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I am interested in creating some customer-derived trade areas that represent "most" of the customers for a given store (say 80%). I have both the customers and the stores geocoded.

The ESRI Business Analyst description of the general idea (with pictures) is here. Unfortunately I work at a MapInfo shop, so I am trying to hack it together myself. Does anyone know if something like this exists already so that I don't have to reinvent the wheel?

Here's a summary of what I've tried so far:

I've start at the store, ranking the customers from closest to farthest, and then adding each customer in until I get to ~80% of sales for each store. Then I put the convex hull around those folks and call that the trade area. This works reasonably well, but it misses major customers who happen to be distant.

I've also tried ranking the customers in terms of sales, from largest to smallest. Then I keep the ones who make up the 80%, and then snap a convex hull around them. This gets the big guys, but I loose the 80% feature since that area now includes lots of the small shrimp.

I've also tried a hybrid approach where calculate z=sales/(straight line distance) for each customer, rank by z, and put CH around the folks that add up to 50%. That CH will also include other customers that were not selected, and so I then trim the farthest customers in the hull until I get back down to 80% of sales. This works the best of the 3 methods.

Any advice would be greatly appreciated.

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2 Answers 2

TerraNova MapInfo AnySite® is the premier and preferred location-based software solution from MapInfo.

"you can connect, retrieve, report and map any information from your proprietary database to analyze trade area data quickly, easily and accurately"

enter image description here

http://www.terranova4mapping.com/products/anysite.htm

(Seen it in action but not used it myself)

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Thanks! I will investigate this. –  Dimitriy V. Masterov Apr 10 '12 at 15:35
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This answer relates to your first method. You mention that you end up with big customers that are far from the store. What you might not be considering is where they work or live. Their path home may be near your store, or they work nearby and can drop by during their lunch hour.

They may buy from you because of convenience, price, or quality. The flaw you are concerned about may be useful information.

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You are right. I do want the big guys to be part of the trade area. That's why I am trying to capture this trade-off between revenue and distance. –  Dimitriy V. Masterov Apr 10 '12 at 15:30
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