Where there's a CVS.......there's always a Walgreen's....why?

Question

Ever wonder why this is so?

It's the same thing with McDonald's and Burger King. Whenever one pops up on a busy street.......the competition pops up within a few months.

Wouldn't it be smarter for an owner/operator to build one of these franchises in an area where there is no competition?

Thanks,

Primo

Answer 1

Prevalent marketing theory assigns a premium to the same types of businesses to be located in the same area.  The customer adopts an association between place and product that is stronger than brand allegiance.

Answer 2

Another thing I've noticed is there's always a Motel 6 near a Super 8. I think wherever Super 8 goes, Motel 6 follows them and start a business near them giving customers a cheaper option.

One reason I could think of is, for an existing business there's already a good customer base serving that business, especially if the business is doing well. And the competitor just has to find such businesses that flourish and start one right next to them providing cheaper service and attract some of the customers.

Probably this may also save them from putting time and money on their own market research, reduces the risk starting business in unknown territory. For example it may be easier someone starting a new motel, to just locate existing locations of flourishing super 8s and start one near them instead of going through several steps of collecting data, researching...etc..

It may seem ironic but it's actually beneficial for the businesses in some ways. Let's say there's a McD, Burger King, JITB, Popeye's all scattered far from each other. As customers drive by, undecided on what to eat or if to eat, they see McD, after 5 mins they see Burger King...etc and they feel like Popeye's but it's another 15 mins drive in the opposite direction and they'd just give up and decide to go home to eat. But instead if they are located next to each other, that particular part of the town thrives as a busy restaurant area attracting lot of people. And it's also easy for customers to make choices just by looking around. For instance if there are 5 motels in an area, if one is full the customer just needs to go next door and check instead of driving another 15 mins. And because of motels other businesses like restaurants or pharmacies may open nearby.

In short, it's easier to attract customers if a particular area is developed into a busy and popular area, than having businesses scattered all over the town thinning out 'customer density' as well has making it harder for customers by having them drive all over the town

Ok...I stop, I'm not writing a research paper...LOL

Answer 3

i think they are too big for their britches, and when they see one getting good business, they would rather risk mediocre sales next to the competitor and take from them, rather than just open elsewhere and and leave the other alone.

Answer 4

Ha. I know right. Like a little ways down my road. There is a CVS and there in process of building a walgreens. And there is a walmart on the SAME road to lol. I find it funny.

Answer 5

Companies must have a thorough understanding of tapestries and demographics. There is a GIS software package used by many of these companies that map spatial data to plot a large number of demographics, populations, new community construction and other stats. Enter in all such data and it spits out the best places for a new franchise to be built. (see screenshot example below)

Since competing companies have access to the same "sweet spot" location analysis, they build accordingly. So how do they capture more traffic than the other? By offering better or more convenient service, sales, and different product line.

That is just the tip of the iceberg regarding the answer to this question. There is far more to it than that. :)

Answer 6

They're in competition... that's why they're sooo close.

Sometimes, but rarely, they are in partnership...

Can you give me best answer? I need points - bad... lol

Answer 7

We also have the Mc Donald and Burger King competition going on as well. Just last light I grabbed a couple chicken burgers for the girls and personally was not feeling for any, but then I thought" Hey.. the Mc donalds is across the street ( literally) I'll go grab one of their parfaits there"

Its too true. They set up shop right next to one another.  In a good way, competition aside, if we have preferences, say your kids like Mc D and you like BK, then you dont' have to go too far out of your way to get them. hehe.

But yeah.. I wish things were not so competitive.  I guess some look at it as competition, others see it as " Choices"

Right now they have Lowes and Rona, Canadian Tire and Home hardware all competing in one small town for the business. eek.

We don't have CVS and Walgreens... but the Zellers and Walmart are not far from one another and are always competing but I noticed that they are never in the same mall anymore.  Don't know if they came up with an agreement or something ...

Good observation bro hehe.

Too funny though:P

Your sis

sandy