Marketing 24 ppt.

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Marketing 24 ppt.

  1. 1. DETERMINING THE RIGHT LOCATIONREPORTED BY: COURSE & YEAR:Vladimir Amadeus BSBA – 3Felizco MedinaJennifer Salazar DATE: March 1, 2012 –PROFESSOR: ThursdayMr. Poblete
  2. 2. 2 Determining the Right Location• One of the most important decisions the small business operator has to make is choosing the right location for his business. The location decision must be made before actual operations begin. The wrong location will make it very difficult for the SBO to achieve business objectives.
  3. 3. 3 Determining the Right LocationWHAT IS THE RIGHT LOCATION?• The right location refers to that one which will bring the highest possible benefits to the firm. The wrong location on the other hand is one which will bring the most disadvantages to the small business.
  4. 4. 4 Determining the Right LocationGENERAL CRITERIA FOR SELECTING ABUSINESS LOCATION• Different types of small business need to use different sets of criteria in determining the right business location. The criteria for locating the retail business will be different from that of the manufacturing firm and the service business. Some of the factors in the criteria set, however, are generally applicable to all types of small business. These refer to those which concern the region, the province, and the city or town.
  5. 5. 5 Determining the Right LocationSELECTING THE REGION• A mere look at the statistical reports on the growth patterns and economic performance of the nation’s different regions will reveal information the some regions are more desirable areas of investment than others.
  6. 6. 6 Determining the Right LocationSELECTING PROVINCES1. Proximity to Markets2. Proximity to Supply of Raw Materials3. Labor Supply4. Business Climate
  7. 7. 7 Determining the Right LocationSELECTING PROVINCES1. Proximity to Markets ▫ Small business must be as near to their markets as possible. This is most especially true if the cost of moving the products from the firm to its customers is high in relation to their value.
  8. 8. 8 Determining the Right LocationSELECTING PROVINCES2. Proximity to Supply of Raw Materials ▫ When the raw material requirements of a small firm are voluminous and frequent acquisitions are made, the company must consider locating in the province where the raw materials are sourced. This will provide the firm with the advantage of reducing considerably its raw material acquisition costs.
  9. 9. 9 Determining the Right LocationSELECTING PROVINCES3. Labor Supply ▫ The small business must be located in the province where its labor requirements will be supplied sufficiently. The labor requirements that are classified as 1. Managerial, 2. Specialists, and 3. Skilled laborers, must be available.
  10. 10. 10 Determining the Right LocationSELECTING PROVINCES4. Business Climate ▫ Small businesses are expected to thrive places where they transact business more effectively. Some provinces are more business friendly than others. They are so because they provide certain incentives for small business like tax holidays, lower fees, minimum restrictions and others.
  11. 11. GENERAL CRITERIA FORSELECTING BUSINESS LOCATION
  12. 12. 12 Determining the Right Location Mode Criteria •Population Growth Selecting the Right •Average Annual Income Of Families Region •Proximity to Markets Selecting the Province •Proximity to Supply of Raw Materials •Labor Supply •Business ClimateSelecting the City or Town •Population Trends •Local Laws and Regulations •Competition •Compatibility With the Community •Transportation •Public Services •Police and Fire Protection •Reputation of the Location
  13. 13. 13 Determining the Right LocationSELECTING THE CITY OR TOWN1. Population Trends2. Local Laws And Regulations3. Competition4. Compatibility With The Community5. Transportation6. Public Services7. Police And Fire Protection8. The Reputation Of The Location
  14. 14. 14 Determining the Right LocationSELECTING THE CITY OR TOWN2. Local Laws and Regulations ▫ The small business investor must compare the local laws and regulations of the different towns within the province of his choice. He will find out that some towns provide a climate conducive to small business operation. Some towns, for instances provide a climate conducive to small business operation. Some towns, for instance, impose lower business taxes.
  15. 15. 15 Determining the Right LocationSELECTING THE CITY OR TOWN3. Competition ▫ It is rivalry of two or more businesses that target the same customers. Business competition tends to result in increased efficiency as firms attempt to reduce expenses. On the negative side, competition may result in duplication of efforts.
  16. 16. 16 Determining the Right LocationSELECTING THE CITY OR TOWN4. Compatibility with the Community ▫ The small business must be compatible with the community it is located.
  17. 17. 17 Determining the Right LocationSELECTING THE CITY OR TOWN5. Transportation ▫ The cost of moving firm’s products contributes to the overall costs of operating the business.
  18. 18. 18 Determining the Right LocationSELECTING THE CITY OR TOWN6. Police and Fire Protection ▫ Towns or cities that do not provide adequate police and fire protection should be ruled out in choosing a location.
  19. 19. 19 Determining the Right LocationSELECTING THE CITY OR TOWN7. Public Services ▫ Towns or cities which provide adequate services like those on water and sewerage, trash and garbage collection, among others, must be regarded as plus factors in choosing a location.
  20. 20. 20 Determining the Right LocationSELECTING THE CITY OR TOWN8. The Reputation of the Location ▫ Some cities and towns have established reputations which may not contribute to the achievement of the goals of the firms. However, cities like Makati, Cebu, or Davao lend their reputations to business located in their areas. In a way, prospective customers are easily swayed to pay attention to whatever message small business would want to convey to them.
  21. 21. 21 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS• Some location criteria are uniquely applicable to retailers. They may be derived through three major business location selection steps. The steps are classified as follows: 1. Choosing A Viable Community 2. Selecting The Trading Area 3. Evaluating The Specific Site
  22. 22. 22 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS 1. Choosing a Viable Community  A viable community is one that has the capacity to provide an adequate and profitable sales volume for small business.  In terms of viability, there are three general factors used to determine the best geographic area or city for the business. They are the following: 1. Economics 2. Population 3. Competition
  23. 23. 23 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS 1. Choosing a Viable Community 1. Economics  Areas with a stable economic base must be chosen by the SBO rather than those without a stable economic base. An economically stable area is one which has a balanced mix or business establishment. Areas with few types of businesses must be reviewed with some concern.
  24. 24. 24 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS 1. Choosing a Viable Community 2. Population  Information about characteristics of population relevant to the location decision must be obtained. The following are important aspects that must be reviewed: 1. Size of Population Of The Area Under Consideration 2. Growth Trend Of The Population 3. Average Income Of The Potential Customers 4. Population Changes In Recent Years
  25. 25. 25 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS 1. Choosing a Viable Community 3. Competition  No matter how large an area is, it can only support a certain number of competing firms. If too many of the same types of business are located in one area, they may have difficulty in obtaining the sales volume they desire. Some may get bankrupt in the process.
  26. 26. 26 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS 2. Selecting the Trading Area  The trading area is the geographic area from which a business draws its customers. In choosing a business location, several trading areas must be considered and evaluated.
  27. 27. 27 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS 2. Selecting the Trading Area  The following aspects must be considered in trading area analysis: 1. The demographic and socioeconomic of customers; 2. The focus of promotional activities; 3. The determination of whether the proposed location will service new customers or take away business from existing competitors;
  28. 28. 28 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS 2. Selecting the Trading Area 4. The determination of the number of outlets that can be operated; the geographic weaknesses of the proposed trading area; and 5. Other factors like competition, availability of financial firms, availability of labor, location of suppliers, legal restrictions, and the like.
  29. 29. 29 Determining the Right LocationSTEPS IN SELECTING BUSINESSLOCATION FOR RETAILERS 3. Composition Of the Trading Area  The trading area consists of the following parts: • Primary Trading Area – This is where 50 to 60 percent of the retailer’s customers come from. • Secondary Trading Area – This is where 20 to 25 percent of the firm’s customers come from. • Fringe Trading Area – This is where the remaining customers of the firm come from.
  30. 30. 31 Determining the Right LocationTYPES OF LOCATION
  31. 31. 32 Determining the Right LocationTYPES OF LOCATION Location may be classified as follows:  The Central Business District  The Shopping Center; and  The free-standing location
  32. 32. 33 Determining the Right LocationTYPES OF LOCATION• The Central Business District (CBD) ▫ refers to an unplanned shopping area around the geographic point at which all public transportation systems converge.
  33. 33. 34 Determining the Right LocationTYPES OF LOCATION• Advantages of locating in the CBD: ▫ Easy access to public transportation ▫ Wide product assortment ▫ Variety in images, prices, and services, and ▫ Proximity to commercial activities
  34. 34. 35 Determining the Right LocationTYPES OF LOCATION• Disadvantages of locating in the CBD: ▫ Inadequate parking ▫ Older stores ▫ High rents and taxes ▫ Traffic and delivery congestion ▫ Potentially high crime rate; and ▫ The generally decaying conditions of CBDs in many cities
  35. 35. 36 Determining the Right LocationTYPES OF LOCATION• Secondary Business Districts (SBD) ▫ a shopping area smaller than a CBD and which revolves around at least one department or variety stores at a major street intersection.
  36. 36. 37 Determining the Right LocationTYPES OF LOCATION• The Shopping Center ▫ to a centrally owned and/or managed shopping district which is planned, has balanced tenancy (the stores complement each other in merchandise offerings), and is surrounded by parking facilities.
  37. 37. 38 Determining the Right LocationTYPES OF LOCATION• Advantages of Shopping Center: ▫ Heavy customer traffic resulting from the wide range of product offerings; ▫ Nearness to population; ▫ Cooperative planning and sharing of common costs;
  38. 38. 39 Determining the Right LocationTYPES OF LOCATION• Advantages of Shopping Center: ▫ Access to highway and availability of parking; ▫ Lower crime rate; ▫ Clean, neat environment; and ▫ More than adequate parking space.
  39. 39. 40 Determining the Right LocationTYPES OF LOCATION• Disadvantages of Shopping Center: ▫ Inflexible store hours; ▫ High rents; ▫ Restrictions as to the merchandise the retailer may carry; ▫ Inflexible operations; ▫ Possibility of too much competition; and ▫ Dominance of smaller stores by the lead (or anchor) store.
  40. 40. 41 Determining the Right LocationTYPES OF LOCATION• Free-Standing Retailer ▫ generally located along major traffic arteries without any adjacent retailers competing products to share traffic.
  41. 41. 42 Determining the Right LocationTYPES OF LOCATION• Advantages of Free-Standing Retailers: ▫ Lack of direct competition ▫ Generally lower rents ▫ Freedom in operation and hours ▫ Facilities that can be adapted to individual needs of retailers and ▫ Inexpensive parking
  42. 42. 43 Determining the Right LocationTYPES OF LOCATION• Disadvantages of Free-Standing Retailers: ▫ Lack of drawing power of complementary stores ▫ Difficulties in attracting customers for the initial visit ▫ Higher advertising and promotional costs
  43. 43. 44 Determining the Right LocationTYPES OF LOCATION• Disadvantages of Free-Standing Retailers: ▫ Operating costs that cannot be shared with others ▫ Possible cash outlays in constructing the store instead of renting and ▫ Zoning ordinances that may restrict some activities
  44. 44. 45 Determining the Right LocationSELECTING THE SPECIFIC SITE• After determining the trading area where the small retail business will be located, the specific site must be pinpointed. But first, a listing of possible specific sites must be made.
  45. 45. 46 Determining the Right LocationSELECTING THE SPECIFIC SITE• This will be followed by evaluation of the listed sites considering the following:• Pedestrian traffic • Vehicular traffic
  46. 46. 47 Determining the Right LocationSELECTING THE SPECIFIC SITE• This will be followed by evaluation of the listed sites considering the following:• Parking Facilities • Transportation
  47. 47. 48 Determining the Right LocationSELECTING THE SPECIFIC SITE• This will be followed by evaluation of the listed sites considering the following:• Store composition• Internal characteristics of the specific sites and• Terms of occupancy
  48. 48. 49 Determining the Right LocationSELECTING THE SPECIFIC SITE• Among these that must be considered are: ▫ Visibility of the site ▫ Placement in the location ▫ Size and shape of the lot ▫ Size and shape of the building and ▫ Condition of the lot and building
  49. 49. 50 Determining the Right LocationSELECTING THE SPECIFIC SITE• The following must be scrutinized: ▫ Ownership and lease options ▫ Operations and maintenance costs ▫ Taxes ▫ Zoning restrictions ▫ Voluntary restrictions like uniform store hours and cooperative forces
  50. 50. 51 Determining the Right LocationLOCATING THE SMALLMANUFACTURING FIRM• Big cites are desirable locations because of proximity to a bigger percentage of the population.• However, zoning laws implemented in big cities are more restrictive than those imposed by small towns.• To avoid the said difficulty, some manufacturing firms locate in small town just outside the boundary of the city.
  51. 51. 52 Determining the Right LocationLOCATING THE SMALLMANUFACTURING FIRM• Even if some manufacturing firms wanted to be near their market, they cannot afford to be situated away from the source of their raw materials. This may because of the following: ▫ The factory produces much waste in processing the materials ▫ The raw materials are perishable and so the factory should be situated close to the source of raw materials
  52. 52. 53 Determining the Right LocationLOCATING THE SMALLMANUFACTURING FIRM ▫ The raw materials such as iron and stone are very bulky and ▫ Distribution methods or expenses make one site more cost-effective than another.
  53. 53. PROCEDURES IN LOCATING ASMALL MANUFACTURING FIRM
  54. 54. 55 Determining the Right LocationPROCEDURE IN LOCATING A SMALLMANUFACTURING FIRM• In locating a small manufacturing firm, the following specific steps are recommended: 1. Determine if the proposed area allows the type of manufacturing under consideration. 2. Determine the following: 1. Adequacy of shipping facilities 2. Types of buildings available for lease or rent and 3. Distance from factory to market and resulting shipping costs.
  55. 55. 56 Determining the Right LocationPROCEDURE IN LOCATING A SMALLMANUFACTURING FIRM 3. Determine the availability of the following: a. Cheap fuel b. Power and water c. Skilled labor (if required) and d. Financing facilities
  56. 56. 57 Determining the Right LocationPROCEDURE IN LOCATING A SMALLMANUFACTURING FIRM• Locating the Service Firm ▫ Service the firms are those specifically sought by customers. ▫ The choice of a location for service firms will depend on the traits of the target customer.
  57. 57. 58 Determining the Right LocationIt’s Over!!!
  58. 58. 59Determining the Right Location

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