1. Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar1Gravity Models The 3 critical elements to a business' success: Location

2. Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar2Gravity Models Business Geographics  Trade area  The geographic area from which a store draws most of its customers.  Applications:  New store location.  Existing store promotional activities.  Delineation methods:  Analog method.  Proximal area method.  Gravity model method.

3. Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar3Gravity Models Analog Trade Areas  Uses customer and sales data from an existing store(s) to predict sales in an anologous (i.e. similar) store.  Non-geographic.

4. Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar4Gravity Models Proximal Trade Areas  Defines proximal areas around each store based on the assumption that consumers will always shop at their nearest store.  Stores based: Trade areas are defined by Voronoi polygons around each store.  Customers based: Each customer is assigned to their nearest store. All the customers that share the same nearest stores are grouped to form that store's trade area.  But … what if there are other factors that attract customers to a store other than their nearest one?

5. Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar5Gravity Models  Gravity models define trade areas based on:  Distance (or time) to a location; and  A location's attraction.  The gravitational pull of a location (g) is in direct proportion to its attraction (S) and in inverse proportion to the square of its distance (d):

6. Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar6Gravity Models Reilly's Law  Consider 2 locations that are at a distance of d 12 of each other and have attractions of S 1 and S 2, respectively. The breaking point that separates their trade areas is defined as: Wang, F., 2006. Quantitative Methods and Applications in GIS. Boca Raton: Taylor & Fancis

7. Geog 409: Advanced Spatial Analysis & Modelling © J.M. Piwowar7Gravity Models Huff Model  A more general gravity model that defines trade areas based on multiple locations.  Defines a probability surface for each location based on its attractiveness and distance.  The probability (P) of an individual (i) selecting a store (j) is found with:  Customers will usually visit the location that has the highest probability.