Determining trade area penetration

Available with Business Analyst license.

Overview

Trade Area Penetration calculates the penetration for each trade area. A Trade Area Penetration report is based on the number of customers within a trade area compared to a base value, such as total households or disposable income.

Note:

Trade Area Penetration can be run in the background or foreground in the 64-bit environment. Business Analyst 64-bit background geoprocessing is installed during the product setup and is the default processing option. You can switch between background or foreground options from Geoprocessing menu > Geoprocessing Options > Background Geoprocessing section. Running tasks in the background allows you to continue your work in ArcMap as the task executes.

To enable, or disable, background processing navigate to the General tab of the tool properties and check, or uncheck, the Always run in foreground check box.

Read more about 64-bit Background Geoprocessing.

Input Prerequisites

Any point file. In many cases the point file will be a customer database.

Example Output

The image below shows a detailed (with smoothing) three ring customer derived trade area. The trade area values are percentages based on the weighted value of the customer sales. Using the Trade Area Tools from the Trade Area Wizard the trade area penetration can be determined. The following are the attributes that are derived:

• BA_CUST - shows the number of customers in each ring.
• BA_TCUST - shows the total number of customers for each store (100 * BA_CUST / BA_TCUST).
• BA_PCUST - shows the percentage of customers within each ring.
• BA_CUSTW - Is the same as BA_CUST but has been assigned weights based on customer sales.
• BA_TCUSTW - the total number of customer for each store weighted by customer sales.
• BA_PCUSTW - same as BA_PCUST but based on customer sales.
• BA_BASEVAL - the base value for calculating the trade area penetration.
• BA_MKT_P - the trade area penetration value (100 * BA_CUST / BA_BASEVAL).

The penetration rate, shown in the BA_MKT_P field on the far right, is thematically shaded on the map. The inner-most ring shows a value of 34.4765 meaning, that there is 34% penetration in this section of the trade area. This is based on the number of customers in each ring compared to the total population.

Note:

A quick look at the two trade areas shows that the lighter colors have less penetration vis a vis the darker areas. It can be surmised that the bottom store is the better performing store.

Learn more about Trade Area Penetration.