In order to know where the lowest hanging fruit is in your targeted market for growth, you have to first analyze what drives sales to your existing successful business. If you don’t have an existing successful business, then you have to analyze what drives sales at your competitor’s place of business. Otherwise how do you know what type of people, or what adjacent businesses, or which retailers, or what other factors are out there that you are supposed to target? Believe it or not, there are a lot of companies out there today that are rapidly expanding without this very important information.
A proper market plan will take all of this information into consideration and inform the brand on the number of viable trade areas that meet the conditions necessary for success within a certain geography.
This is a result of two key steps:
1. Proper analysis of existing business (yours / theirs or both) 2. Proper identification of all trade areas within the market place
Trade area prioritization is a methodology of analyzing all trade areas within a given marketplace and determining the proper order in which these trade areas should be developed. The method for prioritization is very complex and requires specific algorithms to be developed for proper analysis. Trade areas vary in size and complexity based on the density within them. Additional algorithms are needed to properly size trade areas so that you are analyzing the proper reach for your brand (also known as the convenience line).
To further complex the prioritization process, the models above have to be further modified for each specific concept to hone in on its specific ‘secret recipe’ for success. For example, Starbucks Coffee vs. Dunkin Donuts or McDonald’s vs. Five Guys or Subway vs. Jimmy John’s or Wawa vs. Circle K. Each brand sells similar product lines, offer similar services and are in the same industry however customers trade differently at one vs. the other. That’s why the first step in the trade area analysis process is so important.
As you can see, trade area analysis and prioritization is not for the novice. Don’t feel bad, as some of the most experienced professionals in store development struggle with this procedure. Our methodologies have taken decades to develop along with a lot of blood, sweat and tears. Many have oversimplified this very important procedure and ultimately end up over developing or under developing a market place with their restaurants. Again, don’t feel bad as the best of the best are guilty of this… There is a LOT to this process (too much to explain and comprehend) which is why you hire a professional to conduct it for you.
For more information on our unique market planning methodologies, or to find out more about trade area analysis and trade area prioritization, please do not hesitate to call us direct anytime or shoot us an e-mail with your questions and we will be sure to promptly respond.