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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.)
3Marketing e management del turismo Prof. Luca Brusati
4Marketing e management del turismo Prof. Luca Brusati
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)
5Marketing e management del turismo Prof. Luca Brusati
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)
6Marketing e management del turismo Prof. Luca Brusati
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
7Marketing e management del turismo Prof. Luca Brusati
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
8Marketing e management del turismo Prof. Luca Brusati
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
9Marketing e management del turismo Prof. Luca Brusati
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)
10Marketing e management del turismo Prof. Luca Brusati
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
11Marketing e management del turismo Prof. Luca Brusati
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)
12Marketing e management del turismo Prof. Luca Brusati
13Marketing e management del turismo Prof. Luca Brusati
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)
14Marketing e management del turismo Prof. Luca Brusati
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
15Marketing e management del turismo Prof. Luca Brusati
16Marketing e management del turismo Prof. Luca Brusati
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
17Marketing e management del turismo Prof. Luca Brusati
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)
18Marketing e management del turismo Prof. Luca Brusati
“The Venice of Slovenia”
19Marketing e management del turismo Prof. Luca Brusati
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)
20Marketing e management del turismo Prof. Luca Brusati
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
21Marketing e management del turismo Prof. Luca Brusati
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)
22Marketing e management del turismo Prof. Luca Brusati
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
23Marketing e management del turismo Prof. Luca Brusati
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
24Marketing e management del turismo Prof. Luca Brusati
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
25Marketing e management del turismo Prof. Luca Brusati
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)
26Marketing e management del turismo Prof. Luca Brusati
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
27Marketing e management del turismo Prof. Luca Brusati
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
28Marketing e management del turismo Prof. Luca Brusati
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)
29Marketing e management del turismo Prof. Luca Brusati
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
30Marketing e management del turismo Prof. Luca Brusati
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
31Marketing e management del turismo Prof. Luca Brusati
• 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
32Marketing e management del turismo Prof. Luca Brusati
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?
33Marketing e management del turismo Prof. Luca Brusati
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
34Marketing e management del turismo Prof. Luca Brusati
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
35Marketing e management del turismo Prof. Luca Brusati
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
36Marketing e management del turismo Prof. Luca Brusati
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
37Marketing e management del turismo Prof. Luca Brusati
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]
38Marketing e management del turismo Prof. Luca Brusati
Served demand and satisfied demand
Cumulated industry-level marketing investments
Market potential
Served demand
(industry)
Satisfied demand
(organization)
39Marketing e management del turismo Prof. Luca Brusati
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?
40Marketing e management del turismo Prof. Luca Brusati
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)
41Marketing e management del turismo Prof. Luca Brusati
• 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
42Marketing e management del turismo Prof. Luca Brusati
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
44Marketing e management del turismo Prof. Luca Brusati44
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)
45Marketing e management del turismo Prof. Luca Brusati45
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
46Marketing e management del turismo Prof. Luca Brusati46
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)
47Marketing e management del turismo Prof. Luca Brusati
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
48Marketing e management del turismo Prof. Luca Brusati
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)
49Marketing e management del turismo Prof. Luca Brusati
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
50Marketing e management del turismo Prof. Luca Brusati
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
51Marketing e management del turismo Prof. Luca Brusati
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!)
52Marketing e management del turismo Prof. Luca Brusati
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
53Marketing e management del turismo Prof. Luca Brusati
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
54Marketing e management del turismo Prof. Luca Brusati
The traditional approach: mass marketing (undifferentiated marketing)
MarketMarketing mix
55Marketing e management del turismo Prof. Luca Brusati
Concentrated marketing (focus)
Marketing mix
Segment 1
Segment 2
Segment 3
56Marketing e management del turismo Prof. Luca Brusati
Differentiated marketing
Marketing mix 1
Marketing mix 2
Marketing mix 3
Segment 1
Segment 2
Segment 3
57Marketing e management del turismo Prof. Luca Brusati
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)
58Marketing e management del turismo Prof. Luca Brusati
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?
59Marketing e management del turismo Prof. Luca Brusati59
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
60Marketing e management del turismo Prof. Luca Brusati
Reach
Richness
Local marketing
Niche marketing
Mass marketing
Customization
Segment marketing
Positioning
61Marketing e management del turismo Prof. Luca Brusati
Basic marketing strategies
Marketpenetration
Differentiation Diversification
Marketdevelopment
Current Market segments New
Current
Product range
New