Presentation on theme: "Why are businesses and services located where they are?"— Presentation transcript:
1 Why are businesses and services located where they are? Central Place TheoryWhy are businesses and services located where they are?
2 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…?Fundamentals:
3 The MAXIMUM distance people are willing to travel to use a service/buy a product. Groceries: short rangeNFL football game: large rangeMost people go to the nearest provider.Range
4 The MINIMUM number of people (potential customers) to support a service or business. This depends on the type of serviceTheaters need more younger peopleChiropractors need more older people.This explains why Des Moines doesn’t have any top-level sports teams: We don’t have enough people to support it.Threshold
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.Gravity Model