potential new sales points geomarketingpotential new sales points geomarketing

How can geomarketing help you estimate the development potential of a sales points’ network?

Geomarketing is a powerful tool for brands. It enables to carry out studies about development potential that will help the deciders identify the most interesting zones to open new points of sale, before the upcoming retail location studies. How? What are the criteria that count the most?

Geomarketing in short

A little reminder to start: what is geomarketing? It is a marketing branch, that uses geographical or cartographic data combined with social behavior and social demographic figures in order to target more precisely consumers and to propose a tool that will help making decisions.

Geomarketing could prove useful in many cases, particularly in the development study – different from the location study, as we will see later.

Geomarketing to help prioritize the agglomerations where to open new shops

How can geomarketing help in the development of a point of sale network? Simply by providing tools in order to:

  • estimate the potential of points of sale’s new openings on a given area;
  • identify the most promising towns or agglomerations to locate new shops in priority;
  • give an estimation of the turnover which corresponds to the opening of a sales point.

In other words, geomarketing enables to identify cities or agglomerations where it is the most relevant to locate a new point of sale and also helps to spot the most interesting types of neighborhoods concerning the market potential.

Learn more: Large retailers – What is a competitive pressure index?

Development potential criteria

To identify the development potential of a given area, geomarketing relies on various criteria such as:

  • The minimum number of potential clients. It consists in estimating the number of clients ready to visit the shop and checking if the number of targeted households corresponds to this level of possible traffic in the area. In other words, it enables to check if a possible opening of a shop will correspond to a minimum market.
  • The commercial attractivity. What are the commercial zones where major food retailers are located? What is the surface area of the supermarket? Is its attractiveness hyperlocal, local, departmental or regional? What are the other types of shops present in these zones? Do they attract enough potential and interesting clients for the sales point we would like to open? It is important to study the information concerning these commercial areas and use them to build the choice of retail location strategy.
  • The presence or absence of competing brands. Two strategies can be considered: the creation of a sectorial retail park (the point of sale is located near a competitor, a technique often used by car dealers or employment agencies that regroup in a same zone), in order to benefit from a natural traffic in the zone synonym of potential customers; differentiation strategy which consists in proposing an offer not present in the area.
  • The estimation of the development potential of a point of sale network is then based on the comparison of these different criteria on each possible location. Each criteria can be summed up by a “grade”. One important question will be: which criteria are the most important for the development of the brand.

Development study ≠ location study

Finally, what is the difference between a development study and a location study? It is mainly a question of … steps.

In this way, the potential development study intervenes before the location study. It enables to know in which agglomeration(s) it is the most interesting to be located, while comparing certain areas according to the criteria mentioned above. That way, the brand will know if it is more relevant to be located in Lyon, Metz, Bordeaux or Toulouse, for example.

The location study intervenes after the development study.  It is no longer the cities or the agglomerations that are compared, but places and even…buildings in a city.

The development study enables to obtain a certain amount of recommendations and estimations in the potential sales revenue. It also permits to choose and build general guidelines for a local communication as it gives information on the future customers of the point of sale!

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