Assignment 4
Goal:
The
goal of this assignment was to get a better understanding of how site selection
works on Business Analyst and how one can use these tools for a vaster amount
of knowledge on how the business world works. The job at question was to find a
new site location for a convenient store company found in Minnesota. There are
currently 6 Trader Joe’s in both Hennepin and Ramsey County, the end goal is
for us to have found a new location for a seventh Trader Joe’s in these
counties based on five different reports that need to be created. These reports
include the Market Penetration Report, Hot Spot Analysis, the Optimal Store
Location (Mean Center of all Customers), Location of Ideal Customers, and the
final step is to rank sites of three already existing store locations.
Summary & Findings:
The
first report that I decided to create was the Market Penetration report, this
report is a method that examines how well a company is at reaching their market
area, in this case I am talking about Trader Joe’s and how well they reach
their market in that area. Throughout the entire assignment I had to create
multiple study areas for each procedure and then would analyze the study area
by either analyzing the site location aspect or the market analysis. Below is a
map of the market penetration based on the 2015 Median Income of the area.
As
you can see by looking at the figure above the areas that have been most
penetrated by the Trader Joe’s market are the areas that are darkest green.
Which are the areas that contain the most customers out of the rest of the
counties. The areas that have little to no market penetration are the areas
that are lightest green, and if you look at where the customers are is the area
with the least amount of customers for the Trader Joe stores. This tells us
that the best area to put a new store if Trader Joe’s is looking to make a
profit is right where the red star is which is the Optimal Store Location.
The
next procedure that I started is called a Hot Spot Analysis, this procedure is
used to help identify areas with high values at different geographic scales.
This helped us explain if the areas in Hennepin and Ramsey County with a high population
are the same as the areas with a high income. This analysis will help us decide
which areas within the counties have the most population and the highest income
so than Trader Joe’s can put their next store in a location where it would make
the most profit. Below is figure 2 and 3, the first figure is showing the
hotspots in the counties based on the total population, while figure 3 is
showing the hotspots in the counties based on the median household income.
As
you can see by looking at the two figures above there aren’t too many areas in
the counties where there are areas with both high population and a high income.
This can pose some problems for Trader Joe’s due to the fact that they will
want to ideally put there store in a location with both a high population and a
high median income. But there are still areas on the map that have high
population and a reasonably high median income which would be the best location
for Trader Joe’s to build their next store.
The
next procedure that needed to be completed was to locate the ideal customers of
Trader Joe’s within these two counties. The Ideal Customers method allows us to
identify a threshold of some variable at a certain geographic area or in this
assignments case, find the threshold for zip codes with at least 20,000 people.
This will be helpful because it will allow Trader Joe’s to find future
customers for their company and this test will show which areas will have the
most customers that are most likely to go to their store if one was to be built
close by. Below are figures 4 and 5, the first figure is showing us the Ideal
customers of the area based on total population, and the next figure is showing
us the Ideal customers for the two counties based on median household income.
By
looking at the figures above you can tell which areas have the most ideal
customers based on population and income. Most areas in these two counties would
all be ideal customers for Trader Joe’s but by looking at these figures one can
tell the specific areas that would allow the next Trader Joe’s store to not
only survive but prosper by having the largest profit it could possibly have. The
red star on the map represents the optimal store location based on all of the
data that has already been collected.
The
final procedure for this assignment was to rank already existing sites to see which
are thriving the most and which aren’t doing as well. By ranking these stores
this allows us to see which sites are in the best areas since they are
outperforming other stores around them. This procedure in the end will give us
the information needed to decide where to put the next store while considering
where the three best store locations are. One of the things that Trader Joe’s
doesn’t want to do is put the new store within a close distance of the stores
that are already outperforming others, because this is problematic where the
new store might take business from one the top stores making both stores not
being able to perform at their highest. Instead both stores will have to share
customers and not make as much of a profit as originally intended. Below is the
figure of the future location that I have chosen and the top 3 already existing
store locations, giving the readers a good idea of where I would like to put
the next site in relation to the top stores in the area.
Conclusion:
After
looking at all of the data that was collected over the assignment I have
decided that the best location for Trader Joe’s to place their new store is at
the corner of Olsen Memorial Highway (55) and Van White Memorial Blvd in Minneapolis, MN. There is
a large open area where the store can be placed and has room for a large
parking lot which will allow more customers to be at this location at once
which will maximize the profit of the location. While looking at the population
and median household income for the area this would be best because it is close
by to already existing customers and contains a large amount of ideal customers
which will help this Trader Joe’s be profitable. Same goes for the hotspot figures, the area
that was chosen is in the best location where there is a large population and a
considerably high median household income. While looking at the market
penetration figure I wanted to find an area where the market has already been
penetrated by Trader Joe’s, this means that the area that I have chosen already
knows of the Trader Joe’s corporation and will be more likely to shop there.
The location that I have chosen for Trader Joe’s to build there next site is
the best location, because it is right by a major highway, a neighborhood,
contains a large population, a high median income and in the end will make the
new Trader Joe’s succeed and be very profitable.
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