How does the concept of threshold help a business 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. Movie theaters and dance clubs attract (mostly) younger people; chiropractors attract (mostly) older folks. Poorer people are drawn to thrift stores; wealthier ones 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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