Vol. 19 No. 3 — May/June 2005

Customer-Based Marketing

Proclamation of the Value of Place

Hear Ye, Hear Ye! It is time for us as librarians to be informed and knowledgeable about siting and location strategies. Read on, please!

A well-designed location strategy is critical for most public and private firms. Whether offering countywide police and fire protection or selling goods or services, the choice of location is considered the most important decision a manager or retailer can make. It is through this location or "place" that the organization's offering is made available to potential customers. The same is absolutely true for libraries.

Studying Public Library 'Places'

Across America there are approximately 16,000 public library "places." These "places" range from large, centrally located sites in the middle of heavily urbanized counties to smaller locations in upscale suburban or low-income, inner-city neighborhoods to a single building serving an entire rural county. The location of each site represents significant commitment and long-term investment of public funds, since a library facility usually remains in service for several decades. If the building is a main library for a county, the service time frame for the actual site may even be closer to 100 years.

The disadvantages of a poor location are difficult to overcome. While the public library's vision for customer use is far more equitable than a bookstore's, the placement of libraries within the communities they serve is as strategic as that of a customer-based business. Therefore, the location affects how the library is used, by whom, and how much.

This article argues in favor of the critical need for library location strategies and presents a review and examples of the topic.

The Need for Library-Specific Location Strategies

Historically, location strategy and theory have not been applied when choosing a site for a public library, even though it appears that libraries could benefit from them. There are several reasons for this: 1) librarians lack training and education in this area, 2) local funders and influential citizens traditionally affect decisions on siting according to governance structures, and 3) there is a historic reliance on widely published descriptive checklists used by library building consultants who are hired due to lack of library management experience in this area. Hence, the cycle continues.

Yet retail stores and public-sector agencies have successfully employed location theory since the 1930s. More recently, these agencies started utilizing geographic information system software. GIS is used to review dispersion of customer markets by geocoding user addresses, identify the demographics of potential customers surrounding the facility, and measure distances between other service outlets and possible competitors in a dynamic digital environment. All this data, analyzed in combination, affects profit or service levels. This same type of data also affects library use.

Library managers, too, must proactively develop data that can estimate the extent of potential customer markets served, profile the demographics of the people who live there, and be readily available to assess the impact of any closure or merger. Old descriptive checklists will not suffice. These checklists, while including important considerations such as visibility, cost, proximity to major roads, and adequate parking, fail to show the interrelationships of these same criteria to the population of users and potential users. The checklist approach is also difficult (if not impossible) to apply to multisite decisions.

It is understandable that library managers of the past relied on trial and error, experience, political persuasions, and citizen experts for location decisions. At that time, location methodologies had not been developed. But why aren't they better prepared today? I argue that it is because other location strategies are not widely known or available to them.

Let us take a look at what is available for managers and review some illustrative examples of useful location strategies.

Five Popular Site Selection Strategies

There are five popular strategies for site selection used by today's organizations: the checklist method, analog approach, regression models (do not be afraid!), location allocation, and gravity models. Librarians who are cognizant of these strategies can solicit the assistance of outside consultants, local planning offices, or university research centers. At the very least, librarians can use the content or intent of the models when thinking through siting and location for their systems. I'll give a simple review and examples of each approach in library lingo.

1. Checklist method. The checklist method is used to evaluate the relative value of a site by comparing it to the other possible locations in a systematic way.

The checklist is highly dependent on the decision maker's judgment and ability to place appropriate value on each checklist item. In combination with other methods, it can be useful. The checklists that are most useful also include interactive effects of traffic flow, population density, income, competition, and other demographic information. Site-specific criteria can include parking, ease of access, and visibility.

While the checklist allows you to compare sites, in more complex markets, intuition and expertise with the other considerations are usually not enough. Yet many public libraries continue to rely on this method—in an even more simplified form.

Example: Many library building consultants use the checklist approach, yet fail to use it in conjunction with consideration of demographics and population density (as described above). The typical checklist takes a yes/no approach in regard to the site's general physical conditions, environmental aspects, size, and accessibility. A more powerful use of the checklist would be for a library to identify its geographic market area (the real geographic extent of actual and potential customers for each facility) and to use the criteria as modifiers in siting decisions, not as absolutes.

2. Analog approach. This method is more sophisticated and rigorous. It is derived from assumptions that the drawing power of a proposed site is similar to that of stores operated by a chain organization under equivalent market conditions. For this method, you would identify and select an existing store that is similar to the one you're choosing a location for. The power of the store to draw customers from various distance zones is measured through on-site surveys. The drawing power of the analog store is used to estimate the market area and expected sales at proposed alternate sites; the best site is selected from those results.

Example: This type of method, even partially implemented, can add valuable insight into library site selection. Using standardized library data that is currently available (federal data collectors now collect square footage of facilities, and demographic data is available through http://www.geolib.org/PLGDB.cfm), managers can identify libraries of similar-sized markets and demographics when considering sites.

3. Regression models. Regression statistical models allow someone to consider market-area factors as well as site-specific variables within a single framework. The models also allow an analyst to identify factors (the independent variables) that can predict, with varying degrees of success, different levels of revenue (the dependent variable) at various sites. By measuring the values of the independent variables at a proposed location, an analyst can make predictions for the dependent variable. Regression models require the real population of the store's actual market area, as opposed to general population figures.

Example: The regression model I developed for the library field uses demographic, geographic, and quality or attractiveness variables. Let us say that a library manager does not have the experience or funds to hire a consultant to use a statistical model. I would argue that even descriptive knowledge of those population characteristics that are most relevant to library use would be helpful. In a regression model, I would consider the following demographics as the independent variables: age, race/ethnicity, education, income, language spoken, mode of transportation, travel time, and family life cycle. In my research, I collapsed all the library-usage (dependent) variables into an index. This is usually just fine, as circulation dominates (so including program attendance and reference statistics does little to change the statistical counts). This simple type of analysis—even short of fully employing the model—requires librarians to really deliberate and identify their geographic market area, which is the geographic variable. They can do this by studying paper maps and looking at topographical and cultural boundaries that limit service geographically. Quality or attractiveness variables include square footage, holdings, and hours of access. Use these in combination and you can predict (to a degree) the level of use in a proposed location. That is the way Wal-Mart and CVS/pharmacy do it—why not us?

4. Location allocation models. These models shift the focus from evaluating site-specific factors to evaluating the impact of a new outlet on any other outlet that's operated by the same firm within the market area. These models are advantageous in that they make possible a systematic evaluation of a large number of locational configurations in terms of market share or profit. Components of the location allocation model include measures of accessibility; demand zones (such as census tracts and ZIP codes); feasible sites (zoning, costs, etc.); distances; and the allocation rule, a formula that indicates how consumers choose among different outlets.

Example: Assign each potential user to a library facility based on minimum travel distance. This is an excellent way to see the vitality of a more retail-like approach, in which you consider the drawing power of a library based on the resources offered (square footage and holdings), topographical or cultural barriers, and other factors that defy "going to the nearest library."

5. Gravity models. This model evaluates sites for facilities based on the assumption that the interaction between two population centers is the function of the population size of each center and the distance between them. The two basic variables are population and distance. Marketing researchers use what is known as Reilly's Law by describing the market area or buying power of alternative sites as a function of the population of the geographical areas or shopping areas of the sites. The original formula is modified to include driving time instead of distance. Other modifiers to the market area that are often used include transportation network, lines of communication such as newspapers and cable, population density, proximity to other major centers, intervening opportunities (similar and competing services), topographical considerations, and leadership of competitors in the area.

Example: Decision makers at a library system could evaluate suitable sites for branches and for the central library by at least determining a primary estimate of the size of the population that the branches or central facility would serve. This lack of information regarding geographic market determination continues to thwart the majority of location strategies and models available to the library field.

Location strategies offer public librarians a logical framework for coordinating all that is known about a facility and its environment in order to make site decisions that meet the library's mission, goals, and objectives. An abundance of research and expertise is available for a range of library location problems. We can no longer afford to rely on simple descriptive methods when we are responsible for million-dollar budgets and the long-term impact of a poorly sited facility.

New Library Location Strategy Tool Available

The U.S. Public Library Geographic Database (PLGDB), initially developed from 2002 to 2004, is the ongoing project of myself, researchers, and key library communities. The PLGDB is designed to be a decision-making tool for library planners, researchers, and advocates. The database holds all 16,000 U.S. public library "places," library usage data, and relevant U.S. Census customer data. It's available at http://www.geolib.org/PLGDB/cfm. You can examine demographics such as age, race, language spoken, income, and education level within any reasonable geographic area. This tool allows people to estimate geographic market areas through radius or agglomeration of census geography and to ask powerful what-if questions that are key to effective location strategies. This database is exemplary of customer research tools that go well beyond simple descriptive approaches, and it also bypasses the need to learn the intricacies of GIS or statistics.

This and other more sophisticated tools and strategies must be used at the local, state, and federal level to better understand the impact of a library's geographic location and its subsequent impact on the people it is mandated to serve. Library managers should take advantage of modern-day information technology—computerized maps and databases—just as they encourage their users to do.

"Location, location, location," as some wise retailer said, "is the most important decision managers can make." The public library, as a market-based service segment of the information industry, must ascribe to the credo as well. As for the virtual soothsayers who believe that physical location is a concern of the past, I say, "No way." Let us discuss digital versus physical libraries.

Implications of Digital Libraries on Physical Ones

Today, with advances in computer technology and tele-communications, the future existence of physical libraries is being questioned. Research grants are awarded for "libraries without walls." Some predict that today's brick-and-mortar libraries can and will be replaced by computer networks that transfer vast amounts of up-to-date information over an information highway to homes, offices, and schools.

If this futuristic view of society and libraries comes to pass, what, if any, is the value of geographic market profiling and locational analysis from a library manager's perspective?

I would argue that the community's virtual library is housed within the physical public library facility. Currently, the libraries are complementing one another. Library buildings are increasing in physical size and changing in configuration to accommodate information technology, while the virtual libraries they house are augmenting wider access to information to those who may not have computers at home. Market profiling and locational analysis are critical, as public libraries get about 80 percent of their funding from local monies. These public funds are derived largely from potential or actual customers living within the market area of each facility. Library managers need this critical market data to anticipate and ultimately to satisfy the community's information wants and needs. The location of a facility is an indisputable factor in achieving customer satisfaction.

Hear Ye, Hear Ye! The Fourth 'P' Is Proclaimed!

With the tools currently available, public library managers can confidently resolve the many and unique siting issues confronting them. Armed with practiced and experienced location strategies, they can make decisions that best meet the needs of their community's own special "place," now and in the future.

Hear Ye, Hear Ye! The Fourth P has been proclaimed—Place is Essential!h