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Central Place Theory Why are businesses and services located where they are?

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Presentation on theme: "Central Place Theory Why are businesses and services located where they are?"— Presentation transcript:

1 Central Place Theory Why are businesses and services located where they are?

2 Fundamentals: For a business to succeed or a service to be useful, they need a MARKET. Market area or hinterland: The area surrounding a business or service that attracts customers, patients, and/or clients. The size of the market area depends on two factors: threshold and range. How far are you willing to travel for…?

3 Range The MAXIMUM distance people are willing to travel to use a service/buy a product. Groceries: short range NFL football game: large range Most people go to the nearest provider.

4 Threshold The MINIMUM number of people (potential customers) to support a service or business. This depends on the type of service Theaters need more younger people Chiropractors need more older people. This explains why Des Moines doesnt have any top-level sports teams: We dont have enough people to support it.

5 Gravity Model 1. People go to the nearest place that offers a service. 2. The farther away from the service, the less likely people will use it.


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