Abstract
Market Area Analysis for Retail and Service Locations with MCI
Highlights
A market area is a part of the earth’s surface where the actual or potential customers of a supply location come from. This supply location can be any kind of location which provides goods and/or services and generates a geographically segmented market
This paper presents two market area models, the Huff Model and the Multiplicative Competitive Interaction (MCI) Model, and their implementation into R by the authors’ package MCI (Wieland, 2016)
While the first two aspects can not be offered by a statistical software, the presented package MCI provides several functions to process the other mentioned steps by implementing the Huff Model and the Multiplicative Competitive Interaction (MCI) Model into R
Summary
A market area ( called trading area, service area or catchment area) is a part of the earth’s surface where the actual or potential customers of a supply location come from. The model allows to test hypotheses about the influence of store/location characteristics (such as sales area, pricing) and transport costs (such as travel time, distance) on the local market shares in the submarkets (customer origins) by interpreting the regression coefficients and their inference statistics (Nakanishi and Cooper, 1974, 1982; Huff and McCallum, 2008). As in the Huff Model, the empirical market shares, pij, and the observed explanatory variables (A1, ..., AH, dij) are stored in an interaction matrix (see Table 2).
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