Study Areas, Geocoding, Customers, and Trade Areas

Proposition

Two Coffee shops located in San Francisco want to maximize their trade areas in order to benefit both businesses.  Luckily, they were overheard while talking about it and agreed to hire a 3rd party to answer their question.  To do this, a map illustrating where their customers are located, where other coffee/doughnut shops are located, trade areas, and walk/drive times are created into different maps that will help explain the area to maximize their trade areas for each shop.

Methods/Steps

The first step to answer the question was to set up a map to define the two stores customer base and mean store store center.  This was created to show where the two different stores customers are coming from to get to their shop.  With this map the data will show how far the customers are coming from, and if there is any areas where there are cross-overs of where the two stores are competing for.  In Figure 1,  the map shows that there is almost no cross over in where people are going to get their coffee.  There is very few that are closer to the top and head for the bottom shop or the latter, therefore, people are staying closer to the coffee shop near their home.  The Store mean center was produced and added to this map to show where the average middle point of where the customers are coming from.  From this map the mean center is actually very close to the store it self creating an almost equal 360 degrees around the store. The store to the south does have its mean center slightly more north due to the amount of red dots that are seen in the northern store vicinity.

Figure 1:  A map showing the customer base of each store.  The Green is for the store to the north and the red is the store to the south.  The purple and brown dotes are the store mean centers.

The next step was to create a map showing the coffee stores competitors in the surrounding area.  This is done to show what the market is like for both stores, and how close each is to another coffee shop which can be seen in Figure 2. From Figure 2, the store with the most competitors is going to be the northern store.  There is a larger grouping of stores to the east of it creating a larger amount of competition for it.  But, when looking back at Figure 1,  There almost seems to be a large drop off of customers right where the competitors start to pick up in density.  Therefore,  The northern store is not really competing with those competitors as much as the store has the customers around it.  Also from Figure 2, the north store has a lot more competitive market compared to the southern store, and they are not generally competing for the same customers.  

Figure 2:  A map showing the competitors located in San Francisco County. 

  Now,  The next map to create is one for Customer Derived Trade Areas, Figure 3.  This is a map showing where the people are coming from and how much of that customer base is located in that area.  This is important to show because it can tell the viewer where 80% or almost all of the customers are traveling from.  This also shows that there is not much of a competition between the two shops due to not having any cross-over in the trade areas.  The southern store  has a larger trade area due to having less competition making more customers head to that shop compared to the northern store which has more competition limiting their trade area.  

Figure 3:  This map shows the derived trade areas where 80% of the customers are located. This map is important because it shows that there is not a cross-over in trade areas.  

Finally, the last map produced shows the drive/walk time for the distance it would take to get away from the store, Figure 4.  This is important map because it shows how far 0.5 miles, 1 miles, and 1.5 miles away from the store are.  This can help understand if the customers are more likely to walk to the store or if they are more likely to drive.  The northern store will most likely have more walking due to the customer base near the center compared to the southern store which will have more drivers because of the farther distance from the center it makes.  

Figure 4:  This map shows the distance it takes to get 0.5 miles, 1 mile, and 1.5 miles.  Notice that the northern store has a more diamond pattern due to being in a more downtown like district compared to the southern store that is more of a blob due to having weird types of roads run through the area.  

Conclusion

The market for each store is very different.  The northern store (Store 1) has a more dense cluster of people within the first 1 mile of the store (Figure 4).  The southern store (Store 2) has more of a spread out customer base making it have a larger trade area.  Luckily, based on Figure 3, the store do not need to worry much about competing with each other, but need to worry about competing with closer shops, especially store 1 who has more competitors closer to the shop (Figure 2).  Store 2 is in a better position because there is going to be less competition and it covers a larger trade area, but store 1 is also in a good position because there are a lot of people in that are looking to go to coffee shops, therefore they are likely to store 1.  Both of the stores will be sharing trade areas with their competitors, and their customers are mostly people that like to spend money out to eat compared to staying inside.