Central Place Theory: Location of Services

Summary

In this video, Mr. Sinn dives into the Central Place Theory, originally developed by Walter Christaller in the 1930s, to explain how the most profitable locations for services are determined. This theory utilizes hexagons rather than circles or squares to efficiently model market areas — also known as hinterlands — emphasizing the importance of distance, travel time, and demographic data in choosing these locations. By understanding market areas and thresholds, companies can better strategize their service placement for optimal reach and profitability. This video is part one of a series, promising further insights into urban geography and settlement organization in the next installment.

Highlights

• Mr. Sinn introduces Central Place Theory and its application. 📚
• Walter Christaller developed this theory in the 1930s for service location. 🗺️
• Hexagons are used instead of circles or squares for better efficiency. 🔷
• Market areas, or hinterlands, are vital for service attraction. 🎯
• Travel time outweighs distance when choosing service routes. ⏰
• Specialized services have larger pull factors due to uniqueness. 🏟️
• Demographic data is key for determining service thresholds. 📊

Key Takeaways

• Central Place Theory helps locate services for profitability. 💡
• The theory uses hexagons for efficient market area visualization. 🔷
• Distance and travel time are crucial in determining market boundaries. ⏳
• The theory highlights human behavior in choosing services based on proximity. 🚗
• Demographics play a key role in deciding service locations. 👥

Overview

Mr. Sinn opens up a discussion on the intriguing topic of Central Place Theory, shedding light on its practical use in society today. With the spotlight on service location strategy, this theory, created by Walter Christaller in the 1930s, emphasizes the use of hexagons to map out optimal service areas. Mr. Sinn breaks it all down for viewers, weaving in fun visuals and relatable examples that make these geographical concepts easy to grasp.

As Mr. Sinn elaborates, this theory isn't just about mapping — it's about understanding human behavior and decision-making when it comes to choosing services. The key factors include travel time and the convenience of reaching a location, which often trumps actual distance. Through clear explanations, Mr. Sinn illustrates how companies use this knowledge to strategically place their services for maximum profitability.

In closing, Mr. Sinn touches on how demographics and consumer data further influence service location decisions under the Central Place Theory. By considering who lives in a market area and their needs, companies can better match their services to the right audience, highlighting the integral role of threshold analysis. This sets the stage for part two of the series, which promises to expand on these principles in the realm of urban geography.

Chapters

• 00:00 - 00:30: Introduction and Overview Cristal or central place theory is discussed as a method to determine optimal service locations in society. This video is part one of a two-part series, focusing on the fundamentals of the theory.
• 00:30 - 01:00: Understanding Central Place Theory The chapter explores the Central Place Theory and its application in locating services within society. It serves as part two of a series where part one delves deeper into the foundational aspects of the theory. This chapter particularly focuses on understanding how Central Place Theory is employed in urban geography to explain the organization of settlements in society. The emphasis is on following guided notes available in the description to gain a comprehensive understanding of the content discussed.
• 01:00 - 01:30: Market Area and Hinterland The chapter titled 'Market Area and Hinterland' introduces the central place theory created in the 1930s by German geographer Walter Christaller, and further developed in the 1950s. This theory helps in determining the optimal location for services to maximize profitability. It's still relevant and utilized by companies today for strategic decision-making regarding location promising profitability. The chapter sets the stage to delve into various aspects of this theory.
• 01:30 - 02:00: Role of Human Behavior The chapter discusses the concept of market areas in relation to human behavior. It explains that markets act as nodal regions, attracting people to a central point, which is the service area. A key aspect of human behavior highlighted is the tendency for people to prefer interacting with locations that are closer to them, which is considered to be common sense.
• 02:00 - 02:30: Central Place Theory Model The chapter discusses the Central Place Theory Model, explaining how people are more likely to go to a nearby market or service rather than a distant one. This tendency leads to the formation of patterns as businesses set up services that attract people to these central places, referred to as 'markets'.
• 02:30 - 03:30: Circles, Squares, and Hexagons in Theory The chapter 'Circles, Squares, and Hexagons in Theory' discusses the concept of market areas or hinterlands using restaurant chain Chipotle as an example. It explains how the market area is represented by a circle, symbolizing the geographic region from which a business, like Chipotle, attracts its customers. This is depicted as a basic market, where those within the circle are considered part of the business's market area.
• 03:30 - 04:30: Size of the Market Area The chapter explores the concept of determining the 'Size of the Market Area' using Chipotle as an example. It explains that within a defined circle, potential customers are likely to visit a Chipotle location, but those outside it will gravitate elsewhere. The text introduces the central place theory, which models market areas using hexagons instead of circles or squares, suggesting the significance of this geometric choice in real-world applications.
• 04:30 - 06:00: Distance vs Time in Decision Making The chapter explores geometric representations like circles, squares, and hexagons within the context of the central place theory, highlighting issues such as gaps in service access when using circular models. It emphasizes the contrast with real-life scenarios, such as in the U.S., where everyone has access to services, albeit at varying distances.
• 06:00 - 07:00: Type of Service and Its Impact The chapter discusses the accessibility and impact of different types of services, noting that while accessibility to all services exists, time to access varies. The concept of circles is introduced to illustrate service overlap, suggesting simultaneous attraction to multiple services is impractical. It also highlights that squares, unlike circles, align and thus are more predictable, but are not equidistant from center points, posing challenges in equitable service access.
• 07:00 - 09:00: Role of Threshold and Census Data This chapter discusses the role of hexagons in urban planning and data analysis, specifically focusing on their utility in ensuring equitable service areas. The hexagon is seen as a compromise that allows for minimal variations in distance between service areas, offering a better real-world application compared to other shapes. The chapter anticipates further discussion on hexagons in a subsequent part where their role in organizing settlements will be explored in more detail.
• 09:00 - 10:00: Conclusion and Call to Action This chapter explains the rationale behind choosing hexagonal shapes for market area analyses. It describes the considerations for determining the size of a market area's hexagonal units, noting that companies must assess their 'pull factor' to decide on dimensions. The video transitions from explaining the significance of hexagons to discussing practical aspects of calculating a market's geographical reach.

Central Place Theory: Location of Services Transcription

• 00:00 - 00:30 hello there everybody and welcome to the mr. sin Channel in this video we'll be talking about Cristal or central place theory and how it can be used to actually locate where we should put our services within society [Music] so this video is part one of a two-part series this video is going to be going over what crystal or central place
• 00:30 - 01:00 theory is and how it can be used for us to locate services within society part two will go over crystal or central place theory but how can be used actually an urban geography and how it explains the organization of settlements throughout Society so make sure you check out both of the videos also while watching these make sure to use the guy to notes you can find them in the description below the guided notes go along with the video and they'll help you better understand all of the content now enough of me explaining all this let's actually get into Chris dollar and what this whole theory is and how it
• 01:00 - 01:30 works with the world today the central place theory was created in the 1930s by German geographer walter chris dollar in the 1950s it was further developed but this model and this theory really looks at where you should locate a service to have the most profitability this model is still used today companies use this theory to better understand where they should locate and how profitable location could be now we're gonna explain throughout this video all the different aspects of it and the first
• 01:30 - 02:00 thing that we're gonna have to get into is a market area and this hinterland now in thinking of markets think of it like a nodal region markets are areas that pull people in at the center that is going to be our service this is where people are going to be coming to now there's a couple things with human behavior that we have to understand when looking at this theory one that people always are gonna want to go to the closest area you are going to interact with things that are closer to you compared to things that are farther away that makes sense it's kind of common sense actually
• 02:00 - 02:30 you're not going to drive to a McDonald's that's an hour away if you can go to one that's ten minutes away you'll go to the closer market there so that's this pull and what we start to see is actually patterns start to form as companies provide services that pull people into these markets now markets are these central places and we're going to pull up a picture of them in just a second so that way you can kind of see a visual of it but it's important to understand that when we're talking about markets we're talking about this area
• 02:30 - 03:00 that is pulling consumers in to be able to shop and purchase item on the screen right now you can see a very basic market now in the center I have Chipotle so Chipotle would pull everyone who's in this circle towards it Chipotle is pulling them in this circle is actually our market area or the hinterland both of these are referencing the same thing it's going to be important to understand it anyone who is within this circle is actually in the market area for Chipotle so they're
• 03:00 - 03:30 being drawn to Chipotle people within the circle will if they're going to go get Chipotle we'll go to this location and people outside of this circle well they would not be part of this market area and they're gonna be pulled in a different direction and that's important to understand now for the central place theory we're not going to be using circles in fact we're not using squares either the central place theory uses hexagons for the actual kind of model when laying it out in the real world and it's important to understand why here we
• 03:30 - 04:00 can see we have circles we have squares and we have hexagons all of these are set up to try and show what the central place theory would look like with these shapes now with circles we can actually see a couple of things one I can see there's a gap between some of these circles they don't all line up and what that would mean is if you lived in that gap well you wouldn't have access to certain services you'd have no access at all and that's not true in real life in the United States today for example everyone has access to services now some people live further away and so it
• 04:00 - 04:30 will take them longer to get to certain services than others however we still have access to these services the other issue with circles too is there's overlap this would show that people are being drawn to two places at the same time and that just doesn't necessarily happen now the other issue too when we're getting two squares is we can actually see that squares do line up that's a positive on the other hand though it's not equidistant from all of the center points and that becomes an issue and that's actually where the
• 04:30 - 05:00 hexagon came into be we're here cristal our thought at least that the hexagon was a compromise that this was one lined up so everyone was in a service area and while it's not perfect for the exact distance between all the areas from the sin it's less variations and it was better and hexagons actually played pretty well in the real world and we're gonna actually see the hexagons come back in part two and it'll make more sense in that video when we're seeing how settlements are organized so make sure
• 05:00 - 05:30 to remember kind of why hexagons were picked when you're watching the next part of this video now that we understand why we're using hexagons let's go back to our market area and hinterland we're now gonna talk about how we actually find how large or small that area will be so on the screen here I have my hexagons and I can see I still have triple-a in the middle the question is though how would a company figure out how large or small this hexagons should be how do they know their pole factor well we have to take into account a couple of different things one we are
• 05:30 - 06:00 not going to just use the distance to travel now there's a reason why and it actually is pretty simple think of actually how you process information when it comes to traveling somewhere now your Maps on your phone will say oh this is how many miles it is and this is how far you'll be driving but most people just care about the time we are gonna find this by understanding how far people are willing to travel through how long they're willing to go because time is an easier metric for us
• 06:00 - 06:30 to use so when you're talking with your friends normally when you're deciding where to go you're not necessarily focused just on how long the trip is going to be with miles but you're more focused on how long the time is there's a variety of reasons for that if I want to go to Chipotle and there's multiple Chipotle's in town I'm going to go to the one that is the quickest for me to get there let's say I've at Chipotle that's only five miles away from me and I have another Chipotle that's ten miles away from me the Chipola though that's
• 06:30 - 07:00 five miles away from me is going to have to go through the downtown area and it's traffic the one that's ten miles away I could just quick hop on an interstate and drive right up to it and it'll be a lot quicker for time however it's double the distance I'm gonna pick the one that's double the distance I want to save my time I'm not going to try to go through downtown I'm not going to go through rush-hour so we make decisions based on our quickest route not necess the shortest route and that's important
• 07:00 - 07:30 to understand another factor that people consider when trying to decide how long they should go to drive to a location is the type of service now the more specialized something is the more we're willing to drive to it that's why you're going to see these professional sports stadiums of very specialized service located in a larger area but their market area their hinterland is going to be very large they're gonna have a huge pull factor people will be willing to drive there because it is such a unique
• 07:30 - 08:00 experience however they're not gonna have the same for let's say a subway or a Chipotle or McDonald's those are very common and so in areas then where we are going to have large amount of time required to drive to different spots we're going to see more of those services think about it this way if we actually look at your downtown pull up Google Maps type in the subway see how many Subway's pop up where you have congested roads or where it takes a long time to go through it I bet there's
• 08:00 - 08:30 probably a lot however when you start to move out a little bit and maybe you look at areas that are more spread out and so it's quicker to drive there'll be less Subway's because what happens there is the time has changed so in areas where it takes a lot to go down the street well you're going to have more Subway's popping up because they need to try and capture their market area they know that people won't drive that far for it so they put more in an area that takes a lot of time to travel in and less in an
• 08:30 - 09:00 area where it's quicker now range isn't the only thing that companies use to understand where they should put their locations threshold is another important factor threshold is just looking at the people within our market area within this hinterland again I can see here I have my hinterland in my market area and inside of it are people now these are going to be my consumers every location needs a certain amount of people to be able to support it now companies use census data to better understand who is
• 09:00 - 09:30 within their market area and it's important for them to know what types of people are there Chipotle is an example that caters to more of a broad audience but if I wanted to let's say open up a chiropractor I want to make sure that I have an older population that would be willing to go there if it's a very youthful population maybe it'd be better if I opened up a nightclub or maybe a movie theater depending on the age ranges there all of these play into a roll into a company's decision so our threshold is determined
• 09:30 - 10:00 by looking at the census data and the demographics within it's important for the company to know about this lets them have a good understanding of who's in this region that's going to be drawn to their services if they notice that they this market area works the range is good but the demographics within don't match up with our company they'll locate in a different area or if they decide to still locate there they won't be able to get enough people to support that store and they'll end up closing and that will provide other issues down the road make
• 10:00 - 10:30 sure you check out my next part now which is going to look at the central place theory again but now it's going to be applying it to actually the organization of settlements within society I'm mister sin I hope this video helped you better understand crystal or central place theory and the location of services make sure to subscribe on your way out and check out part 2 of the video thank you again for watching and I'll see you next time online