Convegno brand place aosta 6 9_2013_to publish online

The role of network contracts in place brand management.

Current usage and future possibilities of this new Italian legislative instrument

Aureli Selena - Forlani Fabio

[email protected]; [email protected]

La Salle (AO) – 06/09/2013

4°International Colloquium onPlace Brand Management

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The network contract

● It is a new legal form of inter-firm cooperation in Italy (introduced in April 2009)

which represents a form of strategic alliance which formally links different organizations in the long term.

● Main advantages:– easy to sign and flexible instrument (i.e. no pre-defined goal like in franchising or other

contracts; legislation defines very few aspects then nodes freely chose to create strong or

loose collaborative links, they can freely regulate entrance and exit of single nodes; they

freely decide for creating or not a mutual fund and if fund’s stakes are identical or not)

– aggregates organizations around a common scope and activities to accomplish which

have to be indicated in the contract (vision and plans should be clearly defined)

– maintains single nodes’ autonomy

– organized around a common entity (i.e. a Board)

• Now there are almost 700 contracts involving about 3500 organizations (sole proprietorship, partnership, no-profit, association, consortium) (Unioncamere, 2013).

4°International Colloquium on Place Brand Management:Strategic Marketing of Cities, Regions and Nations

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Agenda

1. Objectives and background of the study

2. Literature review

3. Methodology

4. Findings from empirical analysis

5. Concluding remarks


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Background

● Italy is divided into many fragmented tourist territorial systems (Rispoli and Tamma, 1996; Pencarelli and Forlani, 2002; Sciarelli, 2007)

● Territorial brands are inadequately managed (i.e. too many actors, no coordination, nor integration) (Pencarelli,

2009)

● Travel destinations in Italy lack international competitiveness (Banca d’Italia, 2013)


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● Two main R. Q. :

a) which contribution can formal private alliances (the network contract) offer to create coordinated territorial tourism systems?

b) do networks’ activities contribute to sustain existing territorial brands of the area in which businesses are located?


Research Questions

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● Objectives a):

• Characteristics of networks' nodes

• Aims, structure and governance of the network

• network’s links with other local actors

● Objectives b):

– Creation and usage of networks’ brands

– Link with territorial brands


Objectives

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Literature review:networking

● Networking has been studied recurring to resource dependence theory, game theory, transaction cost economics, network approach etc. (Beritelli, 2011; Maggioni et al., 2012).

● All forms of cooperation should be characterized by four key conditions which make interactions working (Pansiri, 2008; Holtbrügge,

2004) :– compatibility: cultural compatibility of members (which can be facilitated by

having the same historical and strategic grounds) and compatibility of products

– capability: members should have complementary resources, skills and knowledge (to create synergies) and being able to coordinate them;

– commitment: members should commit resources (tangible and intangible) and make long term investments;

– control: formal and/or informal control mechanisms to sustain trust, avoid free-riding behaviors.


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Literature review:Tourism

Companies working in tourism should be considered within the existing complex tourism systems (Rispoli and Tamma, 1995; Pencarelli

and Forlani, 2002; Bonetti et al, 2006; Sciarelli, 2007):

– the supply system of tourism services (network of operators). This system may be recognised or unrecognised, intentional or non intentional, formal or informal

– the system of the geographical area (municipalities, districts, provinces, regions, etc.)

Both systems might be associated to a brand used to give tangible expression of system’s identity


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Literature review:the role of network brands

● The brand of the supply system of tourism services usually represents the catalyzing element of all actors involved in the supply system (Lemmetyinen and Go, 2008)

● Success of brands referring to tourism systems requires following conditions (Betti et al., 2009):

– a cultural and value system and a combination of graphic features which recall the cultural identity (brand identity);

– a mechanism for the selection of structural elements which make it possible to draw the boundaries of the system and a control mechanism allowing the adjustment of the system;

– a system of outputs (application of the brand): external communication flows and products (experiences, services, goods)


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Literature review:the role of place brands

● The network brand should be consonant with individual brands of single tourist organizations (nodes) and with that of the territory/destination in which they are established

● When there is no fit, image of the destination could be negatively affected -> need for coordination and monitoring (Balakrishanan et al., 2011)

● But there are several critical factors related to the management of destination brands (Pastore and Bonetti,2006; Balakrishnan, 2009):

● Problems in defining precise territorial boundaries

● Difficulty in identifying who should plan/govern the destination brand

● Presence of multiple stakeholders with different objectives and characteristics

● Existence of consolidated geographical and historical brands

● Coexistence of different products and services under the same brand


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Literature review:The importance of

brands consonance

Brand of Territory

BrandOf Tourism System or

Network

BrandOf Tourism System

or Network

Brand ofProduct Y

(tourist experience)

Brand ofProduct X


Brand ofPrivate

Organizations

Brandof Local

governments

private subjects

public subjects

Brand ofProduct Z



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Methodology

- explorative research

- two phases: (1) quality-quantitative & (2) in-depth qualitative analysis (case studies)

(1) it attempts to provide a descriptive analysis of current network contracts in Italy regarding the tourism sector (source: ItalianChambers of Commerce)

(2) Selected case studies (6) have been investigated through direct interviews to understand networks’ characteristics and brand management. Topics discussed with informants:

- motivations for networking

- network structure (number and type of nodes) and functioning

- network brand (investment and usage)

- link with the territorial brand


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Findings for Italy

- Network contract is new to the tourism sectors, but its usage is increasing:

In 2009: 0 In 2010: 0 In 2011: 7 In 2012: 14

- Different types of nodes: hotels (& other accommodations), tour operators, farms, beach establishments, wine producers, restaurants, aquatic parks, etc.

- Existing 21 network contracts involve mainly very small businesses

- Average number of nodes : 12

- Nodes mainly localized in the same Province or even the same City


Findings from case studies


1) Network contracts are used to create tourism systems:

- networks composed by small businesses (up to 85 nodes), localized in the same area, offering similar or integrable products (complementarity)

- all characterized by the presence of a mutual fund (commitment), a coordinator (common body and its President), formal and informalrules (control mechanisms)

- with different objectives: increasing bargain power (with public agencies, service providers, etc.), promotion of the destination, commercialization of products (a single service or a bundle of services)

- characterized by openness and willingness to collaborate with other networks (culture of dialogue and collaboration)

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2) Network contracts impact on the territorial system:

- improve discourse among actors (of all types and all sectors) located in the same territory and sense of belonging to the territory (reduced complexity and networks operating in absence of public governance)

- favor creation of touristic clusters

- improve nodes/entrepreneurs’ awareness about the benefits of being associated to a territory with a positive perceived image



3) Different usage of the network brand and links of the networkwith existing territorial brands:

- creation of network brands do not always correspond to high investments (registered trademark, regulation)

- internal consonance (network’s name, graphic logo, website) is almost always present

- but single nodes do not recall network brand in their websites

- all networks are strongly related to the territory with only one exception (rete Core composed by service firms)

- in two cases networks refer to one single territorial brand, while in other two cases two territorial brands are considered and combined in the network brand management; scarce uniqueness of the place brand used identifies networks of firms located in different territories previously not connected



Case studies

0

1

2

3

Relevance network brand

Internal coherence

of network brand

Firms' reference

to network brand

Consonance network brand

– place brand

Uniqueness of

place brand

Rete imprese balneari Viareggio

0

1

2

3

Relevance network brand

Internal coherence

of network brand

Firms' reference

to network brand


– place brand

Uniqueness of

place brand

Rete imprese delle Marine del Parco

0

1

2

3Relevance network brand

Internal coherence

of network brand

Firms' reference

to network brand


– place brand

Uniqueness of

place brand

Rete litorale pisano incoming

0

1

2


Internal coherence

of network brand

Firms' reference

to network brand


– place brand

Uniqueness of

place brand

Rete Core Firenze

0

1

2


Internal coherence

of network brand

Firms' reference

to network brand


– place brand

Uniqueness of

place brand

Illasi Valley

0

1

2


Internal coherence

of network brand

Firms' reference

to network brand


– place brand

Uniqueness of

place brand

Rete Apulia Experience


- network contracts represent a practical (flexible, not bureaucratic) instrument for tourism micro enterprises to engage collaboration at the local level (its adoption will increase)

- collaborative culture become more diffused and new ideas/projects (bundle of services) to attract travelers are implemented

- in several cases networks aim to sustain the attractiveness anddevelopment of the local territory (while making business) or even becoming the destination manager

- branding is a key activity: networks invest in both network brand and place brand as they are strong catalyzer, however the challenge is to find the perfect fit between network brand, place brand and single nodes’ brand

Concluding remarks

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Concluding remarks

Limitations & Future research

- additional case studies are in progress

- other stakeholders’ perceptions (i.e. public agencies and travelers) about network and place brands should be investigated

- networks’ effectiveness in terms of performance


Convegno brand place aosta 6 9_2013_to publish online

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