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Area

An area is a region part of a town, province, country or world.

In many cases areas are important.

If you are going to operate from a certain area, then other competition in that area is important.

If you are going to source goods (suppliers) or sell (to clients) in a certain area then you should do are analysis as part of your research.

Area analysis will tell you, how many competitors you have, potential suppliers, potential clients etc.

This is an important part of knowing your competition, what they charge and what options people have within your area.

It is important when it comes to sourcing from suppliers, will sourcing further away cost more in logistics fees, do you have the means to place orders from further away.

So its for :

Operate (competition)
Source goods / services (Suppliers)
SellĀ  (clients)

This will also help you in targeting your marketing spend, advertising, sales etc.

Example:
If you want to start a business selling salvage or short-dated or reject foods and you don’t have a lot of resources, you need to source from manufacturers, importers, distributors, wholesalers and retailers as close to you as possible. If you have more money you can broaden your search from sourcing further away they will justify the transport cost, to the point where you can import whole containers from overseas.