Geomarketing Models in Supermarket Location Strategies

Abstract

Abstract.Choosing where to open a new outlet is a critical decision for retail firms. Building on the multiplicative competitive interaction model from retail location theory, this paper develops a geomarketing model that can be used to devise supermarket location strategies. First, attributes that explain a supermarket's pull on consumers were determined. These attributes included objective (taken from databases and empirical observation) and subjective (based on managerial judgements) variables relating to the supermarket and its trade area. Then, geographic information system tools were used to analyse real data at a highly detailed level (road section). From a geomarketing viewpoint, the model shows that sociodemographic characteristics of the supermarket's trade area affect firms' location strategies. The paper also discusses improvements for calibrating and validating this model. Adding the spatial organization of supermarkets to the model yields a different consumer behaviour pattern. This geomarketing model can help managers to design supermarket location strategies according to shop features, competitors and environment, whilst estimating supermarket sales.

A Gravity-Based Food Flow Model to Identify the Source of Foodborne Disease Outbreaks

“…In its initial form, the model calculates patronage probabilities depending on store size and travel distance [22]. Further studies have extended the model so that it can take multiple objective and subjective factors on consumer and retailer side into account [23][24][25][26]. In aggregated models, individual store characteristics and exact distances between consumer and supermarket are lost [27].…”

A Comparative Analysis of Fuzzy TOPSIS and Geographic Information Systems (GIS) for the Location Selection of Shopping Malls: A Case Study from Turkey

“…Given the importance of the issue, retail location decision has become the subject matter of different disciplines such as marketing, urban sciences, economics, geography, applied mathematics and geomarketing and different retail location theories, models and procedures have been proposed. In this sense, it is possible to say that retail location theory is comprised of four broad theoretical areas that are central place theory, spatial interaction theory, land value theory and the principle of minimum differentiation [38,[40][41][42][43][44][45].…”

“…In the framework of spatial interaction theory, by including a set of other attractiveness variables along with size, Nakanishi and Cooper (1974) [55] extended Huff's model and proposed the multiplicative competitive interaction (MCI) model. This model is considered as a more general form of Huff's model and incorporates both subjective variables such as consumer evaluation of store image, store appearance, service quality, visibility and brand recognition and objective variables such as number of checkout counters, credit card services, number of sections and size [39,43,44,56]. As a result of Nakanishi and Cooper's demonstration that the parameters of MCI models can be easily estimated by ordinary least square methods, these models have become one of the most popular models in the field of retail location selection [39,44].…”

“…Finally, the disadvantages or problems of an initially wrong decision in retail store location are extremely difficult to overcome as the location decision represents a long-term, fixed investment which is immobile and unique [37][38][39].Given the importance of the issue, retail location decision has become the subject matter of different disciplines such as marketing, urban sciences, economics, geography, applied mathematics and geomarketing and different retail location theories, models and procedures have been proposed. In this sense, it is possible to say that retail location theory is comprised of four broad theoretical areas that are central place theory, spatial interaction theory, land value theory and the principle of minimum differentiation [38,[40][41][42][43][44][45].Central place theory provides a powerful explanation of the spatial structure of retail facilities and considers the behavior of consumers and retail firms in a spatial market. In the framework of this theory, distance to the supply point and transportation costs are the most important factors.…”

A Web-based geo-marketing decision support system for land selection: a case study of Tehran, Iran

“…These approaches have the potential to consider spatiality or geographical variables in e-marketing and business decisions (Giovanardi and Lucarelli 2018). In the literature related to geo-marketing (Campo et al 2000;Ford, Rutherford, and Yavas 2005;Cliquet 2013;Halbout et al 2013;Turk, Kitapci, and Dortyol 2014;Baviera-Puig, Buitrago-Vera, and Escriba-Perez 2016;Chacón-García 2017), it is defined as a system, application, tool or geoanalysis output that produces useful information, knowledge or decision related to a marketing problem. It combines spatial analysis functions, geographic representation and geo-statistical methods of GIS (geographic information system) to produce useful information for business-related decision-making.…”