Deck 9: Trading-Area Analysis

Question 1

The area that has the highest density of store customers to population is the ________ trading area.

A) secondary
B) primary
C) fringe
D) tertiary

Answer 1

B

Question 2

A major benefit of a thorough trading-area analysis is that it allows a retailer to ________.

A) increase sales at branch stores with high trading-area overlap
B) better match its target market profile with a medium's circulation
C) increase the degree of trading overlap among branch units
D) better understand an area's lifestyles

Answer 2

B

Question 3

Between 50 and 80 percent of a store's customers come from its ________ trading area.

A) secondary
B) primary
C) fringe
D) tertiary

Answer 3

B

Question 4

A store which does not have a real trading area of its own is a ________ store.

A) fringe
B) parasite
C) destination
D) convenience

Question 5

Which technique graphically depicts a trading area's characteristics?

A) geographic mapping
B) geographic information analysis
C) trading-area overlap analysis
D) semantic differential

Question 6

The determination of trading-area overlap is most important for ________.

A) regional shopping centers
B) shopping districts
C) chain retailers
D) independent retailers

Question 7

A major benefit of a trading-area analysis is that it allows a retailer to determine ________.

A) the demographic and socioeconomic characteristics of consumers
B) a store's image
C) the psychographics of shoppers versus nonshoppers
D) the response of shoppers to promotional pricing

Question 8

A proposed location for a supermarket chain is within three miles of a current store.What is the major factor that management should study relative to both locations?

A) the trading area of the current location
B) the trading area of the proposed location
C) the trading-area overlap of both locations
D) the demographics of the trading area of each location

Question 9

Primary,secondary,and fringe trading areas can be described on the basis of ________.

A) outshopping by consumers
B) the frequency with which people from various geographic localities shop at a particular store
C) customer store loyalty
D) the probability of large orders based upon customer residence

Question 10

A retailer's outshoppers come from its ________.

A) fringe trading area
B) secondary trading area
C) primary trading area
D) satellite trading area

Question 11

The most widely dispersed group of customers can be found in which trading area segment?

A) trading area overlap
B) primary trading area
C) secondary trading area
D) fringe trading area

Question 12

Which statement concerning the U.S.Census Bureau's national digital map,TIGER,is not correct?

A) TIGER incorporates all streets and highways in the United States.
B) TIGER files are available free-of-charge.
C) TIGER maps include retail facilities and population characteristics.
D) Enhancements to TIGER are available from independent software firms.

Question 13

The trading area with the highest average purchase by a customer is the ________.

A) primary trading area
B) parasite trading area
C) fringe trading area
D) secondary trading area

Question 14

The least flexible element of a retailer's strategy mix is ________.

A) merchandise assortment
B) human resources
C) pricing
D) location

Question 15

Which trading area covers the greatest distance?

A) fringe trading area
B) secondary trading area
C) primary trading area
D) satellite trading area

Question 16

The first step in choosing a store location is to ________.

A) determine whether to locate as an isolated store, in an unplanned business district, or in a planned shopping center
B) evaluate alternate geographic (trading areas) in terms of the characteristics of residents and existing retailers
C) select the general isolated business district or planned shopping-center location
D) analyze alternate sites contained in the specified retail location type

Question 17

A trading area can best be defined as ________.

A) those competitive stores that interchange customers
B) stores that are located in the same shopping center or district
C) a geographic area containing customers of a particular firm or group of firms for specific goods and services
D) a designation of a retail area by the U.S. Census Bureau

Question 18

A retailer should concentrate the bulk of its promotional activity in its ________.

A) fringe trading area
B) secondary trading area
C) primary trading area
D) satellite trading area

Question 19

Digitized mapping with key locational data are combined with ________.

A) trading area analysis
B) trading-area overlap analysis
C) geographic information systems.
D) TIGER maps.

Question 20

A store with a wide assortment of merchandise and a strong image in a particular merchandise category is a ________ store.

A) variety
B) department
C) destination
D) parasite

Question 21

A major advantage of the Census of Population for use by retailers in trading-area analysis is ________.

A) its currency
B) its five-year projections of key economic data
C) the availability of retail sales data by merchandise classification
D) the availability of information on small geographic units

Question 22

Huff improved Reilly's law by adding which variable to the estimation of trading areas?

A) economic barriers
B) the effect of travel time on different kinds of shopping trips
C) median disposable income in each city
D) the existence of primary, secondary, and fringe trading areas

Question 23

The major assumptions of Reilly's law are that two competing areas are equally accessible from a major road and that ________.

A) each city has an equal population
B) each city is equally distant from shoppers at the point of indifference
C) merchants in the two cities are equally effective
D) consumers are willing to travel for lower prices

Question 24

An area's commercial and industrial structure is referred to as its ________.

A) lambda coefficient
B) economic base
C) trading area
D) industrial diversification base

Question 25

In Reilly's law of retail gravitation,the point of indifference is the ________.

A) customer's perceived similarity between two competing retailers
B) geographic breaking point area at which shoppers are indifferent to shopping at either of two cities
C) limit of a city's trading area in estimated driving time
D) limit of a city's primary trading area in driving distance

Question 26

A retailer's location strategy can be made more flexible through ________.

A) sale and leaseback arrangements with financial institutions
B) ownership versus long-term leasing
C) the use of short-term leases with multiple renewal options versus a long-term lease
D) the use of a maintenance-increase-recoupment provision

Question 27

A retailer with a higher than average profitability is most likely to have which level of saturation?

A) overstored
B) understored
C) oversaturated
D) saturated

Question 28

A newspaper stand in a hotel lobby can best be described as a ________ store.

A) fringe
B) parasite
C) destination
D) convenience

Question 29

The regression computer site selection model ________.

A) utilizes a series of mathematical equations
B) evaluates store distance and image
C) analyzes competition, market share, and market size
D) studies population and driving distance

Question 30

Under what condition would it be rational for the trading areas of two branch locations to completely overlap?

A) when each store has the same target market
B) when the retailer desires cost economics in promotion
C) when a retailer pursues a mass marketing strategy
D) when the retailer decides to switch store locations due to loss of a lease on the first store location

Question 31

A retailer with three retail stores located within a 10-mile radius wishes to advertise in a county-based daily newspaper which covers a very large geographic area.The retailer should ________.

A) use small ads to minimize waste
B) use horizontal cooperative advertising to reduce waste
C) use a regional edition to minimize waste
D) seek to reduce the trading-area overlap to minimize waste with this medium

Question 32

What type of economic base is preferred by most retailers?

A) upper-income economic base
B) service-oriented economic base
C) single-industry economic base
D) diversified economic base

Question 33

High trading-area overlap is preferable for a retailer that seeks to ________.

A) receive high incremental sales from new store units
B) saturate a geographic area and keep out potential new retailers
C) appeal to niche markets
D) become a destination store

Question 34

In a regional shopping center,the store with the largest trading area is the ________ store.

A) department
B) variety
C) supermarket
D) gift

Question 35

Which computer-based system classifies and describes communities by lifestyle clusters?

A) American Community Survey
B) Editor & Publisher Market Guide
C) Nielsen Researcher
D) Nielsen's PRIZM

Question 36

An important disadvantage to the use of American Community Survey data in trading-area analysis is its ________.

A) cost
B) sampling error
C) only counting permanent residents
D) encompassing areas larger than many stores' actual trading area

Question 37

An area which has the proper amount of stores to satisfy the needs of its population for a specific good or service is a(n)________ trading area.

A) saturated
B) supersaturated
C) overstored
D) understored

Question 38

Data on an area's economic base are available from ________.

A) American Community Survey
B) Editor & Publisher Market Guide
C) Census of Population
D) Census of Retail Trade

Question 39

Which type of customers are generally not studied in a trading-area analysis?

A) direct-selling customers
B) fringe trading area customers
C) branch customers of retail chains
D) outshoppers

Question 40

The simplest and most popular form of computerized site selection model is ________.

A) corner influence
B) gravity
C) regression
D) analog

Question 41

What type of retailer has a very large primary trading area?

A) impulse retailer
B) convenience retailer
C) destination retailer
D) parasite store

Question 42

Based on Reilly's law,a city with a population of 90,000 would draw people from about how many times the distance as a city with 10,000 population?

A) 1.5 times
B) 2 times
C) 3 times
D) 4 times

Question 43

A retailer's core shoppers come from which trading area?

A) secondary trading area
B) primary trading area
C) parasite trading area
D) fringe trading area

Question 44

A supermarket has developed a model to aid in its site selection process.The model contains variables such as trading area population in the primary trading area and expected market share.This illustrates a(n)________ model.

A) regression
B) historical analogy
C) gravity
D) analog

Question 45

A department store uses a(n)________ computer site selection model.This model contains a series of equations linking variables such as traffic patterns,population size,average income,and transportation adequacy to estimated sales.

A) regression
B) analog
C) gravity
D) historical analogy

Question 46

Based on Reilly's law,two cities that have equal populations are 100 miles apart.The point of indifference ________.

A) is 10 miles from the first city
B) is 15 miles from the first city
C) is midway between each city
D) cannot be determined from the information provided.

Question 47

The distance between city A and city B is 30 miles; city A's population is 1,000,000 and city B's is 16,000,000.The point of indifference between the two cities is ________.

A) 6 miles from A, 24 miles from B
B) 12 miles from A, 18 miles from B
C) 18 miles from A, 12 miles from B
D) 24 miles from A, 6 miles from B

Question 48

The point of indifference between two cities or communities in Reilly's law most closely corresponds to ________.

A) Huff's law based on 50 percent probability of consumer shopping
B) a 50 percent index of retail saturation
C) a saturated retail trading area
D) a 0.50 economic base index for an area

Question 49

Loyal customers who shop at a store despite very long travel requirements constitute the store's ________.

A) trading-area overlap
B) primary trading area
C) secondary trading area
D) fringe trading area

Question 50

Which of the following retailers is most likely to be a parasite in a major shopping center?

A) coffee shop
B) electronic repair facility
C) department store
D) clothing specialty retailer

Question 51

Which software products enable retailers to graphically evaluate the characteristics of alternate locations?

A) data warehousing
B) data mining
C) geographic information systems
D) geographic mapping

Question 52

A store has a disproportionately large primary,secondary,and fringe trading area.This situation can be caused by ________.

A) a high level of prices
B) its being a destination store
C) physical barriers
D) high competition in each trading area

Question 53

Assume that there are three shopping locations with 500,1,000,and 3,000 square feet of space allocated to outdoor lighting fixtures.A group of potential customers lives 5 minutes from the first location,10 minutes from the second location,and 15 minutes from the third location.The retailer estimates the effect of travel time to be 1.The probability of consumers' shopping at location one is ________.

A) 10 percent
B) 15 percent
C) 25 percent
D) 33 percent

Question 54

Huff's law is an example of a(n)________ computer site selection model.

A) regression
B) analog
C) gravity
D) historical analogy

Question 55

Based on Reilly's law,two cities have populations of 1,000,000 and 25,000,000.The point of indifference is 10 miles from the larger city.What is the total distance between the two cities?

A) 40 miles
B) 45 miles
C) 50 miles
D) 60 miles

Question 56

Which computer-based site selection model generally allows a researcher to study the effect of one of several variables on expected sales?

A) analog
B) gravity
C) regression
D) interactive

Question 57

The most important trading area to a retailer is the ________.

A) primary trading area
B) secondary trading area
C) fringe trading area
D) parasite area overlap

Question 58

Which statement about the trading area of a parasite store in a regional shopping center is correct?

A) A parasite store has its own unique trading area.
B) The trading area of the parasite store approximates that of the shopping center.
C) The parasite store has a larger trading area than the center's department store.
D) The parasite store is a destination store.

Question 59

Reilly's law is an example of a(n)________ computer site selection model.

A) regression
B) analog
C) gravity
D) historical analogy

Question 60

"A grouping of stores may actually increase the trading area for each store." This statement especially applies to ________.

A) convenience products
B) emergency products
C) impulse products
D) shopping products

Question 61

Two shoe stores can have different trading areas even though they are located within three stores of each other in the same shopping center.

Question 62

Assume that there are three shopping locations with 500,1,000,and 3,000 square feet of space allocated to outdoor lighting fixtures.A group of potential customers lives 5 minutes from the first location,10 minutes from the second location,and 15 minutes from the third location.The retailer estimates the effect of travel time to be 2.The probability of consumers' shopping at location two is ________.

A) 7 percent
B) 10 percent
C) 15 percent
D) 23 percent

Question 63

Trading-area analysis is useful in determining waste in specific media.

Question 64

Blocks and census tracts are important units in the Census of Population to retailers because ________.

A) online computer tapes are available
B) these can be combined to fit a retailer's trading area
C) these blocks and tracks contain important data on retail sales by location
D) these blocks and tracks contain forecasts on population changes over a 5-year period

Question 65

Areas A,B,and C have similar demographic profiles.The sales per square foot for A,B,and C are $350,$500,and $600,respectively.On the basis of this data,area C is ________.

A) understored
B) overstored
C) saturated
D) in equilibrium

Question 66

If the use of credit cards varies among different geographic areas,a determination of trading areas on the basis of credit card analysis will not accurately reflect a store's trading area.

Question 67

A major refinement in Huff's law versus Reilly's law is Huff's use of ________.

A) mileage versus driving time estimates
B) a point of indifference between two areas
C) actual population figures versus population estimates
D) separate trading-area calculations for different product categories

Question 68

An analysis of a store's customers reveals that area A has twice the concentration of customers as area B.Area C has one-quarter the customers of area A.Area A represents the store's primary trading area.

Question 69

A retailer seeking to study the population characteristics of residents within its primary trading area (a 2-mile radius around its store)should utilize ________.

A) American Demographics
B) Editor & Publisher Market Guide
C) American Community Survey
D) the Census of Population

Question 70

The trading area overlap between two shoe stores of the same chain is significant.What conclusion can we make about the level of saturation in this geographic area?

A) It is overstored.
B) It is understored.
C) It is saturated.
D) Both stores are parasite stores.

Question 71

An area with a relatively large number of consumers per square foot of available store space is ________.

A) understored
B) overstored
C) saturated
D) oversaturated

Question 72

Trading overlap analysis is particularly important for retail chains and franchises.

Question 73

Leases in good shopping center locations are generally for 5 years or less.

Question 74

The simplest computerized site selection model is the gravity model.

Question 75

A retailer seeking a stable economic environment should seek a trading area with a ________.

A) large retired population
B) diversified economic base
C) large government facility
D) booming economy

Question 76

The trading area of a parasite store located within a shopping center closely approximates the trading area of the overall shopping center.

Question 77

The optimal economic base for a department store chain is ________.

A) retired persons
B) military personnel
C) diversified
D) based on one industry

Question 78

The secondary trading area has the highest density of customers to population.

Question 79

The first step in choosing a store location is to select the general isolated store,unplanned business district,or planned shopping center location.

Question 80

Assume that there are three shopping locations with 500,1,000,and 3,000 square feet of space allocated to outdoor lighting fixtures.A group of potential customers lives 5 minutes from the first location,10 minutes from the second location,and 15 minutes from the third location.The retailer estimates the effect of travel time to be 1.The probability of consumers' shopping at location two is ________.

A) 10 percent
B) 15 percent
C) 25 percent
D) 33 percent