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Bottlenecks in place marketing and their effects on attracting target groups Jasper Eshuis, Erik Braun, Erik-Hans Klijn Paper for the Annual EGPA Conference, 7-10 September 2011, Bucharest, Romania Jasper Eshuis is senior researcher at the Department of Public Administration, Erasmus University Rotterdam, The Netherlands Contact: [email protected] Erik Braun is senior researcher at the Erasmus School of Economics, Erasmus University Rotterdam Erik-Hans Klijn is Professor of Public Administration at Department of Public Administration, Erasmus University Rotterdam Abstract Place marketing is increasingly used as a governance strategy for managing perceptions about regions, cities and towns. Both public and private parties engage in place marketing activities to create positive images, and attract residents, investors and tourists. However, only little empirical research has been done on the working and the results of place marketing. This paper contributes to filling that knowledge gap on the basis of a survey among 200 professionals and politicians involved in place marketing in the Netherlands. The paper examines the bottlenecks in place marketing. Also we research the effects of the bottlenecks on outcomes of place marketing in terms of attracting target groups. A factor analysis of a variety of bottlenecks investigated in the survey shows three clearly demarcated bottlenecks: administrative bottlenecks within the municipalities, bottlenecks in developing the substance of marketing campaigns, and political bottlenecks. The survey also shows that the bottlenecks in the developing the substance of the marketing campaigns have significant effects on the effects of place marketing in terms of attracting stakeholders while the two other bottlenecks have no significant influence. 1 1. Introduction Place marketing has become part of the array of strategies used in the public sector to increase the competiveness of places and attract target groups such as tourists, new residents and investors (see e.g. Bennett and Savani 2003; Braun 2008; Hospers 2006). Place marketing may include promotion and creating a positive image, but also product development in the sense of developing the city in a way that responds to the demands of target groups (see e.g. Kotler and Gertner 2002; Greenberg 2008; Kavaratzis 2004). Municipalities in smaller cities, such as Hasselt in Belgium or Dundee in Scotland, have followed the lead of major cities, such as London (‘We are Londoners’), Pittsburgh (‘P!ttsburgh: imagine what you do here’) and Seoul (‘Soul of Asia’). In the Netherlands for example, 75% of the cities mention elements of citymarketing in their coalition agreements for 2010-2014 (NIPO, see www.placemarketing.nl). Notwithstanding the upsurge of place marketing, it is not always easy to book results with citymarketing. Place marketers face multiple difficulties and bottlenecks when trying to apply marketing strategies in a public sector context. The development and implementation of place marketing is often complex due to characteristics of governance processes and public organizations, but also due to the complex nature of marketing itself. Governance processes are characterized by multiple actors with varying or even conflicting perceptions (Koppenjan and Klijn 2004; Teisman et al. 2009; Gerrits 2008). Thus actors may have different perceptions about what marketing campaign to develop. They may disagree about the marketing instruments, or about the brand that best captures the aspired identity of the city. Another difficulty in place marketing is that a place is a complex object or ‘product’, which may be difficult to market. Although the literature mentions several difficulties that actors encounter in place marketing, no comprehensive research has been done on the bottlenecks that public managers encounter in place marketing. In this article we aim to address this knowledge gap. The goal of this article is to empirically determine the most important bottlenecks in place marketing according to city marketeers, and what are their effects on the outcome of place marketing in terms of attracting target groups. We address two main research questions: 1. What are the main bottlenecks in place marketing? 2. What is the relationship between bottlenecks and outcomes of place marketing in terms of attracting target groups? This article is structured as follows. In the next section we lay a theoretical basis by defining what city marketing is. We then discuss the literature on risks, limits and bottlenecks of place marketing. In third section we discuss the research design and methodology. Subsequently we present the empirical findings. The last section includes the discussion and conclusions. 2 2. Place marketing, what is it? Place marketing involves the application of marketing instruments to geographical locations, such as nations, cities, regions and communities. The city marketing literature mentions a multiplicity of activities, instruments, and strategies under the heading of the ‘marketing mix’ that can be applied to places. Thereby most scholars take that marketing is broader than promotion only (see e.g. Braun 2008; Hospers 2006; Eshuis and Edelenbos 2009). Kotler et al (1999b) include activities aimed to improve design and service delivery, as well as developing attractions. Ashworth and Voogd (1990) develop a geographical marketing mix that includes not only promotional measures, but also spatial-functional measures, organizational measures and financial measures which are meant to improve the city itself and its management. The emphasis on multiple activities and strategies in place marketing reflects the idea that merely promotion, without changing elements of the product and the management, is not very useful if one wants to attract actors to the city and increase competitiveness. Place marketing; more than communicating favorable images Place marketing is thus more than only developing favorable images and communicating those to the different target groups; it is not only about ‘selling’ an image. Kotler emphases time and again that marketing is about fulfilling consumer needs (cf. Kotler et al., 1999). Place marketing is about developing a place that fits the needs and wants of citizens, visitors and investors. The image has to be accompanied by a product that matches the image. Marketing is about responsiveness more than persuasion, although persuasion is an important part of city marketing. The idea behind the broader marketing approach is that marketing is much more effective if it is targeted at what stakeholders want. Here, marketing is not only about sending messages but also about receiving messages. Marketing then becomes a matter of developing the city that people want. This is the logic behind introducing elements of policy making, urban planning and place-development (product development in marketing terms). In line with this view Van den Berg and Braun (1999: 993) state that “urban place marketing can be seen as a managerial principle in which thinking in terms of customers and the market is central as well as a toolbox with applicable insights and techniques”. Here place marketing is more of a way of thinking and doing that emphasizes a consumer orientation, or to put it slightly differently, a demand driven orientation. In this paper we follow this line, and we use Braun’s definition of citymarketing to arrive at a definition of place marketing. Place marketing is “the coordinated use of marketing tools supported by a shared customer-oriented philosophy, for creating, communicating, delivering, and exchanging urban offerings that have value for the city’s customers and the city’s community at large” (Braun 2008: 43). Taking this definition into account, place development is a crucial element of marketing. However, in a public sector context it is very much the question whether municipal departments will allow marketers to influence the policies for city development. 3 Exploring bottlenecks in place marketing The literature on place marketing and city marketing mentions a long list of obstacles and bottlenecks for doing place marketing and achieving good outcomes of it. But we can also find contributions in the governance literature that gives us insights in obstacle for place branding. In this section we briefly discus the most mentioned obstacles for place branding. The first thing that is stressed by both literature on governance and literature on place branding is that place marketing takes place in a governance context involving multiple public and private parties, for example municipalities, tourist bureaus, housing associations, the main companies in a city, stakeholders from the facility industry, and citizens. For example, when a city is marketed to attract tourists, the tourist board, hotels, museums, and the municipality are commonly involved. Characteristic for governance processes is that actors may have different or even conflicting preferences (Klijn and Koppenjan 2004, Pierre 2000). Different actors may have different perceptions about aims, strategies and target groups of place marketing campaigns. Here we see not only differences between public and private actors, but also various public actors often have different interests and they prefer different solutions. For example the department of housing may prefer a campaign which positions the city as a nice and peaceful residence, while the economic department may want to stress investment opportunities for industries. Braun (2008) brings forward that city marketing is part the governance of a city. This connects place branding also to the political process in the city. His work shows that lack of clarity about political responsibility may form a bottleneck in citymarketing. Due to a lack of political leadership multiple departments in the administration may claim a role in citymarketing, and the tasks and responsibilities may become very fragmented. This is especially the case if the position of citymarketing in relation to other policy areas is unclear. Summarizing, an unclear positioning of responsibilities and fragmentation of citymarketing activities may hinder swift and coherent implementation of citymarketing, and form a bottleneck in place marketing. Braun (2008) further argues that a lack of political priority for citymarketing may hinder the proper embedding of citymarketing in wider urban governance. A lack of political priority may also lead to a lack of financial resources for place marketing. Other scholars have emphasized the difficulties of place branding in relation to the particular nature of places and the ‘users’ of places. As Ward and Gold (1994: 9) argue “it is not readily apparent what the product actually is, nor how the consumption of place occurs. Though marketing practices make places into commodities, they are in reality complex packages of goods, services and experiences that are consumed in many different ways”. For example a city may be seen as a tourist destination, but at the same time it is the residence of many people or for example only the location that they need to travel through when going elsewhere. In short, one of the challenges in place marketing is that a place is a complex ‘product’ with multiple identities (Karavatzis and Ashworth 2005). The identities of a city 4 may involve for example the cities’ history and its historic centre, but also its ICT and gaming industry. Thus the city may have different identities for different target groups, for example tourists may value the historic centre while private companies may value the gaming industry. The multiple identities that a city has at the same time, complicates the development of the content of a marketing campaign. Local governments and other stakeholders may use brands to appeal to different groups and evoke different associations with them, but this is not easy. A brand that is suitable for one group (e.g. tourists) may not suit other groups (e.g. residents) (Bennett and Savani, 2003). In a commercial setting marketers can choose target groups and neglect other groups, but in a public context it may be inappropriate or impossible to neglect groups of residents, voters or businesses. It often proves difficult to create a brand that fits the preferences of all groups that have an interest. Stigel and Frimann (2006) encounter this limitation of branding in their study of the branding of two Danish towns. They conclude that the wish or need to arrive at consensus about brand identities easily leads to brands with only very general and nondescript values. This inhibits the effectiveness of the brand in terms of creating a distinguishable identity and making the place stand out among its competitors. So in the literature many bottlenecks regarding place marketing are discussed. However all the literature cited above is based upon case study research, so it remains unclear what are the most significant bottlenecks, and how are different bottlenecks interrelated. In this paper we address this issue through quantitative survey research. We have translated the bottlenecks that are mentioned in the literature into survey items. We elaborate these in the next section which deals with the research design 3. Research design: methodology and methods This research is based on data that we collected for the first National City marketing Monitor in The Netherlands 2010 (see also Braun et al, 2010, Klijn et al. forthcoming). This was a web-based survey sent to professionals and city administrators involved in the marketing of cities, towns and villages. To acquire a reliable set of respondents who are actually involved in Dutch city marketing we worked closely together with three organizations who provided us with e-mail addresses of (potential) respondents: Organization of the survey - The main Dutch network for city marketing in the Netherlands (Netwerk City marketing Nederland). This is a non-profit association of professionals working in city marketing. Many consultants on this field are member of this organization as are city marketers employed by municipalities. Also the network regularly organizes seminars and conferences on city marketing. We received the e-mail addresses from people who had participated in these events. This provides us with a large set of respondents; 5 - The Dutch organization for local and regional tourist offices (VVV Nederland). This is the peak organization of the tourist bureaus in the municipalities. They provided us with respondents within the local tourist bureaus who were involved in city marketing - The Dutch association for local governments (Vereniging Nederlandse Gemeenten VNG). This is a peak organization of municipalities in The Netherlands. They provided additional addresses of municipalities and contact persons. This facilitated our further research into people involved in city marketing. By drawing on three different lists of respondents, and complementing this with some additional search for respondents in municipalities by ourselves (using our own network of people working in city marketing), we obtained a reasonable complete data set of 600 people involved in city marketing in the Netherlands. To be sure, it is hard to assess whether our list is complete because there is a lack of official registration of people working in city marketing. However given our extensive search for respondents we are reasonably confident that we included at least a very large share of this group. During the first round of the survey we have sent the survey to the 600 respondents that were on our compiled list. We reached 541 respondents who are actually a member of the target population. 274 respondents filled out (part of) the survey so the response was 51%. The high level of response can be contributed at least partly to the involvement of our partners in the project we just mentioned and supported our survey. We must acknowledge the fact though that the response to a few of the questions which some respondents found difficult to answer, was significantly lower (for instance the questions on the effects of city marketing). Respondents of the survey Out of the 274 respondents 171 worked for a municipality, 68 worked for a tourist office and 35 for an organization 'at arm's length', which was mostly a foundation involved in city marketing (often the tourist bureau participates in that organization). The respondents have a variety of functions, differing from communication advisors till neighbourhood managers, policy advisors and city alderman. Over 53% of the respondents had more than 2 years of experience with city marketing. The larger cities are overrepresented in the survey. The number of municipalities in The Netherlands with less than 50.000 inhabitants is almost 60% but the number of respondents from this group is only 37%.The largest cities in the Netherlands (over 250.000 inhabitants) only are 1,5% of all municipalities while almost 13% of our respondents comes from this group. This however may not come as a surprise since large municipalities tend to employ more people, also in city marketing, than small municipalities. Although our sample may not be representative of all the municipalities we are confident that it is representative of the people involved in city marketing thanks to our broad coverage of professionals (through the Network of City marketing, the Dutch Tourism Bureaus and the Dutch Association of Local Governments) and the good response (51%). 6 Measuring bottlenecks in place marketing On the basis of literature on Public Administration as well as citymarketing we developed a list of eleven potential bottlenecks in place marketing: 1. The budget for city marketing is too low 2. It is difficult to reach consensus with the municipality about content and strategy of city marketing 3. There insufficient expertise within the municipality 4. policy departments view city marketing as a threat, they do not want influence of city marketing on their policy 5. various departments of the municipality don't take city marketing much in consideration in their communication 6. city marketing has insufficient impact on product development 7. There is not enough political support 8. City marketing does not really strike a chord with the citizen 9. The campaign does not fit the identity of the municipality 10. The campaign does not provide the municipality a clear profile 11. The intended target groups are not reached sufficiently The perceptions of the bottlenecks were measured through Likert scales (completely agree, agree, neither agree nor disagree, to disagree and completely disagree). Measuring the attraction of target groups (dependent variable) We measured dependent variable of attracting target groups through three questions in the survey: 1. City marketing has contributed positively to attracting visitors; 2. City marketing has contributed positively to attracting new residents; 3. City marketing has contributed positively to attracting companies/firms. Every question was measured through a Likert scale ranging from completely agree to completely disagree. We created our dependent variable ‘attracting target groups’ by summing the three items. The Cronbach alpha of the newly created variable was 0.787. Factoranalysis We performed a factor analysis in order to find the latent variables behind the eleven bottlenecks that we distinguished. To be more specific, we applied Principal Component Analysis with a Varimax Rotation. We saved the factorscores of the 3 factors that we found and used them in a regression analysis in order to research which factor actually influenced the results of place marketing 7 Regression analysis We employed a multivariate regression analysis (Anova) with the dependent variable ‘results of place marketing in terms of attracting groups’. P.M. explanation and warrants regarding our regression analysis 4. Some main bottlenecks in place marketing In order to analyse the bottlenecks in place marketing we first explored what the most important bottlenecks are according to respondents. Table 1 presents the bottlenecks in order: the higher a bottleneck is positioned in the table, the stronger respondents perceive that this is indeed a bottleneck in their municipality. A score of 4 indicates that respondents on average agree with the proposition that this is a bottleneck, a score of 3 indicates that they do not agree nor disagree. If the score is 2 respondents disagree. Table 1. Bottlenecks in order of perceived importance Std. N - The budget for citymarketing is too low Mean Deviation 190 3,69 ,987 189 3,44 ,846 - There insufficient expertise within the municipality 191 3,41 ,963 - Policy departments view city marketing as a threat, they do not want influence of 189 3,40 ,849 187 3,38 ,836 - City marketing has insufficient impact on product development 191 3,21 ,950 - There is not enough political support 185 2,85 ,824 - City marketing does not really strike a chord with the citizen 190 2,78 ,915 - The campaign does not fit the identity of the municipality 189 2,72 ,916 - The campaign does not provide the municipality a clear profile 188 2,46 ,933 - The intended target groups are not reached sufficiently 188 2,24 ,847 - It is difficult to reach consensus with the municipality about content and strategy of city marketing city marketing on their policy, - Various departments of the municipality don't take city marketing much in consideration in their communication Table 1 shows that according to respondents the most important bottleneck is that the budget for citymarketing is too low. On the one hand this may come as no surprise, because our respondents are involved in citymarketing and they may be inclined to want more money for their own activities. On the other hand this answer should not be discarded to easily, because 8 it also indicate that respondents bring forward that the budget is limiting at the moment; they could do better work with a higher budget. Another point is the high scores of a number of bottlenecks that are related to coordination of policies within the municipal organization, for example reaching consensus about city marketing, and the idea that policy departments view citymarketing as a threat. The bottleneck of insufficient impact on product development points to a similar issue in the sense that it appears difficult to make citymarketing get through in product development (spatial plans, services, development of rules and regulations, et cetera). Also striking is that respondent do not consider political support as a big bottleneck. Apparently they consider the support by the municipal executives big enough not be a bottleneck. Two other bottlenecks that are related to the content of place marketing campaigns are not considered very important bottlenecks in comparison with the other bottlenecks. The list of bottlenecks shows that the coordination of citymarketing activities within the municipality, and the embedding of citymarketing in place development, is considered a larger problem than the development of content of citymarketing policies. So far we have discussed quite a number of perceived bottlenecks. To further our analysis we will analyze the underlying structure of the bottlenecks in place marketing. Employing a factor analysis we will show what dimensions or latent variables underlie the bottlenecks in place marketing. The Principal Component Analysis we applied extracted three main factors with an Eigenvalue higher than 1. These factors explain 60.7 % of the variance (see table 2). Table 2. Results of factor analysis: variance explained Total Variance Explained Compon Initial Eigenvalues ent Total dimension0 Extraction Sums of Squared Loadings % of Cumulative Variance % Rotation Sums of Squared Loadings % of Total Variance Cumulative % Total % of Variance Cumulative % 1 3,921 35,647 35,647 3,921 35,647 35,647 2,624 23,858 23,858 2 1,700 15,453 51,100 1,700 15,453 51,100 2,378 21,619 45,477 3 1,054 9,578 60,678 1,054 9,578 60,678 1,672 15,201 60,678 4 ,963 8,757 69,435 5 ,709 6,447 75,882 6 ,614 5,582 81,464 7 ,522 4,744 86,208 8 ,497 4,522 90,730 9 ,413 3,757 94,487 10 ,362 3,294 97,781 11 ,244 2,219 100,000 Extraction Method: Principal Component Analysis. 9 As Table 3 shows the first factor mainly loads on bottlenecks within the administration, within the administrative organization. This factor relates to governance problems (municipal departments do not take city marketing much in consideration, insufficient experience within municipality etc). The second factor loads on bottlenecks that are connected to the marketing campaign itself. It includes bottlenecks that have to do with the content of the campaign and reaching target groups. This factor is indicative of a latent variable we may call ‘classical marketing problems’. The third factor show high loadings on problems that have to do with politics, for example a lack of political support, a lack of budget and not striking a chord with citizens (voters). This factor indicates political bottlenecks. Table 3. Factor scores of Principal Component Analysis (Rotated Component Matrix, Rotation converged in 4 iterations) Component 1 2 3 ,226 -,265 ,665 ,659 ,228 ,299 - There insufficient expertise within the municipality ,623 ,123 ,194 - Policy departments view city marketing as a threat, they do not want influence ,740 ,036 ,000 ,799 ,114 ,061 - city marketing has insufficient impact on product development ,567 ,193 ,374 - There is not enough political support ,351 ,173 ,649 -,052 ,384 ,703 - the campaign does not fit the identity of the municipality ,129 ,871 -,013 - the campaign does not provide the municipality a clear profile ,110 ,877 ,082 - the intended target groups are not reached sufficiently ,298 ,696 ,191 - The budget for citymarketing is too low - It is difficult to reach consensus with the municipality about content and strategy of city marketing of city marketing on their policy, - various departments of the municipality don't take city marketing much in consideration in their communication - city marketing does not really strike a chord with the citizen Note: Rotation Method: Varimax with Kaiser Normalization So far we have explored and described what respondents consider the most important bottlenecks in place marketing, and how the different bottlenecks can be structured in terms of three main underlying dimensions (administrative, political, and classical marketing bottlenecks). The question we will answer next, is to what extent bottlenecks in place marketing actually influence the outcomes of place marketing. To analyse how particular bottlenecks influence the attraction of target groups to the city we performed a regression analysis with the factorscores of the Principal Component Analysis. We can thus research the influence of ‘administrative bottlenecks’, ‘classical marketing bottlenecks’, and ‘political bottlenecks’. 10 We will test 3 hypotheses: Hypothesis 1: Bottlenecks within the administration significantly influence (perceived) outcomes of place marketing in terms of attracting target groups Hypothesis 2: Bottlenecks related to political issues will significantly influence (perceived) outcomes of place marketing in terms of attracting target groups Hypothesis 3: Bottlenecks related to the content of marketing campaigns significantly influence (perceived) outcomes of place marketing in terms of attracting target groups 5. The relationship between bottlenecks and attracting target groups To test our hypotheses we used a multivariate regression analysis. The results are presented in tables 4 and 5. Table 4. Results of multivariate regression analysis (Anova) with dependent variable results of place marketing (in terms of attracting groups) Model 1 Sum of Squares df Mean Square Regression 178,178 3 59,393 Residual 595,822 140 4,256 Total 774,000 143 F Sig. 13,955 ,000a Note: Predictors used are (Constant), Factorscore Administrative bottlenecks, Factor score Classical Marketing Bottlenecks, Factorscore Political bottlenecks. Our analysis shows in table 4 that the bottlenecks together do have a significant influence on results of place marketing in terms of attracting target groups. This model explains a reasonable deal of the variance in the level of attracting target groups (the adjusted R2 = 0.214). Table 5. Results of the Regression Analysis with Results in attracting target groups as dependent variable (n = .....) B Beta (Constant) 9,875 Factorscore Political bottlenecks -,286 Factorscore Classical Marketing bottlenecks Factorscore Administrative bottlenecks t p 57,396 ,000 -,118 -1,585 ,115 -1,080 -,451 -6,065 ,000 -,141 -,061 -,817 ,415 Note: Dependent Variable: Results of place marketing in terms of attracting target groups 11 The analysis in table 5 highlights that especially the classical marketing bottlenecks have a strong effect on attracting target groups (Beta = 451). This is interesting since the marketeers themselves think the budget is the most problematic bottleneck as we saw earlier in this paper. Thus we accept hypothesis 3. On the other hand there is no significant influence of administrative bottlenecks on attracting target groups. Hypothesis 1 is refuted. Also hypothesis 2 is refuted because there is no significant influence of political issues on attracting target groups. Conclusion and discussion Professionals and politicians involved in place marketing experience a multitude of bottlenecks. Our findings show that the bottlenecks are characterized by three main underlying dimensions: (1) the political bottlenecks related to political citizen’s support; (2) classical marketing bottlenecks related to the content of marketing campaigns and reaching target audiences, and (3) administrative bottlenecks with large loadings on difficulties in the municipal organization. From our survey we can conclude that the classical marketing bottlenecks have a significant negative effect on results of place branding in terms of attracting target groups. The other two bottlenecks (political and administrative) do not have significant effects on the results of place marketing. It is striking however, that respondents did perceive some of the items that are related to the political and the administrative as important bottlenecks. In other words, although the people involved in citymarketing perceive administrative bottlenecks as important bottlenecks in their municipalities, these are not the bottlenecks that significantly influence outcomes of citymarketing in terms of attracting target groups. An explanation for this finding is that the actors have the feeling that they are hindered seriously by administrative bottlenecks, but that in practice they seem to be able to deal with those bottlenecks in such a way that it does not influence how the marketing campaigns reach the target groups and help to attract target groups. To a lesser extent this also accounts for the political dimension of the bottlenecks. These do not influence the attraction of target groups either, so apparently the actors deal with them in a way that does not influence the target groups. 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