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Types of Trade Areas <br /> Trade areas business districts fall under two major categories: convenience trade areas and <br /> destination trade areas. Most small communities encompass only one type of trade area <br /> (primary trade area). However, communities with over 10,000 residents may find it useful to <br /> define both a convenience and a destination trade area. <br /> • A convenience trade area is based on the purchase of products and services needed on <br /> a regular basis, such as gasoline,groceries, and hair care. Because these purchases are <br /> relatively frequent, people usually find it more convenient to buy these products and <br /> services from businesses located close to their home or workplace. A grocery store's <br /> trade area can often be used to represent a community's convenience trade area. <br /> • A destination trade area is based on the purchase of"major" products and services, <br /> such as appliances or furniture, or of products and services that are distinctive in such a <br /> way, such as deeply discounted products and services. People are willing to travel longer <br /> distances to do comparison shopping and purchase these kinds of items. A large <br /> discount department store's trade area can often be used to represent a community's <br /> destination trade area. <br /> In addition to differing by types of goods and services, a business district differs in the types of <br /> customers who shop there. Three common market segments are: <br /> 1. Local residents within the trade area. As they reside locally year-round,they provide <br /> the majority of spending potential for most businesses. " <br /> 2. Daytime employees who may live in the trade area or others who commute from other <br /> communities. They have the potential to make purchases within the trade area during <br /> the workday. <br /> 3. Tourists and second-home owners can offer a large amount of spending potential. <br /> While they are not permanent residents,tourists obviously shop while visiting the area. <br /> Analysis of the geographic origin of non-resident customers is discussed in the appendix <br /> of this section. <br /> Return to top <br /> 5 <br />