Creating territories from centers of density allows you to create territories without seed points. You can build territories in a new market where you have minimal knowledge, with no brick-and-mortar locations to start. This option will search territory centers near most dense places in the base layer and create territories from found centers. Centers of density can be found using spatial locations of features in a base layer only or in combination with some attribute, such as population or diversity.
Spatial locations are the centers of geographic objects, such as centers of ZIP Code polygons. The clustering algorithm analyzes the density of these center points and forms clusters from points with the higher density value. Then centers of these clusters are processed to create the desired number of territory centers.
The use spatial locations only command uses actual distances between center points for calculating the density value. Values of attributes are not applied in this case.
The use spatial locations and summary attribute command uses a modified formula for distance calculation:
Modified Distance = Distance / Density Coefficient
Where Density Coefficient = (Value of attribute from Feature 1 + Value of attribute from Feature 2) / 2;
This formula means that features with bigger values of attributes are closer to each other.
As a sample use case, suppose you create territories using an income summary attribute. A few families with an ordinary income live in a 10-square-mile area. In this case, the territory will not be created because the area is too large for a small number of families, and their income is ordinary. Conversely, consider a different area with the same geographic size and same number of families, but with large incomes. The territory will be created in this case because the calculated density value takes into account their large income.
How Territories are Created from Centers of Density
Source data analysis
In this phase, the base layer feature centers are analyzed to calculate the average density of the layer.
Density clusters calculation
The algorithm searches groups of feature centers with density more than the average of the whole layer density. This density creates the clusters.
Calculation of territory centers based on density clusters
For each density cluster, a calculated weight is based on balancing and capacity variables of the density cluster features. The density cluster centers are processed with help of the "k-means" algorithm accounting for the clusters weight. K-means finds the cluster's desired number of territory centers. Using the weight of clusters helps locate territory centers in positions most suitable to create equally balanced territories.
Setting Capacity Values
Setting capacity values is an important feature to constrain your territories. A capacity value is a threshold you can set to ensure that a territory does not exceed one or more variable limits. For example, you can specify that all territories must stop growing in an area when a population of 150,000 is reached. The 150,000 figure is the capacity value. You can also set a tolerance value if more than one variable is used to create territories. A tolerance value gives a plus-or-minus range of the capacity value and allows more overall balanced territories. For example, if the capacity value is a population of 150,000 and the tolerance is set at 20,000 people, then the range is 130,000 as a floor and 170,000 as a ceiling.
Option 1: Each variable reaches capacity value
Territory creation is stopped only if all variables reach their specified values. As a result, some variables can be much greater than specified.
Option 1 with Tolerance activated: Territory creation stops if some variable(s) reaches the specified value and some variable(s) reaches the floor boundary (specified value minus tolerance).
Option 2: Any variable reaches capacity value
Territory creation is stopped if any variable reaches its specified values. As a result, some variables can be much less than specified.
Option 2 with Tolerance activated: The territory creation will continue while any variable hasn't yet reached the ceiling boundary (specified value plus tolerance) or all variables haven't yet reached the specified value.