"Trade Area Analysis Converse's Law Calculation App"
User Guide

How to Use

This page explains how to use the WEB app "Trade Area Analysis Converse's Law Calculation App".

This calculation app allows you to estimate how strongly customers from a smaller city are attracted to a larger city. Since large cities tend to be more attractive than small cities, nearby metropolitan areas may draw purchasing power away from your target market. Be careful when selecting a business location near major cities.

Now let’s go over how to use the app.

First, enter the following three parameters.

Enter the population of the nearby large city in the "Population of Large City" field. Next, enter the population of the nearby small city in the "Population of Small City" field. For the "Distance Between the Cities" field, you may enter the physical distance between the cities, but it is also effective to use travel time obtained from services such as Google Maps route search.

Please enter numeric values for each parameter. If you leave any field blank or enter non-numeric characters, an error will occur.

After entering the numbers, click the "Calculate" button to display the result.

(Result Page)

 

The numbers you entered will first be displayed at the top of the result page. In this example, the large city attracts customers from the smaller city more strongly. On the other hand, if the result is less than 1, it indicates that the large city has difficulty attracting customers away from the small city.

The distance between the large city and the small city is an important factor in customer attraction. Even if a large city is attractive, customers may prefer shopping locally if reaching the large city takes too much time. Distance is therefore a critical parameter.

 

Features of Converse's Law

If there is a large city near the city where you plan to open a store, customers from your target city may be drawn to the larger city. In such a case, reconsidering your strategy — for example, opening a store in the large city instead — may also be a good option.

Cities with larger populations tend to attract more customers from surrounding cities. This is because larger cities are assumed to have a greater number of attractive stores and shopping opportunities. As a result, people from nearby cities may choose to shop in the larger city instead.

The formula based on Converse's Law is shown below.

The meaning of each variable is illustrated in the following diagram.

Since distance affects the formula exponentially (distance squared), distance is an extremely important factor in attracting purchasing power.

You can access the WEB app "Trade Area Analysis Converse's Law Calculation App" here.
Go to the Trade Area Analysis Converse's Law Calculation App