Service firms are those specifically sought by customers. If the customers are satisfied with the services they provide, they will be continuously patronized even if a competitor is more accessible. Even if this is so, however, there is a point where the customer will be indifferent to the quality of service if the firm providing it is too far enough.

The choice of a location for service firms will depend on the traits of the target customer. Information on where the target customers want to be served may be known through market research.

Schools may be located at the peripheral sections of urban areas where they can be easily reached by students from nearby districts and towns. Motels depend upon some types of travelers, so they must be located along the highway, not necessarily in the centers of the town. Shoe repair shops, barber shops, and appliance repair shops are better located at or near residential areas.