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Copyright 2008 Prentice Hall Publishing Company 1Chapter 14: Location & Layout
Choosing the
Right Location
and Layout
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Copyright 2008 Prentice Hall Publishing Company 2Chapter 14: Location & Layout
Choosing a Location
The right region of the country
The right state in the region
The right city in the stateThe right site in the city
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Copyright 2008 Prentice Hall Publishing Company 3Chapter 14: Location & Layout
Choosing the Region:
Sources of Information Census data
World Wide Web
http://www.census.gov/
http://factfinder.census.gov
STAT-USAhttp://www.statusa.gov
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Copyright 2008 Prentice Hall Publishing Company 4Chapter 14: Location & Layout
Choosing the Region:
Sources of Information Demographics USA
Lifestyle Market Analyst
Survey of Buying Power
Editor and Publisher Market Guide
Rand McNally's Commercial Atlas andMarketing Guide
Zip Code Atlas and Market Planner
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Copyright 2008 Prentice Hall Publishing Company 5Chapter 14: Location & Layout
Choosing the Region:
Sources of Information The American Marketplace:
Demographics and Spending Patterns
Commercial Atlas and MarketingGuide
Zip Code Atlas
Geographic Information Systems (GIS)
U.S. Census Departments TIGER
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Copyright 2008 Prentice Hall Publishing Company 6Chapter 14: Location & Layout
Geographic Information Systems
(GIS) Computerized programs combining map-drawing
with database management capability.
Search through virtually anydatabase and thenplot the results on a map.
Visual display reveals otherwise hidden trends.
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Choosing the State
Proximity to markets
Proximity to needed raw materials
Wage rates Labor supply needs
Business climate
Tax rates
Internet access
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State Evaluation Matrix
State Weighted Score (Weight x Score)
Location Criterion Weight Score (Low =1, High = 5) State 1 State 2 State 3Quality of labor forceWage ratesUnion activityProperty/building costsUtility costsTransportation costsTax burdenEducational/training assistanceStart-up incentivesRaw material availabilityQuality of lifeOther:Other
Total Score
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Choosing the City
Population trends
Competition Clustering
Compatibility with community
Local laws and regulations
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Transportation networks
Police and fire protection Cost of utilities and public
services
Quality of life
(Continued)
Choosing the City
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Retail and Service Location
Considerations
Trade areathe region
from which a business
can expect to drawcustomers.
Retail compatibility
Degree of competition Index of retail saturation
(IRS)
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Index of Retail Saturation
C x RE
RFwhere
C = Number of customers in the trading area
RE = Retail expenditures = the averageexpenditure per person for the product inthe trading area
RF = Retail facilities = the total square feet ofselling space allocated to the product in thetrading area
IRS =
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Reillys Law of Retail Gravitation
where:BP = Distance in miles from location A to the break
point
d = Distance in miles between locations A and B
Pa = Population surrounding location APb = Population surrounding location B
a
b
P
P1
dBP
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14/36Copyright 2008 Prentice Hall Publishing Company 14Chapter 14: Location & Layout
Retail and Service Location
Considerations
Trade area size
Retail compatibility
Degree of competition
Index of retail saturation
(IRS)
Transportation network
Physical, racial, oremotional barriers
Political barriers
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Retail and Service Location
Considerations
Trade area size
Customer traffic
Adequate parking Reputation
Room for expansion
Visibility
(Continued)
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Retail and Service Location
Options Central Business Districts (CBDs)
Neighborhood locations
Shopping centers and malls Neighborhood shopping centers
Community shopping centers
Regional shopping centers Power centers
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Shopping Centers and Malls
Neighborhood shopping centers 3 to 12 Stores; anchor is supermarket or drugstore;
serves up to 40,000 people
Community shopping centers
12 to 50 stores; anchor is department or variety store;
serves 40,000 to 150,000 people
Power centers
Combine drawing power of a mall with convenienceof neighborhood shopping center; anchor stores
typically occupy 80 percent of space.
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Shopping Centers and Malls
Theme or festival centers Employ a unifying theme, often involving
entertainment, to attract tourists
Outlet centers
Feature manufacturers and retailers outlet stores
selling name-brand goods at discount prices; usually
follows open air design
Lifestyle centers Located near affluent residential neighborhoods;
designed to look more like a central business district
than a shopping center or mall
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Shopping Centers and Malls
Regional shopping malls 50 to 100 stores; anchor is one or more major
department stores; draws customers from a large
trading area, often 5 to 15 miles or more in all
directions
Super-regional shopping malls
Similar to a regional mall but bigger; trading area is 25
miles or more in all directions.
Examples
Mall of America (Bloomington, MN), largest mall in the U.S.
West Edmonton Mall (West Edmonton, Canada), largest mall
in the world
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Shopping Mall Patterns
9.5
12.4
10.8
8.87.7
8.5
10.5 10.7
82.2
88.8
73.878.2
85.5 86.787.5
92.8
0
2
4
6
8
10
12
14
All
Ages
14 - 17 18 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65+
Age
NumberofMallVisitsinPreceding
ThreeMo
nths
0
10
20
30
40
50
60
70
80
90
100
AverageDurationofV
isit(inMinutes)
Number of Mall Visits in Past Three
Months
Duration of Visit (in minutes)
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Retail and Service Location
Options
Near competitors
Outlying areas Home-based businesses
(continued)
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22/36Copyright 2008 Prentice Hall Publishing Company 22Chapter 14: Location & Layout
Manufacturing Locations
Foreign trade zones
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How a Foreign Trade Zone (FTZ) Works
Without FTZ
Imported Parts
and Materials
Store
Assemble
Package
Manufacture
Process
Mix
With FTZ
Duty
Paid
No
Duty
Paid
U.S.Sales
Exports
U.S.
Sales
Exports
Small
Company
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Copyright 2008 Prentice Hall Publishing Company 24Chapter 14: Location & Layout
Manufacturing Locations
Foreign trade zones
Empowerment zones
Business incubators
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Copyright 2008 Prentice Hall Publishing Company 25Chapter 14: Location & Layout
Business Incubators
Organizations that combine low-cost, flexiblerental space with a multitude of supportservices for their small business residents.
More than 1,000 in operation across the U.S.,and a new one opening, on average, everyweek.
They work!! Firms that graduate from
incubators have a success rate of 87 percent. Average incubator houses 20 businesses
employing 55 people.
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Copyright 2008 Prentice Hall Publishing Company 26Chapter 14: Location & Layout
Layout
Layoutthe logical arrangementof the physical facilities of abusiness that contributes to
efficient operations, increasedproductivity, and higher sales.
Study: Look and feel ofemployees work spaces is third
most important consideration(after salary and benefits) whendeciding whether or not to acceptor to quit a job.
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Copyright 2008 Prentice Hall Publishing Company 27Chapter 14: Location & Layout
Layout:
External Factors
Size must be adequate to
accommodate business needs.
Appearance must create the properimage or personality for the
business in the customers eyes.
Entrances must invitecustomers tocome in.
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Copyright 2008 Prentice Hall Publishing Company 28Chapter 14: Location & Layout
Layout:
External Factors
Create effective window displays andchange them often; they can be
powerful sales tools. Must comply with Americans with
Disabilities Act (ADA).
Pay attention to the business sign, themost direct method of reachingpotential customers.
(Continued)
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Copyright 2008 Prentice Hall Publishing Company 29Chapter 14: Location & Layout
A Business Sign
Tells potential customers who you are and
what youre selling.
Must comply with local sign ordinances.
Should be visible, simple, and clear.
Should be changed periodically to avoid
becoming part of the background.
Should be legible both day and night. Must be maintained properly.
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Copyright 2008 Prentice Hall Publishing Company 30Chapter 14: Location & Layout
Building Interiors
Ergonomicsis an integral part of any design. Proper layout and design pays off in higher
productivity, efficiency, or sales.
Proper lighting is measured by what is ideal for
the job being done. Use of natural light can increase retail sales.
Careful selection of colors can create thedesired impressions among customers and
employees. Appealing to allof the customers senses can
boost sales.
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Copyright 2008 Prentice Hall Publishing Company 31Chapter 14: Location & Layout
Three Retail Layout Patterns
Grid
Rectangular with parallel aisles; formal;
controls traffic flow; uses selling spaceefficiently.
Supermarkets and self-service discount
stores.
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Copyright 2008 Prentice Hall Publishing Company 32Chapter 14: Location & Layout
Free-Form
Free-flowing; informal; creates
friendly environment; flexible.
Small specialty shops.
Three Retail Layout Patterns
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Copyright 2008 Prentice Hall Publishing Company 33Chapter 14: Location & Layout
Boutique
Divides store into a series of individual
shopping areas, each with its own theme;
unique shopping environment.
Small department stores.
Three Retail Layout Patterns
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Copyright 2008 Prentice Hall Publishing Company 34Chapter 14: Location & Layout
Layout Guidelines
Know your customers buying habits and
plan your layout accordingly. Display merchandise as attractively as your
budget will allow. Display complementary items together.
Recognize the value of floor space; never
waste valuable selling space with nonsellingfunctions.
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Copyright 2008 Prentice Hall Publishing Company 35Chapter 14: Location & Layout
Factors to Consider in
Manufacturing Layouts
Type of product
Type of production process
Ergonomic considerations
Economic considerations
Space availability within the facility
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Manufacturing
Layouts Product layout
Process layout Fixed position layout
Functional layout
Recommended