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Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar1Gravity Models The 3 critical elements to a business' success: Location
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Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar2Gravity Models Business Geographics Trade area The geographic area from which a store draws most of its customers. Applications: New store location. Existing store promotional activities. Delineation methods: Analog method. Proximal area method. Gravity model method.
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Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar3Gravity Models Analog Trade Areas Uses customer and sales data from an existing store(s) to predict sales in an anologous (i.e. similar) store. Non-geographic.
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Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar4Gravity Models Proximal Trade Areas Defines proximal areas around each store based on the assumption that consumers will always shop at their nearest store. Stores based: Trade areas are defined by Voronoi polygons around each store. Customers based: Each customer is assigned to their nearest store. All the customers that share the same nearest stores are grouped to form that store's trade area. But … what if there are other factors that attract customers to a store other than their nearest one?
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Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar5Gravity Models Gravity models define trade areas based on: Distance (or time) to a location; and A location's attraction. The gravitational pull of a location (g) is in direct proportion to its attraction (S) and in inverse proportion to the square of its distance (d):
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Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar6Gravity Models Reilly's Law Consider 2 locations that are at a distance of d 12 of each other and have attractions of S 1 and S 2, respectively. The breaking point that separates their trade areas is defined as: Wang, F., 2006. Quantitative Methods and Applications in GIS. Boca Raton: Taylor & Fancis
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Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar7Gravity Models Huff Model A more general gravity model that defines trade areas based on multiple locations. Defines a probability surface for each location based on its attractiveness and distance. The probability (P) of an individual (i) selecting a store (j) is found with: Customers will usually visit the location that has the highest probability.
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