Poster Presentation C Thursday, 5:00 6:00 pm C Edmund Fitzgerald Exhibit Hall

A Comparison of Trade Area Models for a Small Business

Christina M. Brandel, Robert Werner
College of St. Catherine and University of St. Thomas
JRC 432
2115 Summit Avenue
St. Paul, MN  55105

Trade areas spatially represent where customers live or originate from. They help business owners and planners determine what type of demographic area they should focus on for new development and expansion. Trade areas can also be effective advertising and marketing tools for a business. By understanding who its customers are, a business can market their products more effectively, more efficiently, and target the right people.

Models are often used when determining a trade area. A hand drawn trade area is the most specific model and gives the best representation of where customers are, but is time consuming and difficult to determine. Common models businesses use include buffers, drive time polygons, and gravity models. Buffers create a crude delineation of a specified area, for example a five-mile ring around a location. Drive time polygons also create a delineation of an area, but take into account the importance of roadways and how they influence time. Gravity models determine a trade area by comparing other business locations and how their size and distance from each other influence customers' choices.

To determine which trade area model best represented the hand drawn area, I compared the hand drawn area and demographics (age, income, and education level) of the customers to the results of the other models. My results will show the most appropriate model that represents the hand drawn trade area of the small restaurant that I used. The results can be used to help business owners or planners to consider the most appropriate model for their needs.