Tech students report on ‘market leakage’

Market leakage is a growing issue for Copper Country retailers, particularly online.

That was one of the takeaways at a presentation by Michigan Technological University students at the Keweenaw Economic Development Alliance meeting Wednesday. This is the second year School of Business and Economics Assistant Professor of Marketing Jun Min’s students have done the study, for which they received 71 responses.

In 13 product categories, this year’s study showed increasing market leakage in nine of them, including a 33 percent jump in electronics and office materials and 14 percent in cars. The four areas with stable and decreasing trends were household essentials, personal care products, groceries and medicine and drug.

Different areas benefitted the most from various areas of leakage. Online led for areas such as toys, clothing and telecommunications devices, while Marquette led in areas such as home improvement and outdoor living. The only area in which Green Bay absorbed the greatest market share was in automobiles, with 18.2 percent of respondents saying they had purchased a car in Green Bay.

It was a different story in services, where only four categories went up – rentals, real estate, household improvement and health/medical/dental. The largest decrease in leakage was 12 percent in airline and vacation services.

The bulk of the leakage was online, particularly in airline and vacation services, rental cars and education. Marquette’s strongest categories were restaurants and health/medical/dental. Green Bay again led in only one category: entertainment, museum and shows.

The local market trended downward in the Business Market Wellness index, which measures market attractiveness, satisfaction and recommendation.

The local market scored 3.35 out of 5, where 3 is neutral – behind online, as was the case last year, and also now behind Marquette and Green Bay. The weakest score was in market satisfaction, where the local market scored 3.06.

“That means people are attracted to our market, they like it, but they’re not satisfied,” said Tech student Cory Rokes. “This is something we want to rectify.”

Projections of future spending shows most to stay about the same, but with an edge toward online; 24 percent said they planned to spend more online in the next six months, more than twice the next highest total.

The group also conducted a separate leakage study for the Houghton County Memorial Airport. Of those surveyed, only four in 10 had used in the airport in the past year.

“The problem isn’t the market leakage, it’s promoting the airport,” said Tech student Sarah Ochs.

By GARRETT NEESE – DMG writer (gneese@mininggazette.com) , The Daily Mining Gazette


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