Finding your business

Finding your business

Businesses should use location analytics to see where their customers are clustering, Maria Attard says.

Location information is at the core of 21st century businesses. This is because of a number of technologies which are reliant on knowing exactly what is where and the smartphone boom which promotes location based services through social media, mobile and online searches and more. This has all sorts of implications on businesses that are driven by customer demands, which are constantly changing both in terms of the client demographic and geographic characteristics.

The importance, understanding and use of a location strategy is very much tied up to a very basic rule in geography: Tobler’s first law of geography, which states that everything is related to everything else, but near things are more related than distant things. This sums up the importance of location to businesses that rely on specific human characteristics depending on the services or goods offered.

Following on from Tobler, people with similar characteristics tend to locate near each other, thus forming clusters. These clusters are what businesses look for when trying to identify new markets or new clients.

Developing a spatial model of demand and supply helps businesses identify which goods are being consumed and where. This spatial analysis sometimes referred to as location analytics allows for the effective deployment of goods and services, which in turn reduces redundancy and waste. This does not only have potential for businesses, in terms of revenues, but has also an impact on the environment, especially if the business is dependent on conventional modes of transport for delivery and stock.

Global logistics companies have employed GIS successfully to support their distribution systems, saving millions in transport costs and in CO2 emissions, but also to identify markets.

Marketing has also been engaged with geography for some time now. Geo-marketing is the use of location information to frame marketing efforts using digital maps to organise data for decision-making. Maps allow for the analysis of data through the medium of space or characteristics.

In a world where competition is fierce, not only locally but also globally, the location of a business has serious implications on its success and image

The advent of smart mobile devices and location data through social media has indeed escalated the possibilities of geo-marketing to unprecedented levels. Up until a few years ago many feared the possibility of being notified of a favorite shop as one approaches it in the street, a fear driven primarily by data protection and privacy concerns. Many feared the proposal of wearable computers which would keep us connected all the time with the environment around us.

Nowadays of course many allow location services on their smartphones, meaning that at any one point an app knows exactly when and where you are. This is similar in principle to check-ins on popular social media sites and apps. The idea of switching off devices is also not something which many consider today. This has also become an opportunity for many companies to collect and store geo-marketing information and sell these datasets at premium prices.

This data provides marketing specialists more power and capabilities which in turn businesses can use to target their efforts in the location of a new shop and in locating clients. As consumption patterns not only change but become more specific, so do clients as they become older, change lifestyles and move around. Consumption maps such as those related to food, education, health and so on provide significant indications for businesses and marketers in determining, for instance, optimum retail locations, but also office and services locations.

In a world where competition is fierce, not only locally but also globally, the location of a business has serious implications on its success and image. Increasing internet business and potentially lower profit margins lead many to broaden their exploitation of different market segments. And geo-marking and location analysis have started to play a major role in defining strategies for businesses, particularly in the retail business.

Many researchers have started to appreciate the role of geography in the success or otherwise of a business (Roig-Tierno, N., Baviera-Puig, A., Buitrago-Vera, J. (2013) Business opportunities analysis using GIS: the retail distribution sector. Global Business Perspective, 1:226-238). And even though this is not widely acknowledged in practice, there are several opportunities to develop tools and processes which support new and established ventures to improve their marketing efforts, identify optimal store locations and reach new markets.

• Maria Attard is associate professor in geography and director of the Institute for Climate Change and Sustainable Development at the University of Malta.

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