Research indicates that 80 percent of a flower shop's customers live within one

mile of the store, another 15 percent live within two miles of the store, and the

remaining 5 percent live within five miles of the store.

Compute the number of customers living in the trading areas if the entire

population is 14,240.

Answer: The number of customers living in the trading area is 11,392

Explanation: The trading area of a business enterprise which is also often referred to as market area, is defined as the geographical location or physical region where the enterprise conducts its business. The simplest way to put it is, that location where a business organization conducts most of its sales volume.

The trading area is usually determined by some key factors, among which are;

Distance and travel time

Alternatives

Demand

In this particular instance, distance and travel time is a key factor as far as buying and selling of flowers are concerned. We have been told that 80 percent of the customers live within one mile of the store. These set of customer have the tendency to patronize the store first and foremost due to its proximity. In comparison, customers who live within two miles are likely to have a few competitors to choose from before covering the distance to the flower shop, and for customers living within five miles, the likelihood of patronizing the flower shop is quite lower than the other two categories. Also these ones are likely to have more options in terms of flower shops within a five-mile range.

Considering the time and travel involved in buying a bunch of flowers, the trading area of the flower shop would include the customers within a one mile range, and this number ca be calculated as follows;

Trading area population = Percentage of customers x population

Trading area population = 80%*14240

Trading area population = 0.8*14240

Trading area population = 11392

The number of customers living in the trading area is 11,392