MARKET ANALYSIS FOR DING DONG TEA LLC

Overview

Get Visual Business Solutions was engaged by Ding Dong Tea LLC in Pittsburgh PA to conduct a market area analysis for a proposed retail location in the Squirrel Hill neighborhood of Pittsburgh. Ding Dong was considering opening a retail store modeled after four other successful locations in the United States. The market analysis included an assessment of those four successful locations in Ashville NC, Burlington VT, Madison WI, and Portland ME, as well as the proposed Pittsburgh location. At the outset, anecdotal evidence suggested that the Pittsburgh market area likely exhibited higher incomes, population density, and overall population than the other four locations, and thus should provide a very favorable environment for a successful retail store. This also took account of the proposed location close to Carnegie-Mellon University and the University of Pittsburgh, the professions of many people living in the area, and the competitive environment for similar businesses.

Since sound business decisions are best made with accurate factual information, we set out to quantify the market area populations and their characteristics for all five areas using a location analytics approach. This combined the use of readily-available and very up-to-date maps, aerial photographs (to serve as basemaps), and U.S. Census data using geographic information system (GIS) and relational database management software (DBMS) to integrate and tabulate all the information. We used aerial photos from the National Agricultural Imagery Program (NAIP) for base maps, U.S. Census TIGER block group and tract polygon maps, 2010 population data from Summary File 1, and 2005-2009 population characteristics and income data (5-year estimates) from the American Community Survey.

Total population, persons age 16 to 60, median age, percent college graduates, and median household income were tabluated for the area within a 3-mile radius of each retail location in the five market areas. Most of the data were summed from Census block groups as illustrated by the blue areas on the following maps. Because of the high population density and urban character of the Pittsburgh location, the same characteristics were tabulated for 1-mile, 2-mile, and 3-mile areas around the proposed location. The maps that were used to assemble Census block group polygons (purple areas, with blue areas "selected") of each are shown below, with the big yellow dot representing the retail location and the pink circle representing a 3-mile radius around the retail location (yellow dot). A data table with information extracted from GIS maps (Census databases were attached to the maps) is presented at the bottom of this page. Get Visual can perform this type of analysis for any area in the United States, large or small. Demographic data can be assembled from any collection of geography, including counties, zip codes, tracts, and more.

Pittsburgh PA Market Areas – 1, 2, and 3-mile radii from Forbes Ave. at Murray Ave. – 2 mile area shown

Pittsburgh PA market area

Asheville NC Market Area – 3-mile radius

Asheville NC market area

Burlington VT Market Area – 3-mile radius

Buslington VT market area

Madison WI Market Area – 3-mile radius

Madison WI market area

Portland ME Market Area – 3-mile radius

Portland ME market area

Market Area Data – collated from GIS maps and attached data

Pittsburgh PA – 1 mile radius from retail location
Total population 26,100
Persons age 16-60 17,380
Median age 32.9
Percent of persons age 25 and over
with bachelor's degree or higher
72.7%
Median household income $66,300
Pittsburgh PA – 2 mile radius from retail location
Total population 100,280
Persons age 16-60 72,070
Median age 33.1
Percent of persons age 25 and over
with bachelor's degree or higher
57.5%
Median household income $44,300

 

Pittsburgh PA – 3 mile radius from retail location
Total population 184,450
Persons age 16-60 124,930
Median age 34.8
Percent of persons age 25 and over
with bachelor's degree or higher
44.0%
Median household income $39,200
Asheville NC – 3 mile radius from retail location
Total population 50,960
Persons age 16-60 32,860
Median age 37.7
Percent of persons age 25 and over
with bachelor's degree or higher
35.9%
Median household income $38,100

 

Burlington VT – 3 mile radius from retail location
Total population 60,770
Persons age 16-60 44,850
Median age 31.7
Percent of persons age 25 and over
with bachelor's degree or higher
43.8%
Median household income $44,900
Madison WI – 3 mile radius from retail location
Total population 92,730
Persons age 16-60 74,660
Median age 29.8
Percent of persons age 25 and over
with bachelor's degree or higher
58.0%
Median household income $41,400

 

Portland ME – 3 mile radius from retail location
Total population 70,200
Persons age 16-60 47,530
Median age 37.9
Percent of persons age 25 and over
with bachelor's degree or higher
43.6%
Median household income $45,300
Sum of Asheville, Burlington, Madison, and Portland Areas
Total population 274,660
Persons age 16-60 199,900
Median age 33.8
Percent of persons age 25 and over
with bachelor's degree or higher
47.8%
Median household income $42,570

Analysis and Conclusion

The expected 2-mile radius market area for the proposed Pittsburgh location has a total population of 100,000 people and exhibits very favorable demographic and income characteristics. The educational attainment and median household income of this area is on par with or exceeds such characteristics for market areas served by successful retail locations in the other four cities. In addition, the relatively small Pittsburgh market area has a significantly larger population than the other market areas, due to high population density in Pittsburgh. However, it should be noted that the Madison market area is very similar in many respects. Given the financial success of the retail locations in four other cities, the proposed Pittsburgh location should also perform well based upon the demographic market area characteristics shown.


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