A business district may serve a number of different trade areas depending on a variety of factors such as types of products sold or customer market segments served. Population of your community: Proximity of other competing business districts:
|Types of Trade Areas||Without accurate trade area definitions, you cannot measure the key statistics that impact a store's performance. Use trade area analysis to aid site selection and target marketing.|
|Factors that Impact Trade Areas||Our retail store is located in a corner piece property on a busy road directly opposite one of the largest residential estates in Columbus, Ohio.|
Town B Although Town B looks more competitive 10 competitors vs. The definition of a potential customer will depend on your type of business. For example if you are opening a small shop selling office furniture then your market will be all the companies within your delivery range.
You would however factor it when assessing the value of the market. Market value Estimating the market value is often more difficult than assessing the number of potential customers. The first thing to do is to see if the figure is publicly available as either published by a consultancy firm or by a state body.
It is very likely that you will find at least a number on a national level. If not then you can either buy some market research or try to estimate it yourself. Methods for building an estimate There are 2 methods that can be used to build estimates: The bottom up approach consist in building a global number starting with unitary values.
In our case the number of potential clients multiplied by an average transaction value. We would first factor in the size of the businesses in our delivery range in order to come up with the size of the desks park.
Then we would try to estimate the renewal rate of the park to get the volume of annual transactions. Finally, we would apply an average price to the annual volume of transactions to get to the estimated market value. Here is a summary of the steps including where to find the information: You can get the number and size of businesses in your delivery area from the national statistics.
Your accountant should be able to give you the useful life of a desk but you should know it since it is your market! You can compare the desk prices of other furniture stores in your area.
As a side note here: The top down approach consist in starting with a global number and reducing it pro-rata.
When coming up with an estimate yourself it is always a good practice to test both the bottom up and top down approaches and to compare the results. If the numbers are too far away then you probably missed something or used the wrong proxy. Once you have estimated the market size you need to explain to your reader which segment s of the market you view as your target market.
Target Market The target market is the type of customers you target within the market. For example if you are selling jewellery you can either be a generalist or decide to focus on the high end or the lower end of the market.
This section is relevant when your market has clear segments with different drivers of demand.
In my example of jewels, value for money would be one of the drivers of the lower end market whereas exclusivity and prestige would drive the high end. Now it is time to focus on the more qualitative side of the market analysis by looking at what drives the demand.A key part of any business plan is the market analysis.
This section needs to demonstrate both your expertise in your particular market and the attractiveness of the market from a financial standpoint. What is a 'Business Plan' A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals.
A business plan lays out a written plan. A trade area analysis is an important part of business planning.
The trade area analysis shows where your customers live in relation to your existing or potential business site(s). The trade area analysis compares the number of customers by distance from a business site . Sample Retail Store Business Plan Template – MARKET ANALYSIS Market Trends Retailing business has been in existence for as long as humans started trading goods, but one thing is certain, the retailing industry is still evolving.
Trade area surplus/leakage analysis is one approach to help understand the overall health of your community’s retail business by identifying retail market trends and documenting gaps and opportunities for .
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