05-19-2009 EDC Meeting - Laserfiche WebLink

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Trade Area Overlap Analysis Summary: One goal of this project was to measure how much individual lodging establishments share the same customer base. If the customer base is similar as indicated by stong trade area overlap, it makes sense to market cooperatively since establishments are pulling from the same geographic area. It's clear from both measurements of this analysis that the customer bases of individual establishments do significantly overlap. The overlap of trade areas of individual establishments is really remarkable, considering each establishment is independently marketing to their customer base. All lodges pull a majority of their customers from the same general area (figure 2). The centerpoints of lodges' customers are also remarkably close together, all placed just southwest of the twin cities all within 72 miles of one another(figure 1). Methodology: The two ways of measuring the similarity of customer bases between lodges are a comparison of centerpoints and a calculation of trade area overlap. Centerpoints are a way to visually describes where an establishment's customers are most concentrated based on their distribution geographically. This measurement is commonly used by franchise businesses to place new store locations. When comparing the centerpoints of all lodging establishments,we gain a sense of how closely customers overlap(figure 1). Technically a centerpoint is a centroid,which is the geometric center of many points or the geographic mean of many points. Trade areas allow us to visually describe how customers are distributed. A standard trade area measurement uses a majority (60%)of customers to show where they are concentrated. "Brainerd"trade area. The trade area of each lodging establishment was then compared to the composite trade area to measure how much they overlapped. This is indicated by the percentage of the lodging establishment's trade are overlapping the composite"Brainerd"trade area. This was done through 4 steps. First, we mapped all customer records based on their address. Second, we drew a trade area based on the locations of the 60%of customers closest to each establishment's centerpoint. Third, we combined all records from all lodging establishments and drew a trade area based on the 60%of customers closest to the overall Brainerd Centerpoint. Forth, we measured how much each trade area overlapped this composite "Brainerd"trade area. Page 5