How does the concept of threshold help a business to decide on the right location?
What will be an ideal response?
Answer: To determine the extent of a market area, geographers need two pieces of information about a service: its range and its threshold. The range is the maximum distance people are willing to travel to use a service. The second piece of information needed is the threshold, or the minimum number of people needed to support the service.
Every enterprise has a minimum number of customers it needs to generate enough sales to make a profit. Determining the range, a service provider must also determine whether a location is suitable by counting the potential customers inside the irregularly shaped circle. How potential consumers inside the range are counted depends on the product. Convenience stores and fast-food restaurants appeal to nearly everyone, whereas other goods and services appeal primarily to certain consumer groups. For example, less affluent people may be drawn to thrift stores whereas wealthy consumers might frequent upscale department stores. If a service appeals to certain customers, then only the type of service that appeals to them should be counted inside the range.
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