1. PATTERNS OF SETTLEMENT REFLECT WHERE SERVICES ARE PROVIDED

2. Tertiary Sector of the Economy: Services
Marketplace in Kashgar, Western China
Tertiary Sector of the Economy: Services
Times Square New York City
A Service is something that fulfills a human want or need in return for money
situation factor:
proximity to market
Where people live!
Town Center Mall, Kennesaw, Georgia
Marketplace in Bati, Ethiopia

3. Services & settlements
Most people in developed countries work in such places as shops, offices, restaurant, universities, and hospitals
tertiary/service sector of the economy
Farm & factories are what sectors?
Services only focus on one situation factor: proximity to market
Settlement: permanent collection of buildings where people reside, work, and obtain services
Services generate more than 2/3 of GDP in MDC’s…less than ½ in LDC’s

4. Compare 2005 to 2017
Find all the things that have changed…

5. Types of Services Consumer services:
retail, education*, health, travel, restaurants, etc)
½ of U.S. jobs
Business services :
facilitate business such as banks, insurance, law, information services, etc)
¼ U.S. jobs
Public services: security and protection. *Public school (education can be consumer too)
Only 10% of U.S. jobs

6. Origin of Services: How did services originate?
Consumer & public came first, then business:
Burial, tools, clothing (con.)
Defense & religion (pub.)
Food storage, trade, record keeping (bus.)

7. Employment Change in U.S.
Growth in employment in the U.S. has been entirely in the tertiary sector, with the greatest increase in consumer services overall and professional services in the business sector.
What type of jobs are professional services?
Lowest in transportation and utilities: why?...better technology, needs less people

8. Where are consumer services distributed?
What things might influence where someone locates there business?

9. How are services distributed?
Atlanta (proper) 450,000
Marietta (proper) 58,000
Acworth (proper) 19,000
Hiram (proper) 3,500
Looking at the populations of the following cities, where would you expect to find:
Gas station
Immigration lawyer
Prada (high end) fashion boutique
Major Grocery Store
Shopping mall
Heart transplant surgeon
Art dealer
General Store
Family owned clothing store

10. Have you ever been asked what your zip code is when you check out at a store?

11. Central Place Theory
Use CPT to identity the amount of customers and how far they will travel for your service
Central place: market center
Market area: the area surrounding a service from which customers are attracted (aka hinterland)
Range: maximum distance consumers will travel for a service.
Threshold: minimum number of consumers needed to support the service.
Let’s think of services that have:
A high range
A high threshold
A low range
A low threshold

13. 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.

14. Why cities are where they are.
Watch until…5:00 minute

15. CPT and Hierarchy of Settlements
Hamlet: fewest goods and services available
Village: includes the region of the hamlet and some additional goods and services
Town: includes the region of the village and hamlet and provides some additional goods and services
City: includes the region of the village, hamlet and town and provides additional goods and services
Market areas are arranged into a regular pattern according to central place theory, with larger settlements fewer and further apart.

16. Hierarchy of Settlements
Small settlements are limited to consumer services that have
Smaller thresholds (Rent is not high for store space or selling items that are frequently needed)
Short ranges (sell things that are necessities)
Small market areas
Ex: a department store like Macy’s has a high threshold to cover costs, small towns don’t have enough people to cover that, they are better suited for large settlements (cities)

17. “Daily Urban Systems” now where do you put your service once you’ve identified CPT?
Fig : The Commerce Department divided the U.S. into “daily urban systems” with functional ties, especially commuting to the nearest metropolitan area.

18. Market Area Analysis Market area analysis: GRAVITY MODEL
Shows the profitability of a location
Would a convenience store be profitable in your community?
Range: survey people to find out how far they are willing to drive (15 minutes?)
Threshold: sell $10,000 worth of goods per week to make a profit, average customer spends $2, store needs 5,000 customers per week to break even
Draw a hexagon based on population statistics around your central place (business location), see if it justifies building your business

19. Optimal Location in linear (line) settlement pg. 409(for Pizza Shop)
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).

20. Gravity Model for Services
Predicts that the optimal location of a service is directly related to the number of people in the area and inversely related to the distance people must travel to access it. In other words:
More people=more potential customers.
Farther people are from a service=less likely to use it.
Number of people +
Distance

21. Why does this happen??? Why might there be so many gas stations and fast food restaurants clustered together??? Don’t they steal customers from each other???

22. Hotelling’s SERVICE location theory
Suppose that initially two ice cream vendors locate at points A and C in the illustration below. These locations would minimize the average traveling costs of the buyers and would result in each vendor getting one half of the business. However, if vendor A moved to point B, he would keep all customers to his left and get some of C’s customers. For similar reasons, C would move toward the center, and both vendors would locate together in the middle.

23. Hotelling’s SERVICE location theory
Proposes that with many services it makes sense for their to be many of the same services in one small geographical area.
It is sometimes called the “principle of minimum differentiation.”
Examples:
Many ice cream stands at the beach.
10 gas stations at one busy interstate exit.
Three pizza places across the street from a major university’s campus.
Lowe’s across from Home Depot.
Target next door to Wal-Mart
Can you think of any others???