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PATTERNS OF DISTRIBUTION FOR CONSUMER SERVICES

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REMEMBER Manufacturing facilities locate in certain patterns Bulk reducing industries tend to be raw-materials oriented; Bulk gaining and perishable industries tend to be market oriented Some industries also choose to locate near break of bulk points, major transportation arteries, or cheap labor. Consumer services will also distribute themselves according to a pattern. The distribution of is regular and bases itself on the size of settlements (larger settlements have more services). This powerpoint will focus on the pattern of consumer service distribution. Business services will distribute themselves differently than consumer services. Business services tend to cluster in specific settlements and create a specialized pattern. The next section will focus on distribution of business services.

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CENTRAL PLACE THEORY In the 1930s, German geographer Walter Christaller developed CENTRAL PLACE THEORY to explain how to identify the most profitable location for a business. THE CENTRAL PLACE A CENTRAL PLACE is a market center for the exchange of goods and services. It is centrally located to maximize accessibility and competes against other central places to market for the surrounding region. According to CPT, the competition creates a regular patter of settlements. THE MARKET AREA A MARKET AREA or HINTERLAND is the nodal region surrounding a service from which customers are attracted. CTP represents hinterlands around settlements as hexagons because they compromise between the problems of circles and squares. People near the center of the market area are more likely to use that area, people towards the periphery are equally as likely to use another service area. The US Dept. of Commerce divides the entire US into market areas based on the hinterlands of the largest urban settlements. SIZE OF MARKET AREA The extent of an individual businesss market area is based on the range and the threshold of the particular service. RANGE RANGE: maximum distance (usually in time) that people (3/4 of customers) are willing to travel to use that service. In CTP, the range is the radius of the hexagonal hinterland draw around a central place. People will travel only short distances for everyday consumer services (gas/groceries/fast food), but will travel longer distances for specialized services (hospital). As a rule, people tend to go to the nearest service, so hinterlands will often be irregularly shaped to represent areas where a service is closer than the nearest competitor. THRESHOLD THRESHOLD: the minimum number of people needed to support a service. Once a location is determined, a service must count the potential customers in the irregularly shaped service area. Which people to count in a service area depends on the type and price of a product (Victorias Secret will count only females, Whole Foods only people whose annual income exceeds a certain amount). US daily urban systems, the functional regions around major commuting hubs

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ANALYZING A MARKET AREA Consumer services use market-area analysis to determine A) if locating in an area will be profitable and then B) where the best location in the market area will be. PROFITABILITY OF A LOCATION 1. Compute the range (perhaps people are willing to drive 15 minutes for your service) 2. Compute the threshold (you $10k/wk. to make a profit; your average customer spends $2/wk. at your service; so you need 5000 customers) 3. Draw the market area: draw an irregularly shaped market area (adjusting for drive times and closer competitors) if 5k customers are in the market area, you may choose to locate there. OPTIMAL LOCATION IN A MARKET If the threshold and range justify the service, then the next question is where to locate within the market area. The best location is the the one that minimizes the distance to the service for largest # of people. THE GRAVITY MODEL In a linear settlement, the best location is where half of the customers will be either direction. OPTIMAL LOCATION IN A LINEAR SETTLEMENT For situations where certain blocks are more densely populated, geographers have adapted the gravity model (remember it from unit 3? (PopA x PopB)/ distance squared). Optimal location is directly related to # of people in the area, but inversely to the distance people will have to travel. BEST LOCATION IN A NON-LINEAR SETTLEMENT Most settlements are more complex than a single main street with short side streets. So, geographers use the gravity model thusly: 1. Identify possible site 2. Within range, identify where every potential customer lives. 3. Measure distance from site to every potential customer 4. Divide each potential user by the distance to the site. 5. Add all of the figures 6. Select second possible location and repeat steps 2-5 7. Compare sum for step 5 for all possible sites, and the highest score is the best site.

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HIERARCHY OF SERVICES AND SETTLEMENTS Small settlements are limited to services with small thresholds, short ranges and small market areas (too few people to support many services). Large settlements host services with large thresholds, large ranges and large market areas. Neighborhoods within large settlements also host services with small ranges and thresholds. NESTING OF SERVICES According to CTP, in a perfect scenario, market areas across an MDC would be a series of hexagons (unless interrupted by physical features). The typical settlement sizes in MDCs are city, town, village, hamlet (from largest to smallest), with more settlements of smaller sizes and fewer settlements of larger sizes. Nesting also works at the scale of services within cities. Note that there are fewer large Kroger grocery stores in Dayton, OH than there are small UDF convenience stores.

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RANK-SIZE RULE AND PRIMATE CITIES PREPARE TO GET A LITTLE FREAKED OUT. RANK-SIZE RULEPRIMATE CITY In MDCs, the size of cities tends to follow a very regular pattern. The rank-size rule states that the population of the nth largest settlement will be 1/n the population of the largest settlement. In other words, the population of the second largest settlement will be the population of the largest, the pop of the 3 rd largest will be 1/3 the population of the largest and so on when graphed, the chart will look roughly like the graph of y=1/x, or on logarithmic paper a straight line. 10 largest US CitiesPredicted PopActual Pop 2010 1 New York8,175,133 2 Los Angeles4,087,5673,792,621 3 Chicago2,725,0442,695,598 4 Houston2,043,7832,099,451 5 Philadelphia1,635,0271,526,006 6 Phoenix1,362,5221,445,632 7 San Antonio1,167,8761,327,407 8 San Diego1,021,8921,307,042 9 Dallas908,3481,197,816 10 San Jose817,513945,942 Some MDCs and almost all LDCs do not fit the rank-size rule. Instead, the largest city has much more than twice the number of the second largest city. The PRIMATE CITY RULE states that the largest settlement has more than 2x the pop of the second largest settlement, and the largest settlement is called a PRIMATE CITY. In an MDC, the Rank-size distribution indicates that the society is sufficiently wealthy to provide goods and services to consumers throughout the country. In general, smaller MDCS will fit the primate city rule due to their small size (Demarks Copenhagen, the UKs London, Romanias Bucharest). In an MDC, a Primate city distribution usually indicates small size. However, in an LDC it indicates that the country is not sufficiently wealthy to provide goods and services for all of its citizens. In LDCs, PERIODIC MARKETS (a collecttion of vendors who come together to offer goods and services in a specific location at a specific time) may be formed to offer services in areas too poor, remote or unpopulated to support full-time shops.

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Primate Cities (Pros and Cons) Drawbacks ArticleArticle from About.com Geography ListList from wikipedia Examples Benefits London, England --Agglomeration of economic activity --Large market for goods/services --Availability of high-end goods/services (+education) from larger threshold --Enhanced flow of information and ideas --Centralized transportation network --Ability to compete in global market and attract FDI --Unequal distribution of investment (impedes national development) --Uneven econoic/resource development (islands of development) --Unequal distribution of wealth/power (to residents of the city) --Hub and spoke transpo network prevents accessibility to all regions --Brain Drain (migration and unequal distribution of education) --Disproportionate effect of disaster (if in primate city) on the whole country --Unsustainable growth, slums and enviro impacts burden national economy Bangkok, Thailand A primate city is: more than two times the size of the next- largest city (magnitude) AND exerts social, political, economic dominance (significance). Definition