A market area is the region where a product or service is sold, determined by demand, sales objectives, and marketing techniques. It can be defined by a small town or a global area, and influenced by substitutes or competition. Defining the market area helps companies market more effectively and plan for expansion, using geographic information systems to collect and analyze data.
A market area is the geographic region in which a specific good or service is offered for sale. The market area, or commercial area, differs from one company to another based on demand, sales objectives and marketing techniques. By clearly defining the business area for its product or service, a company is able to market and promote its product to customers and also to identify new potential customers.
To understand how the market area works, it helps to look at examples for different types of businesses. A small-town butcher may define his market as people who live or work within the city limits or surrounding suburbs. A large retailer, on the other hand, may define its market as wherever products are sold. This may include your local area only or include countries from all over the world. In this type of situation, the company often divides the market area into many regions or zones to facilitate coordination of marketing and sales efforts.
The market for a product or service depends on many factors and criteria. It is largely determined by local demand for that particular good, but it can also be influenced by how willing and able people are to travel to obtain that product or service. In the modern global economy, the shopping area can be quite large due to the availability of online retailers.
The market area is also influenced by the availability of substitute or competing products. The more butchers there are in a small town, the smaller the market for each, because meat products are largely interchangeable. If one of these stores can stand out on the basis of price or quality, it may be able to expand its shopping area and capture more customers.
One of the major benefits of clearly defining the market area of a product or service is that this information can be used to market more effectively. This helps the company set prices, introduce new products or modify existing products based on consumer demand within the defined area. Understanding the size and demographics of a particular shopping district also helps companies plan for expansion, maximize size and minimize waste.
Modern businesses often rely on geographic information systems (GIS) to help them better understand a product’s market. GIS technology is a means of collecting and analyzing data, including information about the population, average income, and shopping habits of people within a given area. This helps companies find the right market for a product or service and also helps identify regions that may be underserved by existing companies or suppliers.
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