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Site Selection - Modeling Neighborhood Psychographics and Demographics to Choose Ideal Locations

February 28, 2012 | Comments: 0 | Views: 166

Whether opening a new location or setting up shop for the first time, selecting the best-possible site for your business is one of the most important decisions you can make. If you are a business-to-consumer (B2C) company, in particular, you have a huge responsibility in selecting the right site. If you fail to find a location in the right type of neighborhood, you will have a much harder time selling your goods and services to local customers.

Traditional site selection activities by companies typically involve going with the owner's gut feeling or making decisions based merely upon the size or visual appeal of a space. By contrast, successful businesses' site selection process is more sophisticated than this. In order to find the perfect site for your business, you need to gather and analyze as much data on each candidate location as you possibly can. Only in this way will you be able to make a data-driven decision about where to locate.

Traditional site selection decisions have often boiled down to being a matter of availability or real estate shopping convenience. For example, your brother just happens to know a guy whose lease is about to expire on a retail location, and he suggests you take it over. While a certain site may be available, and ready for move-in, the chance that this just happens to be the very best available site for your business is very slim.

Though it is counterintuitive, opening a second location can require more analysis than opening your first. When opening a second location, you need to take into account your first location's customers and trade area that may start going to the new store. This is called customer cannibalization. A second location should add new customers to your client base, not simply take customers from your original site.

Most businesses selecting a site fail to subdivide their target trade area into meaningful geographic areas. Depending on the size of your city, and the type of business, it is vital that you carefully consider what the size of your target area will be. If you are opening a coffee shop, you will probably want a much smaller trade area than if you are opening a car dealership.

In order to make the best-possible site selection decision, you simply must take into account the psychographic and demographic makeup of customers in each candidate location's immediate neighborhood. If you set up shop in a neighborhood with few valid prospective customers, you will find it exceptionally hard to turn a profit. Instead, research the area and try to compile as much information as you can about the neighborhood's demographic makeup.

Leveraging advanced predictive modeling techniques, this data can then be analyzed to find meaningful relationships between the various candidate locations you are considering. By finding these relationships and patterns, you can home in on specific variables that are more likely to be predictive of the future potential success of any given location. Using this type of high-level analytics, you can first develop an ideal location model and then compare candidate locations against that model, ranking them accordingly.

By ranking your various candidate locations based on variables with high correlations of success, you improve your chance of selecting the most profitable location for your business.

For more information about site selection for business success, check out

Source: EzineArticles
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Article Tags:

Candidate Locations


Choose Ideal Locations


Site Selection Modeling


Neighborhood Psychographics

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