MKTG 350 – ch.9;10 – Flashcards

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3 Potential Problems from Moving Locations
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1. Some loyal customers and employees may be lost; the greater the distance between the old and new locations, the bigger the loss. 2. A new site may not have the same traits as the original one 3. Store fixtures and renovations at an old site usually cannot be transferred to a new site; their remaining value is lost if they have not been fully depreciated
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4 Steps in Choosing a Store Location
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1. Evaluate alternative geographic (trading) areas in terms of the characteristics of residents and existing retailers 2. Determine whether to locate as an isolated store, in an unplanned business district, or in a planned shopping center within the geographic area 3. Select the general isolated store, unplanned business district, or planned shopping center location 4. Analyze alternate sites contained in the specified retail location type
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Trading Area
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a geographic area containing the customers of a particular firm or group of firms for specific goods or services
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Primary Trading Area
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encompasses 50 to 80 percent of a store's customers
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Secondary Trading Area
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contains an additional 15 to 25 percent of a store's customers
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Fringe Trading Area
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includes all the remaining customers and they are the most widely dispersed
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Destination Store
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retail outlet with a trading area much larger than that of a competitor with a less unique appeal; offers a better merchandise assortment in its product category(ies), promotes more extensively, and/or creates a stronger image
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Parasite Store
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does not create its own traffic and has no real trading area of its own; this store depends on people who are drawn to the location for other reasons
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Physical Barriers
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toll bridges, poor roads, rail tracks, one-way streets, etc.
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Economic Barriers
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different sales taxes in 2 towns, etc.
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Census of Population
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supplies a wide range of demographic data for all U.S. cities and surrounding vicinities
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Economic Base
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reflects a community's commercial and industrial infrastructure and residents' sources of income. A firm seeking stability normally prefers an area with a diversified economic base to one with a base keyed to a single major industry
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Understored Trading Area
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has too few stores selling a specific good or service to satisfy the need of its population
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Overstored Trading Area
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has so many stores selling a specific good or service that some retailers cannot earn an adequate profit
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Saturated Trading Area
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has the proper amount of stores to satisfy the needs of its population for a specific good or service, and to enable retailers to prosper
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Isolated Store
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a freestanding retail outlet located on either a highway or a street; there are no adjacent retailers with which this type of store shares traffic
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Unplanned Business District
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a type of retail location where 2 or more stores situate together (or in close proximity) in such a way that the total arrangement or mix of stores is not due to prior long-range planning
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4 Types of Unplanned Business District
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1. Central Business District (CBD) 2. Secondary Business District (SBD) 3. Neighborhood Business District (NBD) 4. String
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Central Business District (CBD)
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(unplanned) the hub of retailing in a city (downtown); exists where there is the greatest density of office buildings and stores; no pre-set format
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Secondary Business District (SBD)
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(unplanned) usually bounded by the intersection of 2 major streets
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Neighborhood Business District (NBD)
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(unplanned) appeals to the convenience shopping and service needs of a single residential area
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String
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(unplanned) comprising a group of retail stores, often with similar or compatible product lines, located along a street or highway (ex. car dealers)
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Planned Shopping Center
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consists of a group of architecturally unified commercial establishments on a site that is centrally owned or managed, designed and operated as a unit, based on balanced tenancy, and accomplished by parking facilities
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Balanced Tenancy
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the stores in a planned shopping center complement each other as to the quality and variety of their product offerings, and the kind and number of stores are linked to overall population needs
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Regional Shopping Center
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a large, planned shopping facility appealing to a geographically dispersed market; at least 1 or 2 department stores and 50 to 150 or more smaller retailers
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Megamall
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(regional center) an enormous planned shopping center with 1 million+ square feet of retail space, multiple anchor stores, up to several hundred specialty stores, food courts, and entertainment facilities
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Community Shopping Center
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a moderate-sized, planned shopping facility with a branch department store (traditional or discount) and/or a category killer store, as well as several smaller stores (similar to those in a neighborhood center
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Power Center
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a shopping site with: 1. up to half-dozen or so category killer stores and a mix of smaller stores 2. several complementary stores specializing in one product category
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Lifestyle Center
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an open-air shopping site that typically includes 150,000 to 500,000 square feet of space dedicated to upscale, well-known specialty stores
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Neighborhood Shopping Center
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a planned shopping facility, with the largest store being a supermarket or a drugstore; convenience-oriented goods and services; usually arranged in a strip
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One-Hundred Percent Location
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the optimum site for a particular store
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Location and Site Evaluation
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-Pedestrian Traffic (number of people, type of people) -Vehicular Traffic (number of vehicles, type of vehicles, traffic congestion) -Parking Facilities (number and quality of parking spots, distance to store, availability of employee parking) -Transportation (availability of mass transit, access from major highways, ease of deliveries) -Store Composition (number and size of stores, affinity, retail balance) -Specific Site (visibility, placement in the location, size and shape of the lot, size and shape of the building, condition and age of the lot and building) -Terms of Occupancy (ownership or leasing terms, operations and maintenance costs, taxes, zoning restrictions, voluntary regulations)
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Terms of Occupancy
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ownership vs. leasing, the type of lease, operations and maintenance costs, taxes, zoning restrictions, and voluntary regulations - must be evaluated for each prospective site
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Straight Lease
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a retailer pays a fixed dollar amount per month over the life of the lease
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Percentage Lease
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stipulates that rent is related to sales or profits
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Graduated Lease
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calls for precise rent increases over a stated period of time
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Maintenance-Increase-Recoupment Lease
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has a provision allowing rent to increase if a property owner's taxes, heating bills, insurance, or other expenses rise beyond a certain point
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Net Lease
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calls for all maintenance costs (such as heating, electricity, insurance, and interior repair) to be paid by the retailer
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