Survey of Buying Power Editor and Publisher Market Guide Editor and Publisher Market Guide Small Business Development Centers Small Business Development Centers Choosing the Region: Sources of Information

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 7 Geographic Information Systems (GIS) Computerized programs combining map- drawing with database management capability Computerized programs combining map- drawing with database management capability Example: Census Bureau’s TIGER file Example: Census Bureau’s TIGER file Search through a database and then plot the results on a map Search through a database and then plot the results on a map Visual display reveals otherwise hidden trends Visual display reveals otherwise hidden trends

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 8 Selecting the State Factors to consider: Proximity to markets Proximity to markets Proximity to needed raw materials Proximity to needed raw materials Labor supply Labor supply Wage rates Wage rates Business climate Business climate Tax rates Tax rates Internet access Internet access

Sample State Evaluation Matrix Location Criterion Weight 10-high 1-low Score 5-high 1-low Weighted Score (weight x score) Total ScoreFlorida Georgia South Carolina Quality of labor force Wage rates Union activity Energy costs Tax burden Educational/ Training Assistance Start-up incentives Quality of life Availability of raw materials Other Assign to each location criterion a weight that reflects its relative importance (10 high to 1 low). Then score each state on a scale of 1 (low) to 5 (high). Calculate the weighted score (weight x score) for each state. Finally, add up the total weighted score for each state. The state with the highest total weighted score is the best location for your business. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 10 Selecting the City Population trends Population trends Population density Population density Competition Competition  Clustering Costs Costs Local laws and regulations Local laws and regulations  Zoning Compatibility with community Compatibility with community

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 11 Quality of life Quality of life Transportation networks Transportation networks Police and fire protection Police and fire protection Public services Public services Location’s reputation Location’s reputation Selecting the City

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 12 Retail and Service Location Considerations Trade area size Trade area size  Retail compatibility  Degree of competition  Transportation network  Physical, cultural, or emotional barriers  Political barriers

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 13 Index of Retail Saturation A measure of the potential sales per square foot of store space for a given product within a specific trading area w here C = Number of customers in the trading area RE = Average expenditure per person for the product RF = Total square feet of selling space allocated to the product

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 14 Reilly’s Law of Retail Gravitation An estimate of a site’s ability to attract customers w here BP = Distance in miles from location A to break point d = Distance in miles between locations A and B P a = Population surrounding location A P b = Population surrounding location B

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 15 Retail and Service Location Considerations Customer traffic Customer traffic Adequate parking Adequate parking Expansion potential Expansion potential Visibility Visibility Continued

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 16 Retail and Service Location Options Central Business Districts (CBDs) Central Business Districts (CBDs) Neighborhood locations Neighborhood locations Shopping centers and malls Shopping centers and malls

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 17 Shopping Centers and Malls Neighborhood Shopping Centers Neighborhood Shopping Centers  3 to 12 Stores; anchor is supermarket or drugstore Community Shopping Centers Community Shopping Centers  12 to 50 stores; anchor is supermarket, super- drugstore, or discount department or variety store Power Centers Power Centers  Combines drawing power of a mall with convenience of neighborhood shopping center Theme/Festival Centers Theme/Festival Centers  Employ unifying theme (often entertainment) and frequently target tourists

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 18 Shopping Centers and Malls Outlet Centers Outlet Centers  Rather than use anchor stores, rely on manufacturer’s and retailers’ outlet stores to draw shoppers Lifestyle Centers Lifestyle Centers  Anchor is upscale specialty chain store; designed to emulate a village main street Regional Shopping Malls Regional Shopping Malls  50 to 100 stores; anchor is one or more major department stores Super-regional Shopping Malls Super-regional Shopping Malls  Trade area stretches up to 25 miles

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 19 Retail and Service Location Options Near competitors Near competitors Outlying areas Outlying areas Home-based businesses Home-based businesses  49% of U.S. businesses are run from home continued

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 20 Manufacturing Locations Foreign trade zones Foreign trade zones

Figure How a Foreign Trade Zone (FTZ) Works Without FTZ Imported Parts and Materials Store Assemble Package Manufacture Process Mix With FTZ DutyPaid NoDutyPaid U.S.Sales Exports U.S.Sales Exports Small Company No Duty Paid Duty Paid No Duty Paid Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 22 Manufacturing Locations Foreign trade zones Foreign trade zones Enterprise and empowerment zones Enterprise and empowerment zones Business incubators Business incubators

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 23 Business Incubators Locations that combine low-cost, flexible rental space with a multitude of support services for their small business residents Locations that combine low-cost, flexible rental space with a multitude of support services for their small business residents 1,400 incubators operate across the U.S. 1,400 incubators operate across the U.S. They work!! Firms that “graduate” from incubators have a success rate of 87% They work!! Firms that “graduate” from incubators have a success rate of 87%

Source: National Business Incubation Association

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 25 Layout: External Factors Size and adaptability Size and adaptability External appearance External appearance  Create proper image or “personality” in customers’ eyes Entrances Entrances  Invite customers to come in Americans with Disabilities Act Americans with Disabilities Act Signage Signage

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 26 A Business Sign Tells potential customers who you are and what you're selling Tells potential customers who you are and what you're selling Must comply with local sign ordinances Must comply with local sign ordinances Should be visible, simple, and clear Should be visible, simple, and clear Should be changed periodically to avoid becoming part of the background Should be changed periodically to avoid becoming part of the background Should be legible both day and night Should be legible both day and night Must be maintained properly Must be maintained properly

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 27 Building Interiors Ergonomics is an integral part of any design Ergonomics is an integral part of any design Proper layout and design pays off in higher productivity, efficiency, or sales Proper layout and design pays off in higher productivity, efficiency, or sales Careful selection of colors can create the desired impressions among customers and employees Careful selection of colors can create the desired impressions among customers and employees Proper lighting is measured by what is ideal for the job being done Proper lighting is measured by what is ideal for the job being done

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 28 Building Interiors Scents can have a powerful impact in retail stores Scents can have a powerful impact in retail stores  Scent marketing Sound Sound  Background music can be a selling tool  Classical music encourages shoppers to slow down and makes them feel more affluent

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 29 Layout for Retailers The arrangement of merchandise and fixtures The arrangement of merchandise and fixtures “The stage on which a retail company functions” – Paco Underhill “The stage on which a retail company functions” – Paco Underhill Well-designed layout takes customers past plenty of displays of items they may buy on impulse Well-designed layout takes customers past plenty of displays of items they may buy on impulse  65% to 70% of purchase decisions are made after a customer enters a store

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 30 Three Layout Patterns Grid Grid  Rectangular with parallel aisles; formal; controls traffic flow; uses selling space efficiently  Supermarkets and self-service discount stores

Grid Layout Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 32 Free-Form Free-Form  Free-flowing; informal; creates “friendly” environment; flexible  Small specialty shops Three Layout Patterns

Free-form Layout Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 34 Boutique Boutique  Divides store into a series of individual shopping areas, each with its own theme; unique shopping environment  Small department stores Three Layout Patterns

Boutique Layout Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 36 Layout Guidelines Know your customers buying habits and plan your layout accordingly Know your customers buying habits and plan your layout accordingly Display merchandise as attractively as your budget will allow Display merchandise as attractively as your budget will allow Display complementary items together Display complementary items together Use music to set the mood Use music to set the mood Recognize the value of floor space; never waste valuable selling space with non- selling functions Recognize the value of floor space; never waste valuable selling space with non- selling functions

Space Values for a Small Store Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 38 Factors to Consider in Manufacturing Layouts Type of product Type of product Type of production process Type of production process Ergonomic considerations Ergonomic considerations Economic considerations Economic considerations Space availability within the facility Space availability within the facility

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 39 Manufacturing Layouts Product layout Product layout

Product Layout Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 41 Manufacturing Layouts Product layout Product layout Process layout Process layout

Process Layout Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 43 Manufacturing Layouts Product layout Product layout Process layout Process layout Fixed position layout Fixed position layout

Chapter 16 Location and Layout Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 44 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall