Ring studies are the simplest and most widely used type of market area analysis. The concept of a simple ring is easily understood. Since a businessperson might not know what shape the market or service area should be, a simple circle is used to begin the process. Many preliminary market studies begin with an analysis of one-, three-, and five-mile rings, but this may vary from retailer to retailer.
Once the rings have been generated, the underlying demographics are extracted. What is the total population within one mile? How many households are within three miles? What is the average household income within five miles? These are all questions that ring studies can quickly and easily answer.
Simple ring studies are generally used to generate a rough visualization of the market areas around points. Suppose a company is expanding into a new market and plans on leasing space in the major shopping centers in that market. The company may begin the analysis process with a series of ring studies around the major malls. The characteristics of these rings can be compared to similar rings around successful existing operations.
Other examples of simple ring store-based analysis include the following:
- A commercial real estate company calculates underlying demographics for 5- and 10-mile rings around each available property as part of a standard report.
- A large HMO provides a count of the number of employees within 3, 5, and 10 miles of each of its branch clinics as part of its proposal to potential clients.
The examples below show that simple rings are created two ways. There is a single site example and multiple rings created for nationwide locations.
The simple rings below is a typical 3 ring (1-3-5 mile) example.
The simple rings below is a multiple 2-ring example.
The ring size is a radius figure. So a 5-mile ring is 10 miles wide (diameter) from one side to the other.
Simple rings can be created with or without donut areas. Donut areas allow you to extract underlying data for each individual band. Simple rings can be created with the nonoverlapping option. This option removes the overlapped geographic areas when rings cross over one another and shows the separation in market coverage.
Learn more about simple rings.