Place Marketing

Place marketing

2Marketing e management del turismo Prof. Luca Brusati

“Place marketing”: what is it about?

Place marketing is based on:• “bandwagon effect”• benchmarking• legitimisation of political action• impact of “place ratings” (comparing economies, levels

of internationalisation, governments, infrastructure, science and technology, educational levels, people’s characters, etc.)


Place marketing: past and present

• Place marketing is centuries old (invention of national history/traditions – common symbols)

• Mostly inward directed in the past (constructing national identity); more outward directed today (influencing public opinion outside the place)– “There is nothing new about places being promoted by

those likely to profit from their development (...) what is new, however, is the conscious application of marketing approaches by public planning agencies” (Ashworth & Voogd 1994: 40)


Why is place marketing becomingmore important? (1) Demand

• For individuals: IT and free movement across borders increased knowledge of other places and demand for visiting them or living there

• For businesses: sharp competition – For companies competing on cost leadership: production

costs have to be cut down (cheap labour, land, taxes)– For companies competing on differentiation: a well-

educated workforce must be attracted (may require that companies move to other locations)


Why is place marketing becomingmore important? (2) Supply

• Decentralization and decline of inter-governmental grants (competition for tax base)

• Struggling industrial cities or regions need to attract new types of businesses and tourists (employment)

• Ageing of the labour force in Western countries (low birth rates, longer lives) = need of a larger workforce to support old-age pensioners

• Innovations (e.g., low-cost airlines, Internet) allow places to compete far beyond their traditional outreach


Goals and stakeholders of place marketing (Kotler et al. 1993: 24)

Goal: Increased attractiveness

• as a tourism destination

• for inward investment from foreign companies

• to increase exports of local / domestic industries

• to hold existing and to attract new residents and skilled professionals

Stakeholder groups

Visitors

Business and industry

Export markets

Current and potential residents and employees


Strategic place marketing

Places react to challenges in a number of ways• Do little, other than press for economic resources from

other levels of government?• Work out growth programmes to lure investors with

financial incentives?• Invest in expensive attractions to improve image?

Undertake strategic market-oriented planning


Demand side actors(place buyer roles - business)

• Initiator (person responsible for scanning foreign markets / any person in the company)

• Influencer (colleagues, superiors who are heard on the matter)

• Decision-maker (CEO / marketing manager)• Approver (Board of Directors)• Buyer (person or team implementing the decision – e.g.,

manager of the local business unit)• User (employees, managers, accompanying families)


Supply side actors

• Government/diplomacy (Ministries of Foreign Affairs, Ministries of Culture, embassies around the world)

• Cultural institutions, including fully, semi-, non-governmentally controlled (Istituti Italiani di Cultura, Goethe Institute, British Council, Institut Francais...)

• Regional and local authorities• Investment organisations• Private businesses and industry associations


Is there hope for all places?

• Lack of expertise to analyse demand / forecast market trends / audit

• No dialogue between enterprises and public officials• Weak local leadership fear of making decisions• Inability to implement plans

– “A place’s potential depends to a lesser degree on location, climate and natural resources than it does on its human will, skill, energy, values and organisation” (Kotler et al. 1999: 27)


Defining place, 1 (Ashworth & Voogd 1995)

• A place is both a container of products and a product in itself– nuclear product (the place as a whole): Venice– contributory elements (selected number of facilities): Pisa

• The place consumed may differ from the place promoted– nesting hierarchies (e.g., Milan, Lombardy, Italy)– “uneasy coexistence between the public policy and the

marketing approaches to place promotion” (Ward & Gold 1995: 11)


Defining place, 2 (Ashworth & Voogd 1995)

• A place is “multi-sold”– by different actors– to different target groups

• Selling a place does not diminish the stock of the place (except when capacity limits are in place: e.g., Venice, Piran)

• “Place” as a resource vs. “place” as a product– “[The place product] is constructed from a set of place-

specific resources selected in accordance with the needs and wants of the targeted market” (Therkelsen 1999: 38)

Risk of mismatch

of messages


Identity and image (Barke & Harrop 1995)

• Place identity vs. place image– identity = what the place is actually like (supply side)– image = how the place is perceived externally (demand

side)• Image may be influenced by identity or exist

independently of it• Marketers can influence the images of target groups, but

can not control them


Image promotion and place marketing

• Image promotion is only rarely the creation of new images in a perceptual vacuum: it is usually the accommodating, modifying or exploitation of existing images, derived from a wide variety of sources over which marketing has little control

• “Effective promotion requires ‘active collusion’ (...) itself a consequence of pre-existing dispositions” (Ashworth & Voogd, 1990, p. 80)


“The Venice of Slovenia”


Image formation agents (Gunn 1988)

• Organic (“cultural”) images of a place, i.e. the preconception shared by a group of people, based on information from non-commercial sources– media in general, popular culture, education on historical,

political, economic, cultural topics, experiences of family / friends (e.g., Sanremo)

• Induced images, i.e., the result of marketers’ strategies appearing in promotional efforts

• Role of personal experiences (visits influence one’s perception of the place)


Cultural image network: an example

sociallyconscious

Tivoli gardens

welfare

egalitarian

rational

reserved

orderly

healthycleandesign

Holland

liberal morals

blond

far-away

Vikings

Scandinavia

DENMARK

expensive

skiing

cold

Little Mermaid

Copenhagen

cheese

bacon

Lurpak

pastries

fish

boats

sailing

agricultural

laid-back eating & drinking

sociable

open-mindedlanguage skills

H.C. Andersen

fairytales

peaceful

small

Core Image

Extended Image


Cultural images as a shortcut to place positioning

• “…use[ing] the cliché as a hook on which to hang more detail – the cliched identity can then be reshaped and given greater complexity through effective and consistent marketing” (Morgan & Pritchard 2001: 275)


What is special about strategic place marketing?

• Place market planning is much more difficult than the planning of individual companies– Companies have clear lines of authority (who decides

what) and clear profit oriented goals– Place marketing has to accommodate multiple interests

• direct stakeholders who have a product to sell• indirect stakeholders who are influenced by the way in which

their place of residence is marketed

• Dialogue and consensus building involving firms, governments and residents is vital


ASSOCIAZIONE ALBERGATORI

GRADO

Grado Hotels Antica Contea

GRADO RESORTConsorzio

Campeggi Grado

ATIAssociazione

Agenzie Turistiche

Immobiliari Grado

AIAT di Grado, Aquileia e Palmanova

GIT Grado Impianti

Turistici

COMUNE di Grado

ITURConsorzio tra

Imprese Turistiche Isola di

Grado

ASCOM

Il sistema turistico di Grado


Approaches to place marketing

“Product plus” approach• The brand as an addition to

the product• Purpose: to identify and

differentiate the product• Focus on promotion

Holistic approach• The brand as an integral

part of the product• Brands reside in the minds

of consumers• Focus on integrating all

activities of the company• Brand equity – strategic

decision making


Research on destination image and brands

• Images of places based on numerous sources and formed at all times– induced & organic images– both when engaged and not engaged in place consuming

activities• Place images rely less on marketer’s communication than

traditional brand images• Residents hold a central position in destination images

(unmanageable attribute)


Problems and opportunities in place marketing

• Destination marketers cannot control brand associations to the extent that marketers of conventional products can– many sources feeding into place consumers’ images – salience of the resident attribute– many actors involved in place marketing no clear

ownership• Branding concepts can orient place marketers

– collecting, analysing, disseminating intelligence– communicative branding tools useful


The challenges ahead

• Accelerating pace of change: mobile companies, people, products, information, political changes

• Urban evolution – decay process: too much success can be a disadvantage

• Growing competition: supply greater than demand (“race to the bottom”?)

• “Think globally – act locally”: local resources are the differentiating factor towards global markets


Responses

• Develop a realistic and localised strategic vision• Pursue a sustainable balance between political needs

and market orientation• Establish a strategic planning process: avoid both quick-

fixes and overplanning• Design an effective promotion plan, based on

uniqueness, truth and consistency• Build quality into the marketing plan (investment in

infrastructure, amenities and personal service)


Funzioni del business plan (1)

• Il business plan è uno degli output del processo di formulazione della strategia, insieme ai piani strategici da un lato e a piani operativi e budget dall’altro– è un documento orientato al futuro, con un orizzonte

temporale di medio termine (3-5 anni)– ha per oggetto una specifica combinazione prodotto-

mercato (ASA)– si predispone senza periodicità predefinita, ma quando

serve


Funzioni del business plan (2)

Funzione

interna

esterna

• valutazione / riduzione del rischio• apprendimento• integrazione organizzativa

• ottenimento di risorse da parte dibanchepartner industriali (joint venture)venture capitalistsponsor pubblici o privati

Il rispetto dei criteri formali di redazione del business plan non è sostitutivo della creatività e dell’intuito necessari per la formulazione di un progetto imprenditoriale di successo


• Il business plan dovrebbe rispondere idealmente alle seguenti caratteristiche– esaustività– coerenza– chiarezza– realismo– persuasività

• Eccessi di ottimismo e di pessimismo sono ugualmente sconsigliabili

Il business plan comestrumento formale di comunicazione

Comunicazione


Strutturaaziendale

Mercato obiettivo

Sistema diprodotto

Mercatoobiettivo

Sistema diprodotto

Dalla visione… … alla formula imprenditoriale

Visione e formula imprenditoriale

Strutturaaziendale

Che cosa facciamo?

Come lo facciamo?

A chi ci rivolgiamo?


Domande critiche per lo sviluppo di un business plan

• Qual è il profilo dei clienti che si vogliono servire?• Quali bisogni si intendono soddisfare e quali no?• Su quale area geografica si vuole operare?• Quanti sono i clienti così individuati? Quanto acquistano

e con quale processo d’acquisto?• Quale trend si può ipotizzare per la domanda?• Con quali concorrenti diretti e indiretti ci si dovrà

confrontare? Quali sono le loro logiche competitive?

Mercato obiettivo e sistema competitivo

Fattori critici di successo


Definitions (1)

• Demand is defined by the number of potential users of a given product or service multiplied by the quantity each of them would require

• Overall theoretical demand = total demand which could be expressed by a given target population ( need)

• Market potential = total demand that can be expressed by a given target population, taking users’ preferences and willingness to pay into account

• Available demand = share of market potential that can be expressed by a given target population, taking constraints to consumption into account


Definitions (2)

• Qualified available demand = share of available demand that can be served by the industry, taking the current features of supply into account (actual vs. marginal benefit)

• Served demand = share of qualified demand that is currently supplied by the industry, taking suppliers’ current distribution and promotion patterns into account

• Satisfied demand = share of served demand that is actually met by a given organization


Definitions (3)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Overalltheoretical

demand

Marketpotential

Availabledemand

Qualifiedavailable demand

Serveddemand

Satisfieddemand

•Interest•Income

•Interest•Income•Access

•Interest•Income•Access•Features


Market potential

• Market potentialt = Nt * Ot * DPt [* pt]– Nt = max number of users who could afford to buy the product

or service in the time span taken into account– Ot = max number of occasions when the product or service can

be used in the time span taken into account– Dt = max volume of product or service which can be used in each

consumption occasion– [pt = max percentage of potential users who do not have

impediments to consumption]


Served demand and satisfied demand

Cumulated industry-level marketing investments

Market potential

Served demand

(industry)

Satisfied demand

(organization)


Gap analysis

• Total market gap = market potential – served (“primary”) demand

• Market gap for a given organization = market potential – satisfied (“secondary”) demand

• The market gap for a given organization can be broken down into three main components:– “product gap”: non-users of the product or service– “usage gap”: “light” users (only sometimes, or

consumption of small amounts anytime)– “competition gap”: users of competitors’ products or

services

Why?


Issues to consider when assessing the target market

• Real propensity to use your product?– history of products / services in similar markets– market surveys and interviews with potential clients– assumption based on the above (pay attention to

differences in preferences and competition!)• Size and likely growth of the market?

– basic demographic statistics– panel-based consumer surveys (Nielsen, GfK, etc.)– trade and product statistics– proxies (different technologies capable of satisfying the

same need)


• To define a marketing strategy, demand analysis has to be pushed a step further

• The potential market is made up of different users: the point is to understand what is the specific group of users we wish to focus on

Segmentation = Process of aggregating users with similar wants, needs, preferences or purchasing /

consumption behaviour

Market segmentation


The concept of market segmentation

• “Segmenting a market” = dividing it into definable groups, so that users belonging to the same group have analogous demand functions

• Goal: to identify users’ subsets so that heterogeneity is minimized within and maximized among segments, and a marketing strategy can be designed for each of them

• Main purpose: to identify the factors explaining differences in users’ consumption behaviour

43Marketing e management del turismo Prof. Luca Brusati43

Criteria for segmentation

• User profile– geographic segmentation– socio-demographic segmentation

• User preferences and desires– psychographic segmentation– behavioural segmentation– benefit segmentation


Geographic criteria

• Assumption: the areas in which a given territory can be divided show features relevant in terms of consumption patterns, based on their specific geographic variables (e.g., climate, availability of communications, geo-morphology, city size, population density, neighbourhoods, regions)

• Geographic criteria by themselves supply limited information on real differences in preferences, in values, in attitudes and in behaviours– often used jointly with demographic criteria (geo-

demographic approach to segmentation)– “geo-marketing” (IT-based mapping)


Socio-demographic criteria (1)

• Assumption: the features of the target population can be used to identify different segments of potential users, showing different consumption patterns

• Demographic variables, e.g.– age– gender– personal status– family size– income– employment– education– religion– ethnicity


Socio-demographic criteria (2)

• Broadly used since it relies on information readily available or simple to collect, but usually it provides only a first foray into the complexity of a given market– no information on users’ motivations and preferences– individual behaviours are not necessarily aligned to those

expected by the members of the same group• membership reference group• dissociative reference group• aspirational reference group

– used jointly with other criteria (e.g., to describe the segments identified through other variables)


Psychographic criteria (1)

• Assumption: users can be classified based on individual psychological variables, which explain their consumption patterns (motivations behind their choices and actions)

• Psychographic variables, e.g.– lifestyle– activities– attitudes and

orientations– interests– values and opinions– social class– personality


Psychographic criteria (2)

• Limitations:– It might divide up the market into segments that do not

consider the specific features of the product or service– It is difficult to get reliable data sets (lengthy

questionnaires; implications of missing and purposefully wrong answers; privacy issues)

– Statistics are based primarily upon self-reported attitudes and intentions ( need for Customer Relationship Management)


Behavioural criteria (1)

• Assumption: users can be classified based on their revealed preferences (e.g., towards brands or product clusters), and on the corresponding behaviours (consumption patterns)

• Behavioural variables– User status

• non user, former user, potential user, first time user, regular user

– Purchase or consumption occasion for product or service• symptom• check-up• medical advice


Behavioural criteria (2)

– Loyalty status• none (“switcher” or variety seeker), medium (“shifting loyal”),

strong (“soft-core”), absolute (“hard-core”)• loyal to a product or service, to a brand, to a store

– Usage rate• light, medium, heavy product users

– Attitude• enthusiasts, positives, indifferent, negative, hostile

– Stage of buyer readiness• unaware, aware but uninterested, aware and interested,

knowledgeable, desirous• never tried / tried occasionally / tried frequently

– Media habits


Expected benefits (1)

• Among behavioural criteria, an important segmentation pattern looks at the benefits sought or the barriers avoided (e.g., economic; performance; usefulness; status)– functional value (“quality”)– emotional / experiential value– symbolic value

• This criterion provides an answer to the practical problems associated to an exclusive reliance on geo-socio-demographic criteria (but expected benefits are in turn influenced by developments in supply patterns!)


Expected benefits (2)

• Benefit segmentation:– Segmentation aims at aggregating the factors that

motivate users to choose a specific product or service (e.g., durability, brand name, price to quality ratio, etc.)

– Method:• definition of a broad range of benefits associated with a

product or service• selection of a sub-set of benefits by customers• identification and description of segments


From segmentation to targeting

• After segmentation, the market can be considered as separate sets of users interested in different products, and likely to react differently to a given marketing mix

• The organization assesses the opportunities associated to each segment to decide how many and which ones it should serve the target market is made up of those users whose needs and features are compatible with the organization’s ability to actually provide the expected benefits


The traditional approach: mass marketing (undifferentiated marketing)

MarketMarketing mix


Concentrated marketing (focus)

Marketing mix

Segment 1

Segment 2

Segment 3


Differentiated marketing

Marketing mix 1

Marketing mix 2

Marketing mix 3

Segment 1

Segment 2

Segment 3


Targeting: basic requirements (1)

• Segmentability: are segments really homogenous inside and heterogeneous outside?

• Measurability: are the features of the segment measurable, in financial or quantitative terms? (number of users, purchasing power, etc.)

• Stability: are they really stable over time?• Accessibility: is there a way to target the segment in

terms of marketing mix at reasonable costs? (coherence with core competences)


Targeting: basic requirements (2)

• Serviceability: are operating conditions suitable to implement effective marketing actions, differentiated along different segments?

• Relevance and efficiency: the size of the segment should be meaningful (in terms of expected benefits) and relatively stable over time: is it big enough? Does serving it pay for the value?

• Competitive pressure: are there already powerful competitors trying to serve the same segment?


Product / market matrix

• A product / market matrix is a graphical summary highlighting what segments will be targeted and how

• It is a key step in the design of a marketing plan, since it builds on demand analysis to specify the segments we plan to serve and the basic traits of the organization’s supply meant to meet their demand

• Example: prepare a product / market matrix for an amusement park


Reach

Richness

Local marketing

Niche marketing

Mass marketing

Customization

Segment marketing

Positioning


Basic marketing strategies

Marketpenetration

Differentiation Diversification

Marketdevelopment

Current Market segments New

Current

Product range

New

Place Marketing

Documents

Transcript of Place Marketing