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TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 26.12.2014, Belgrade Prepared by: TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Disclaimer: This publication has been produced with the assistance of the European Union. The contents are the sole responsibility of Danube Competence Center and Horwath HTL Belgrade and can in no way be taken to reflect the views of the European Union and the Austrian Development Agency. TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 3 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Table of Contents I INTRODUCTION................................................................................................................. 6 II ECONOMIC DEVELOPMENT AND INVESTMENT TRENDS................................ 10 Global and national trends of foreign direct investments ..........................................10 III DEVELOPMENT CONTEXT – SECTOR BASED TRENDS AND POLICIES ...... 16 3.1. AGRICULTURE AND RURAL DEVELOPMENT ............................................................16 SWOT ANALYSIS OF THE ARD IN DANUBE SERBIA ............................................................ 18 CONCLUSIONS ...................................................................................................................................... 19 3.2. TRANSPORT .........................................................................................................................21 Inland waterways................................................................................................................................ 22 Rail transport ........................................................................................................................................ 22 Road transport ..................................................................................................................................... 23 Intermodal transport......................................................................................................................... 23 SWOT ANALYSIS OF THE SECTOR OF TRANSPORT IN DANUBE SERBIA................... 24 CONCLUSIONS ...................................................................................................................................... 26 3.3. SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ...........................................27 SWOT ANALYSIS OF THE FDI / SME SECTORS IN THE DANUBE SERBIA REGION. 31 CONCLUSIONS ...................................................................................................................................... 33 3.4. ENVIRONMENT ...................................................................................................................35 SWOT ANALYSIS OF THE SECTOR OF ENVIRONMENT IN DANUBE SERBIA ............ 36 CONCLUSIONS ...................................................................................................................................... 39 3.5. CULTURE ...............................................................................................................................40 SWOT ANALYSIS OF THE SECTOR OF CULTURE IN DANUBE SERBIA ......................... 42 CONCLUSIONS ...................................................................................................................................... 43 IV KEY ASSETS AND VALUES OF THE IDENTIFIED SECTORS ............................. 45 4.1. AGRICULTURE AND RURAL DEVELOPMENT ............................................................45 4.2. TRANSPORT .........................................................................................................................46 Road .......................................................................................................................................................... 46 Rail............................................................................................................................................................. 46 Inland waterways................................................................................................................................ 47 Air .............................................................................................................................................................. 47 Intermodal transport......................................................................................................................... 48 4.3. SME DEVELOPMENT .........................................................................................................49 Value propositions for the purpose of territorial marketing ............................................... 50 4.4. ENVIRONMENT ...................................................................................................................52 4.5. CULTURE ...............................................................................................................................54 V UNDERSTANDING TERRITORIAL MARKETING STRATEGY ........................... 57 PROPOSED VISION OF THE DANUBE SERBIA REGION ..................................................60 PROPOSED MARKET POSITIONING OF THE DANUBE SERBIA REGION...................60 VI STRATEGIC MARKETING GOALS ............................................................................ 61 6.1. TO CREATE AWARENESS OF THE DANUBE SERBIA REGION AND ITS POTENTIALS ................................................................................................................................61 6.2. TO ENSURE THE QUALITY IN THE MIX OF OFFERED PRODUCTS AND SERVICES .......................................................................................................................................62 6.3. TO FOCUS ON MARKETS / SEGMENTS WITH THE HIGHEST POTENTIAL ......63 VII PRODUCT STRATEGY ............................................................................................... 65 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION PRODUCT CLUBS / CLUSTERS................................................................................................65 DANUBE SERBIA AS AN INVESTMENT DESTINATION ...................................................67 DANUBE SERBIA QUALITY PROGRAMME ..........................................................................68 VIII STRATEGY OF TARGET GEO MARKETS AND SEGMENTS ............................ 70 8.1. TARGET GEO MARKETS ...................................................................................................70 8.2. TARGET SEGMENTS / AUDIENCES OF THE TERRITORIAL MARKETING STRATEGY.....................................................................................................................................72 Residents of the Danube Serbia – raising awareness / building commitment of residents ................................................................................................................................................. 72 Local communities – mobilizing local communities ............................................................. 72 Tourists – attracting visitors / tourists...................................................................................... 73 Export markets - consumers of the goods produced in the region ................................ 73 Investors – encouraging small business development ........................................................ 73 Investors – accessing "local" multinationals............................................................................ 73 Potential partners – utilizing links with Danube Serbia neighboring areas ............... 74 Sponsors – ensuring further support from EU and bilateral donors ............................. 74 IX BRANDING STRATEGY .............................................................................................. 75 POSITIONING IS ABOUT STORYTELLING ...................................................................................... 80 STORYTELLING IS ABOUT EFFECTIVNESS ................................................................................... 80 EFFECTIVENESS IS ABOUT RELEVANCE ....................................................................................... 81 RELEVANCE IS ABOUT BENEFITS..................................................................................................... 81 X COMMUNICATION AND DISTRIBUTION STRATEGY ......................................... 82 10.1. Internal communication strategy .............................................................................83 10.2. External communication strategy.............................................................................84 PR strategy ............................................................................................................................................. 85 10.3. Sales and distribution strategy ..................................................................................87 Investment promotion ...................................................................................................................... 89 Public diplomacy .......................................................................................................................91 XI MARKETING INFRASTRUCTURE ............................................................................ 92 XII MANAGEMENT AND ACTION PLAN ..................................................................... 97 ACTION PLAN............................................................................................................................ 100 Action set 1 - Ensure requirements / prerequisites for achieving quality................ 100 Action set 2 – Building Administrative Capacity .................................................................. 103 Action set 3 – Building Community Capacity......................................................................... 105 Action set 4 – Targeting Strategic Sectors and Relevant Markets ................................ 107 CROSS CUTTING ISSUES ........................................................................................................ 109 Environmental sustainability ....................................................................................................... 109 Minorities inclusion ......................................................................................................................... 109 Gender equality .................................................................................................................................. 110 COMPETITIVENESS PROGRAMMES .................................................................................. 111 5 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION I INTRODUCTION Austrian Development Agency (ADA) has been implementing the programme "Socio – Economic Development of the Danube Serbia Region ", which is the first programme in the context of implementation of actions and measures of the EU Strategy for the Danube Region in Serbia. The programme aims to advance the comprehensive and sustainable socio-economic development opportunities for the Danube Serbia Region and Serbia as a whole, by maximizing investments of the private sector, developing accompanying job creation potentials and increasing atractiveness of the Danube Serbia Region to foreign investors through infrastructure development. During the previous phase of the programme, the study "Danube – Serbia: Building a European Gateway" was developed and presented. The purpose of the study is to put the EU Strategy for the Danube Region (EUSDR) into operation in Serbia. The study has focused on the challenges facing Serbia in achieving sustainable export-led growth and new employment generation, especially in Government's priority industries, how EUSDR measures can be connected to the planning of national, provincial and local budgets and EU/ donor support, and raising the visibility of Danube Serbia, as a river-based growth region of international standing. One of the measures foreseen with the study and is integral part of the Component 2 of the programme, designed to improve visibility of the Danube Serbia Region and to sensitize and actively engage Danube Serbia Region stakeholders in socio-economic development initiatives, is Territorial marketing of Danube Serbia within Danube Europe. The aim of the territorial marketing is to convey the spirit of the region ("sense of place") as somewhere that is attractive to invest, do business, visit, work or live in and to buy products from the region. The challenge is to position Danube Serbia so that it attracts investment and trade, to achieve the vision of a "global trading region" and the goal of increasing exports and jobs, and not as a source of cheap raw materials and labour. Territorial marketing strategy will provide framework for enhancing socioeconomic development in the Danube Serbia region, to attract investors and promote the attractiveness of the region. An essential element in territorial marketing is the fact that it is not just the marketing of an administrative jurisdiction. Nor is territorial marketing merely the institutional communication undertaken by territorial authorities. Rather it is an effort to match the expectations of potential clients with a defined geographical area. Territorial marketing is, in fact, a gathering together of an aggregate of assets and opportunities, directed at an audience whose needs have been identified and understood. It is a way to build competitive identity of the region. 6 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Starting point in preparing the analysis and for understanding the needs, wants and expectations of the target audience (investors, buyers and the media) were the results of the previous phases of the SEDDSR programme, especially findings, conclusions and recommendations from the study "Danube – Serbia: Building a European Gateway". According to the agreement with ADA, special attention was made to analysis of the current status and foreign direct investment trends for the identified key five sectors (agriculture, transport, environment, development of small and medium-size enterprises and culture) in order to indicate perspectives of the sectors to build prosperity within Danube Serbia. Since the elaboration of territorial marketing strategy is a participative process, relevant stakeholders were included in the process of defining the framework of the strategy through intervieweing target audiences and organization of workshops / focus groups that discussed the current status, current projects and programmes, new programmes / initiatives and perspectives of intra and inter sectoral cooperation of the key identified sectors. In the context of the strategy, it is important to bear in mind that the Danube Serbia region is more than budget(s) and businesses. It encompasses people, culture, historical heritage, physical assets and opportunities. The real challenge that remains is to find a way to become a place to start and locate a business, or plan a retirement; to be the place for raising the family, or to come to a vacation, hold a convention and, generally, to live in. It is about quality of life – the quest for livable, investible and visitable region. In that respect, Strategic Destination Marketing Plan for the Danube Serbia Region has been developed as the part of the same package with this strategy, but has been prepared as a separate document, comprising of tourism marketing strategy and general operational marketing plan (marketing toolbox). Tourism marketing is of paramount importance in the context of territorial marketing, since its aim is to attract and sell a more or less tangible product – a holiday, or a visit – to a consumer who is in the market for such a product. A good experience of visiting a place has the power to change the image of the region – quickly and forever in the mind of the visitor. People frequently change their minds or confirm their preconceptions about countries / regions once they visit them. This is, actually, a very strong instrument in building a regions reputation and its competitive identity. It is important to say that Serbia has not yet undergone through the process of country branding and tourism branding. In that respect, development of the territorial marketing for the Danube Serbia can be perceived as development of "sub-regional" marketing strategy. Nevertheless, the assumptions and recommendations of Territorial Marketing Strategy are applicable to the Danube Serbia region, but can be used for the wider area as well. The emphasis is on the immediate hinterland of the River Danube in Serbia, that includes 11 districts: Belgrade, Bor, Braničevo, Central Banat, Mačva, Podunavlje, South Bačka, South Banat, Srem, West Bačka, and Zaječar (please see the map below). 7 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION MAP 1 The key goal of Territorial Marketing Strategy for the Danube Region is to strengthen the capacity of communities and clusters along the Danube to adapt to the changing marketplace, seize opportunities and sustain their vitality. In that respect, communities should be oriented towards satisfying the needs of their key constituencies – citizens, workers, businesses, visitors, new businesses and investors. Thus, the marketing strategy for the Danube Serbia region recommends following activities1: 1. Designing the right mix of community features and services; 2. Setting attractive incentives for the current and potential buyers and users of its goods and services; 1 Marketing Places, Kotler P., Haider D., Rein I.; The Free Press, New York, 1993 8 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 3. Delivering a place's products and services in an efficient, accessible way 4. Promoting the region's values and image so that potential users are fully aware of the Danube Serbia region's distinctive competences. 9 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION II ECONOMIC DEVELOPMENT AND INVESTMENT TRENDS Global and national trends of foreign direct investments The general definition of FDI, based on OECD, Detailed Benchmark Definition of Foreign Direct investment, third edition (OECD, 1996) and International Monetary Fund, Balance of Payments Manual, fifth edition (IMF, 1993), describes Foreign Direct Investments (FDI) as an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor (FDI enterprise or affiliate enterprise or foreign affiliate). Empirical evidence suggest that most of countries are competing to attract as much as possible FDI`s in order to boost their economic growth, where countries with less developed financial markets and economies in general, tend to use different systems of subsidies and related public policies to attract FDI`s in order to counter costs generated by their own inefficiencies in economic, legal or political systems like corruption, ineffective public administration, rule of law, etc. GRAPH 1 Source of data: OECD, Foreign Direct Investment (FDI) Statistics - OECD Data, Analysis and Forecasts The Graph 1 clearly indicates that paste of growth of FDI inward stock was increasing worldwide, in OECD and EU countries throughout the period, with only one exception – the crises period (2008). Also, the graph suggests that crises period has equally affected all target markets for FDI, irrelevant of their geographical or economic area. However, although we can observe similar trends of growth before the crises period, it is obvious that paste of growth of FDI inward stocks is starting to differ pending of the regions and economic areas, resulting that EU is facing substantial slowdown compared to total world and OCED countries. It may be further expected that, due to recent developments in Eastern Europe, particularly the conflict in Ukraine, EU will continue to slow down in paste of growth of FDI inward stock, further affecting its economic growth rates. Similar patterns of 10 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION slowdown both in FDI and economic growth could be expected in Russian Federation, with overall stronger negative effects. Having in mind that more than 85% of all foreign trade of Serbia and almost 90% of all FDI to Serbia come from Europe, be it EU, the region or other European countries (Russia, Norway) it is expected that slowdown in these markets (FDI and economic growth) will directly reflect on Serbia and the Danube Serbia region. GRAPH 2 Source of data: OECD, Foreign Direct Investment (FDI) Statistics - OECD Data, Analysis and Forecasts Graph 2 reflects the volatility of FDI in certain years, with two sharp declines, after the 2000 and after 2008. The trend lines clearly show the difference in paste of growth of the received FDI between total world, OECD countries and EU countries in the observed period, with EU countries having the slowest growth rate. Although none of the observed groups of countries, reached pre crises levels of FDI inflow, it is clearly visible that both OECD and EU countries are lagging behind if compared to trend of the total world. GRAPH 3 Source of data: The World Bank Danube countries have experienced severe decline in net FDI inflow measured in per capita terms after 2008. Most of countries, except Germany, belong to more or less developed “developing countries”, as defined by the World Bank, of which Germany is and “old” EU member, Slovakia and Hungary (2004), Romania and Bulgaria (2007) and Croatia (2013) are new EU members, while Serbia is a candidate country. 11 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Graph 4 indicates strong volatility in FDI net income per capita in case of Hungary and to some extent in Germany, with both countries have positive and negative net inflows of FDI per capita. Graph 5 suggests that only Hungary had significantly above average net FDI per capita inflow in the observed period, and Bulgaria to a certain extent, while all other observed countries had bellow average net FDI per capita inflow compared to the Danube countries. GRAPH 4 GRAPH 5 Source of data: The World Bank Most of countries of southeast Europe have developed significant policies mechanism to attract investments and push their economic growth. In Serbia particularly, the pattern of promotion and subsidizing FDI was followed by almost all Governments after the democratic changes from October 2000, irrelevant of their political background. Special Government agency – Serbian Exports and Investment Promotion Agency (SIEPA) was founded to facilitate Government efforts to attract investments, while several regional and local agencies were also established. According to SIEPA web site,” Serbia Investment and Export Promotion Agency (SIEPA) is a government organization dedicated to effectively helping foreign investors and buyers, while raising Serbia's profile in the minds of international business decision-makers. Created in 2001 by the Government of the Republic of Serbia, our mission is to support foreign companies seeking to set up or expand in Serbia and Serbian companies when doing business worldwide.“ GRAPH 6 Source of data: National Bank of Serbia 12 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION It can be noticed from graph 6 that Serbia still has not recovered from the 2008 crisis in terms of total FDI net inflow. Not only that it didn’t reach the pre-crises levels, but also it is still far below the average of the observed period. Thus, it can clearly be observed that external factors have heavily influenced the net level of FDI in all of the observed countries. However, it is also clear that within the overall trend that shaped the net FDI inflow, some countries have managed to perform better than others. Thus, it remains to be investigated in further analysis how to enhance the competitiveness set of Serbia and in more particular, Danube Serbia to attract more FDI and generate economic growth and new jobs. GRAPH 7 Source of data: National Bank of Serbia/SIEPA The inflow of FDI to Serbia in 2005-2013 primarily came from European countries, mostly EU members. However, according to SIEPA, the actual amount of U.S. investment is significantly higher than the official figure due to their companies investing primarily through European affiliates. This also holds for Belgium, Denmark, Israel, and a number of other countries. It should be noted that almost 34% of all FDI`s, as per available data, came to Serbia from the Danube countries. TABLE 1 Investment value (EUR mil.) (2004-2013) % of total Financial intermediation Manufacturing Wholesale, retail and repairs Real-estate activities Transport, storage and repairs Construction Mining and quarrying Agriculture, forestry and fishing Other utility, social and personal services Professional, scientific and technical services Accommodation and food service activities Public administration and social insurance Electricity, gas and water Administrative and support service activities Education 4,968 4,766 3,167 2,459 2,456 586 544 194 136 119 97 83 73 26 4 25 24 16 12 12 3 3 1 1 1 0.49 0.42 0.37 0.13 0.02 Total 19,678 Industry Source of data: National Bank of Serbia / SIEPA Almost two thirds (66%) of all FDI`s in Serbia, in period 2004-2013, went into financial intermediation sector, manufacturing and wholesale, retail and repairs 13 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION sectors, while transport attracted around 12% and agriculture attracted roughly 1% of all FDI`s. TABLE 2 City/municipality Belgrade Novi Sad Zrenjanin Inđija Stara Pazova Vršac Bačka Palanka Pećinci Sremska Mitrovica Ruma Novi Bečej Bečej Koceljevo Loznica Pančevo Smederevo Zaječar Apatin Kovin Nova Crnja Odžaci Šabac Sečanj Sombor Alibunar Bač Bački Petrovac Bela Crkva Beočin Knjaževac Kovačica Šid Smederevska Palanka Titel Vrbas Žitište Total Number of projects 76 22 13 10 9 9 7 7 7 6 4 3 3 3 3 3 3 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 359 Percentage 21.30% 6.10% 3.60% 2.80% 2.50% 2.50% 1.90% 1.90% 1.90% 1.70% 1.10% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% Value (eur million) 5743.2 2196 890.7 693.1 251.1 248.4 180 174.5 169.6 163.8 135 77.2 70 62.5 60 60 52.8 52.4 40.7 34 31 30.5 28 27.5 22.3 21.2 21 18 17 9.9 8 3.2 3 1.5 0.2 0 20858.4 Percentage 27.50% 10.50% 4.30% 3.30% 1.20% 1.20% 0.90% 0.80% 0.80% 0.80% 0.60% 0.40% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.20% 0.20% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Jobs 40657 17804 4969 4737 3441 3054 2885 2424 2283 1838 1307 939 900 890 727 708 635 618 510 480 450 400 376 340 300 300 226 177 150 120 82 38 25 0 0 0 156636 Percentage 25.90% 11.40% 3.20% 3.00% 2.20% 1.90% 1.80% 1.50% 1.50% 1.20% 0.80% 0.60% 0.60% 0.60% 0.50% 0.50% 0.40% 0.40% 0.30% 0.30% 0.30% 0.30% 0.20% 0.20% 0.20% 0.20% 0.10% 0.10% 0.10% 0.10% 0.10% 0.00% 0.00% 0.00% 0.00% 0.00% Sou rce: Horwath HTL The data in the table 2 suggest strong correlation of FDI with major population and economic centers in Serbia. Thus, looking at the Danube Serbia region, measured by number of projects, value of FDI or number of jobs created, Belgrade and Novi Sad have attracted most significant number of FDI`s. Furthermore, two reltively smaller municipalities in population terms, Indjija and Stara Pazova, have heavily utilized the fact that are geographically located in close vicinity of Belgrade, while enjoying relatively good transport connection to both northern and western part of Corridor X (Belgrade-Zagreb and BelgradeNovi Sad-Budapest highway). In general, we can presume that potential demand or vicinity to biggest markets in country (including goods, services and labor markets), as well as existing production capacities (privatization of existing companies) have strongly influenced targeted cities / municipalities for FDI inflow. However, direct access to Danube seem not to have influenced significantly the decisions where to invest, although it is noticeable that municipalities / cities north or west from Belgrade, have been more successful in attracting FDIs, compared to cities / municipalities to the east and south from Belgrade, which can partially be 14 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION explained with proximity of EU markets, access to national markets, especially labor market and access to general infrastructure. It can be further noted that within Serbia, different regions have substantially different capacity and ability to attract FDIs. According to Vojvodina Government web site: “At the prestigious Financial Times’ competition, ranking “European Cities and Regions of the Future”, Vojvodina was proclaimed the first among 54 mid-sized regions in effectiveness of foreign investments, competing with the Italian, Spanish and Slovenian regions. In addition, Vojvodina was, based on the same criterion, ranked fourth among all European regions and cities, and was ranked fourth in the South Europe for its strategy for the attraction of foreign investments.” In general, some of the basic factors influencing FDIs-whereabouts decision, like geographical position, natural resources, size of local markets, access to other markets etc. are beyond influence of national or local governments. In Serbia, particularly, most of FDI subsidies and related public policies are formulated at national level, of which some directly stimulate FDI inflow to certain underdeveloped municipalities or regions. According to SIEPA, following national policies are in place to attract FDIs (http://siepa.gov.rs/en/indexen/invest-in-serbia/investment-incentives/ - Local): State Grants The National Employment Service Grants Corporate Profit Tax Holiday Corporate Profit Tax Credits Carrying Forward of Losses Avoiding Double Taxation Salary Tax and Social Insurance Charges Exemptions Annual Income Tax Deductions Value Added Tax Exemptions in Free Zones Customs-Free Imports Local governments/municipalities in Serbia have very limited options, including policy options, to attract FDIs. Most important, according to SIEPA, are: City construction land lease fee exemptions or deductions, including the option of paying in installments, with the prior consent of the Serbian Government; City construction land development fee relief such as fee exemptions or discounts for one-off payments; Other local fees exemptions or deductions (e.g. the fee for displaying the company's name). However, it should be kept in mind, that these specifically targeted municipalities / regions, have the support of the national government, as they alone would not be able to attract FDI`s due to extremely bad infrastructure and geographic location, low human capacity or other deterring factors. At the same time, we have witnessed that certain municipalities have managed to use local policies to stimulate strong inflow of FDI`s, among which, Indjija Municipality could be a good example. 15 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION III DEVELOPMENT CONTEXT – SECTOR BASED TRENDS AND POLICIES 3.1. AGRICULTURE AND RURAL DEVELOPMENT The importance of agriculture for the Serbian national economy is high, which is confirmed by data on the sector's share in GDP, employment and exports.2 This is the result of two basic factors: firstly the rate of restructuring in other sectors has been slow, resulting in low investment activity and consequently low employment opportunities in non-agricultural sectors; secondly, the high availability of rich natural resources for agricultural production in Serbia3. Less than 1% of all FDI inflow to Serbia was absorbed by agriculture sector. Having in mind that agriculture represents one of the pillars for Serbian future economic development, the recorded FDI levels in the sector remains low and inadequate to substantially modernize the sector and boost the growth, because of the following4: low profitability of the sector unstable economic and climatic conditions for the agricultural production unfavorable agrarian structure the absence of quality standards and government subsidies necessary for the placement of agro- food products in foreign markets The following are the main characteristics of the agriculture and rural development in Serbia: According to the Census in Agriculture 2012 there were 631.552 agricultural holdings and 108.230 households with 45.002 ha of agricultural land and livestock registered. Of the total number, 0.5% are holdings of legal entities and unincorporated enterprises. farms above 20 ha represent less than 1% of the holdings and use 7% of the total agricultural area. Serbia's farms are fragmented, with a large part of the farm holdings being (semi-) subsistence. There are also substantial regional differences, where Vojvodina, especially north, has large farms, with modern equipment and management structures. Of the total utilized agricultural area, 30% is rented land the average utilized agricultural area per holding extends over 5.4 ha agricultural holdings raise 908.102 heads of cattle, 3.407.318 pigs, 1.736.440 sheep and 26.711.220 hens; “National priorities for international assistance (nad) 2014-2017 with 2020 projections agriculture and rural development”, Internet, http://www.evropa.gov.rs/Documents/Home/DACU/12/74/NAD%2020142017%20with%20projections%20until%202020%20(English).pdf 3 Berkum Siemen Van and Natalija Bogdanov (2012): Serbia on the Road to EU Accession: Consequences for Agricultural Policy and the Agri-food Chain, CABI, Oxfordshire, UK 4 prof. dr Danilo Tomić, Visoka poslovna škola strukovnih studija, Novi Sad and prof. dr Miladin M. Ševarlić, Institut za agroekonomiju, Poljoprivredni fakultet Univerziteta u Beogradu 2 16 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION the number of own tractor is 597.816,; the average age of holders of family agricultural holdings is 59 years The agriculture production is extensive, with cereals as the main value. Affection of weather conditions is high, but there is a growing trend of modern irrigation and anti-hail systems in the last 2 years. Floods in 2014, made serious damage to agriculture, and raised awareness and urge to address these issues in more structured manner. Livestock production is declining Agri-food supply chain suffers a lot of limitations in Serbia. Direct sales of food is highly significant, and with growing trend. growing trend in organic farming, but organic farming sector cannot overcome obstacles of inefficient production, processing and marketing, until interwoven processes are resolved, such as national agriculture budget for organic production, poor supply chain organization. There is an increased interest in raising plantations with high quality and authentic regional varieties (Prokupac, Muscadine, Skadarka and others) and locally created varieties (Probus, Sila, Morava and others) One of the main tools available to regional agriculture comes from available EU funds, and primarily Instrument for Pre-accession Assistance for Rural Development priority area d) agriculture and rural development –IPARD-. The main objective of the IPARD Program is to contribute to solving of the problems of structural adjustment in agricultural sector and rural areas in order to strengthen competitiveness in relation to European Union market. Rural areas, directly linked to agriculture production and processing, suffer from two important negative trends in Serbia: declining population and in parallel, decline of women in rural areas. Level of education, formal/informal, additional skills/knowledge is low. Rural infrastructure needs investments, which cannot be done by local selfgovernments without additional support. The fact that local infrastructure is not included in IPARD Program 2014-2020 for Serbia, strikes as worrying. LEADER (Liaison Entre Actions de Développement de l'Économie Rurale) is a powerful tool for linking and activating public, private and civil sector sectors. Local Action Groups, which follow EU 25 years old and well proven methodology for local development – LEADER http://enrd.ec.europa.eu/enrdstatic/leader/leader/en/leader-guide_en.html, integrated and inclusive approach to local development can be achieved, and support mechanism for marketing created. LAGs make development processes visible and accessible to stakeholders, and can build the capacity of stakeholders to grasp opportunities for development and it's marketing. In Serbia there are 26 potential Local Action Groups (LAG), established by the EU rules for LEADER. More on LAGs in Serbia: http://www.leader.org.rs/next/en/ipard202 In general, agriculture sector in Serbia had achieved some progress, but still is experiencing systemic challenges that need to be addressed. In order to achieve significantly higher competitiveness in relation to EU and the region, 17 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION the reforms and more innovative approach need to be. Ability to use EU funds may be a key success factor in the future. SWOT ANALYSIS OF THE ARD IN DANUBE SERBIA Strengths Rich land resources, favorable ratio of available land per capita and per an employee in agriculture; Richness in biodiversity; Good quality and structure of the agricultural land; Favorable climate conditions for agricultural production; The potential for the production of high value products, including growing organic production Well positioning and competitiveness on the regional market and to Russia and CEFTA countries Export of corn shows strong growth Potential for direct marketing and creation of value added products in farm households Progress made with Leader implementation in Serbia: 26 potential Local Action Groups (LAGs), including 605 rural stakeholders, and covering 15% of the national territory Progress with regard to alignment with the CMOs, rural development policy, as well as food safety, veterinary and phytosanitary policy Diversification of rural economy: rural tourism Significantly improved technology in some sub-sectors (mill industry, oil production companies, meat and milk processing facilities, freezing and processing facilities for fruit, grapes and vegetables); Accessibility of the raw materials produced in the country; Significant areas of High natural value fields; Significant biomass production, possibility of production of energy crops and usage of renewable energy sources; Multi-ethnicity and multi-culturality in Serbian rural areas/villages Danube and Sava waterways Increased interest in raising plantations with high quality and authentic regional varieties (Prokupac, Muscadine, Skadarka and others) and locally created varieties (Probus, Sila, Morava and others). Weaknesses Unfavorable agrarian structure The absence of quality standards and government subsidies necessary for the placement of agro- food products in foreign markets Out-dated mechanisation and technology, insufficient storage facilities Inefficient system of agricultural knowledge transfer Low quality of seeds and fertilizers Insufficient number of cattle; Low awareness on environmental issues and food safety standards Lack of educated, trained and skilled labour force in sector Large part of the agricultural sector is not integrated in the agri-food supply chain 18 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Lack of interest in cooperation among local entrepreneurs Unused natural resources and cultural heritage of rural areas Low administrative capacity (number and quality) Weak monitoring of effects of policy implementation A lot of EU framework legislation to be transposed Weak national administration and decision makers’ capacities for innovative and up-to-date RD policy planning and implementation Insufficient cooperation between state and CSO Inexistence of producers’ groups and, as cause for that, lack of national policy to support their establishing and development Lack of timely information towards nonstate actors Quality of life in villages is low (absence of basic institutions such as ambulance, pharmacy, school, cultural institutions) Agriculture and rural development policy frequent discontinuity Monopoly or near-monopoly situations continuing outmigration of young people Opportunities Possibility of export growth, especially of products of higher added value The possibility of attracting FDIs Increasing market of existing upstream and downstream industries Ability to generate new jobs and growth of employment through diversification of goods and services provided by farms Availability of financing from EU and bilateral funds IPARD Programme 2014-2020 Strong CSOs willing to support the sector with skills, knowledge and time Demand for high quality top segment products Threats The absence of an adequate response to the challenges of climate change and global warming Increased competition on the domestic and regional markets Continuation of the intensive depopulation of villages and its consequences Lack of stability and often changing sector’s policy and administration responsible for its implementation CONCLUSIONS Agriculture and rural development in Serbia has significant resources, both in terms of their scope and diversification, providing significant potential for production growth, products and services diversification and creation of the new and innovative products and practices. On the other hand, it is necessary to invest significant efforts in structural reforms, in terms of strengthening their economic efficiency and competitiveness. Special emphasis should be given to education and trainings for relevant actors in ARD sector. Strategy for Agriculture and Rural Development 2014-2020 points out the directions of future reforms of agricultural policy and institutional framework: 19 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 1. “Agricultural policy reform to enable a dynamic restructuring of the sector, the efficient EU accession through gradual adjustment of the policy with CAP and a modern role of the state in agricultural development management in rural areas; 2. Adoption and full implementation of the legal framework which provides the legal basis for both implementation of the Strategy itself and for adjustment of the national laws with EU legislation; 3. Institutional reforms that would enable meeting the strategic goals, efficient implementation of the selected policy and adjusting the administrative structures with EU requirements”.5 Danube Serbia Region should focus its efforts on the following three levels: 1. Keep up the good job: a. Corn export b. Orchards (especially apples and cherry tomatoes) with new modern technologies c. Introducing vineyard geographic origin system, wines with geographical indications d. LEADER methodology for rural development: Local Action Groups (LAG) to be fully supported by national budget, and from 2017 to become fully operational under IPARD Program e. Foster rural tourism 2. Significantly improve most promising aspects: a. Foster produce of higher processing phase b. Clarity on the role of different levels of governance c. Professionalization of promotion and marketing of agro products d. Increase high value added products e. Increase support for biomass production, and energy from crops waste and usage of renewable energy sources f. Develop domestic market for organic products g. Beekeeping and honey production: growth in the number of households and number of hives. Quality honey in Danube Serbia Region (for instance Deliblatska Pescara acacia honey, etc.) 3. Mitigate the risks as much as possible Risks stated in SWOT should be mitigated by carefully designed measures. Civil Society Organizations will be important actors, representing the interests of the society and monitoring the public administration work. The additional tasks in front of the main actors of Serbian ARD sector is highly demanding process of Serbia and EU negotiations on agriculture and rural development. Official Bilateral screening Results Report of European Commission for Chapters 11, 12 and 13, will show the gaps to be bridged. Strategy for Agriculture and Rural Development 2014-2020, Official Gazette of the Republic of Serbia, no. 85/14, August 12th, 2014 5 20 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 3.2. TRANSPORT The Danube region in Serbia cannot be observed in monolithic terms in relation to access to efficient transportation. Measured by its transportation connectivity and accessibility to main transport arteries, it can clearly be divided in two major parts: 1. The region north-west from Belgrade and municipalities south-east of Belgrade with direct access to Corridor X and 2. The region south-east of Belgrade, without direct access to Corridor X Northern and western parts of the Danube region in Serbia are intersected by highways (To Budapest - HU and Zagreb – CRO) and railway Corridor X as well as by Danube - the Corridor VII. Furthermore, these parts of Danube region in Serbia host most of Serbia`s population, and are relatively easily accessed from both rest of Serbia and abroad. On the other side, mostly mountainous regions east and south-east from Belgrade, apart from municipalities with access to highway (corridor X), have challenging transport connection both to Serbia and rest of the region. Even though most of these municipalities have access to Danube, it is still heavily underutilized as transport potential in these municipalities. For example, the shortest distance by road from the municipality of Kladovo is via Golubac - Veliko Gradište - Požarevac - Corridor X (E-75), a journey that takes on average just over 3 hours.6 The MAP 2, given bellow, clearly shows the difference in land transportation infrastructure availability in different regions of Serbia, with obviously dense and relatively more developed infrastructure in region north and west from Belgrade, compared to the region south-east from Belgrade. Overall, we can conclude that transportation infrastructure and access to main corridors and airport (Nikola Tesla), does not hamper the attractiveness of regions north and west from Belgrade nor for municipalities south-east from Belgrade with direct access to Corridor X. On the other hand, we can assume that for the rest of the Danube region, especially the municipalities south-east from Belgrade without direct access to Corridor X, limited access to efficient transportation system, be it highways, railways or air transport, significantly hampers the attractiveness. 6Danube-Serbia: Building a European Gateway, Challenges and Opportunities 21 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION MAP 2 Source: Danube-Serbia: Building a European Gateway, Challenges and Opportunities Inland waterways Organization of the customs, the police, and the port authorities and inspection services is, comparatively, still at the low level. There is still a practice of waiting for days for completion of the procedures required for customs clearance and control of goods. Rail transport The law regulating railway transport provides for the separation of railway infrastructure management of the transport, i.e. operations. However, there is still a lack of bylaws and weak implementation of existing laws, which prevents effective involvement of private railway operators in transport operations. Several small domestic private companies, as well as “daughter” companies of larger systems, have a license for the performance of rail transport in Serbia, but 22 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION due to the lack of regulations that define the use of national railways, their activity is limited to maneuver the internal tracks within larger economic systems or are at service to "Railways Serbia "where there is a lack of capacity. The railway infrastructure is in a poor condition and still far from European standards. With the construction and reconstruction of railway infrastructure, measures to improve organization in the system should be introduced, particularly in the area of border crossings. If the raise of the average speed on the lines is not accompanied with shortening time delays at border crossings, investing in infrastructure is, practically, not meaningful. Organization of customs, police and inspection services must be coordinated, as an international border co-operation on both sides of the borders. Road transport The construction of the road network improves the accessibility to the places and regions along the Danube and reduces travel time; however, current organization can be significantly improved, primarily at border crossings, and at tollbooths where in the summer season waiting time is for several hours. A measure that can greatly contribute to the reduction of lost time on the highways is modification of toll collection system, where the existing toll booths and manual toll collection slows down the traffic. Furthermore, the loss in the percentage of toll, especially on the branch of Corridor Xb from Novi Sad to Hungary border should be solved. Intermodal transport Intermodal transport is still underdeveloped - the main limitations in that respect are following: Lack of a critical quantity of goods that can be containerized and mass-transported by inland waterways The trade deficit, which causes a large number of empty containers that are pulled into the depots in Europe Relatively poor connectivity of river ports with road and railway Corridor X Low efficiency of rail and river transport The unreliability of rail and river transport (the poor condition of the railways and waterways, the impact of water levels in rivers) Intentedness and the fragmentation of industrial production Lack of equipment at ports that would ensure the collection and consolidation of cargo (e.g., hubs or aggregation stations) Lack of "environmental taxes" for transport modes that are biggest polluters, and therefore no possibility of subsidizing intermodal transport 23 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION SWOT ANALYSIS OF THE SECTOR OF TRANSPORT IN DANUBE SERBIA Strengths The favorable geographic position (apart from the traditional approach of linking the east and west, Serbia is located in the territory that belongs to the Danube and the Adriatic-Ionian macro-regions of Europe and officially participate in both strategies) MAP 3 The level of development of the transport network (branching and density) There are infrastructural resources Large resource potential of inland waterways (Danube - Corridor VII, Sava, Tisa and Duct DTD) The defined frameworks of regional cooperation (SEE, the Danube and the Adriatic-Ionian Strategy) in accordance with the new European transport policy The existence of professional and technical resources in the Republic of Serbia MAP 3 Source: European Commission – Macro-regional strategies Weaknesses The political situation of the country and its instability Transport infrastructure on corridors through the region of the DanubeSerbia is not fully developed and is not equipped with modern technical and technological systems 24 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Lack of trust due to a series of political and economic discontinuities in the past (war, sanctions, NATO bombing, unresolved relations with Kosovo *) Modes of transportation systems are not integrated (lack of mutual connections and interchanges - intermodality) Lack of capacity of institutions and lack of mutual coordination Lack of motivation of experienced managers, administrative and technical staff Inertia changes in administrative procedures (even when the rules changed, they are usually difficult to implement) Lack of stable funding sources Lack of supporting action plans along with strategies Opportunities Defining the region as a "hub" - at junctions of primary corridors (Corridor X, Corridor VII, Route 4 which connects Corridor IV of the foregoing and the Adriatic Highway) Corridor VII (Danube river) is one of the priority axis TEN-T network of the EU The interests of countries in the region for the development of basic regional transportation network and the ability to influence the development plans of the European Networks for Serbian Development Goals (SEE, European macro-regions) Shorter travel distances Corridor X in comparison to the TEN-T priority axes southeast (Corridor IV), in a better, more comfortable and more pleasant environment New models of investment in the transportation sector (concession, PPP, use of European funds) The development of a multimodal transportation system that is costeffective and "greener" Preservation of the environment, potentials of the tourism offer and intensification of tourist flows Threats Fragmentation of interests within the state Resistance to change and lack of institutional reorganization in the previous period Ineffective implementation of strategic and development projects Pan-European Corridors IV, IVa and Vc in the immediate vicinity, that with the entry of Turkey into the NCTS (New EU Transit System) threaten to distract transit traffic if Serbia not rapidly enters the NCTS and not tempt bilateral cooperation in the field of VAT refund on fuel to foreign carriers Possible development strategies of neighboring countries which are not complementary to the Transport Strategy of the Republic of Serbia Unresolved problems of financial accountability, debt repayment, sustainable financing and guarantees for loans Unstable and inadequate funding for the development and maintenance of the transportation system 25 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION The non-harmonized education system with the needs of the transport industry and emigration of professionals CONCLUSIONS The overall current situation in terms of infrastructure is poor due to long periods without maintenance. On the other hand, there is an infrastructure network, well branched with an average density of EU-27. Traditional transport flows across the Danube region are still active, especially in transit by road and railway transport. Certain areas and municipalities have problem to access to transportation network and there is a need to build local and regional road network aiming to increase the attractiveness of these areas. This is especially visible in the south east parts of Danube region in Serbia, although it is hard to justify new investments, due to the small number of inhabitants and the very low level of current traffic. The main transport network is in a fairly good condition. Construction works on major transportation routes are intensive in order to achieve better cohesion of the Danube region and Serbia in general, as well as to increase connectivity with the surrounding regions in accordance with the plan documents for development of infrastructure of South East Europe. There are great potentials for increasing accessibility and opeining the space for investments in south-east part of Danube Serbia, especially with completion of Corridor X and its branch to Bulgaria, as well as with completion of Belgrade bypass. An especially interesting are rail, river and intermodal transport, given that require urgent investment in basic infrastructure, where intermodal transport is potential of all modes of transport aggregating functions and advantages of each of the modes in unique transport system. In the forthcoming period, in addition to investments in infrastructure, particularly railways, water and intermodal transport - which would reduce transportation costs, special attention should be paid to the so-called “Soft measures” and deregulation of transport markets, in order to simultaneously, improve the efficiency of the transportation system, while investing in infrastructure. In that way with minimal investments much bigger effects and savings in transportation will be achieved, comparing to sole construction. 26 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 3.3. SMALL AND MEDIUM ENTERPRISES DEVELOPMENT SME sector represents one of the most important pillars of the EU economy, where micro-enterprises in 2012 employed approximately 86.8 million people. This represents 66.5% of all European jobs for that year. Micro-enterprises provide just under a third of that total employment figure. The SME sector as a whole delivered 57.6% of the gross value added generated by the private, nonfinancial economy in Europe during 2012 according to European Commission Annual Report on EU SMEs 2012/2013. Although national Governments in South-East Europe see SME sector as an important part of national economies, they have so far mostly failed to develop systematic support and boost its economic performance. Most of subsidies offered to investors target large investments, brining large number of employees. This is particularly case in Serbia, where Regulation on terms and conditions of attracting direct investments7, specifically targets large investors. However, this leaves regional governments a lot of free space to find the ways to support the development of local SME potential and enhance the local economic growth, but also to directly approach SME sector of more developed economies like Germany and Austria and market their local investment opportunities. In terms of total number of companies in Serbia, micro, small and medium enterprises represent absolute majority, with more than 99%. GRAPH 8 GRAPH 9 Source of data: Statistical yearbook of the Republic of Serbia, 2013 SME sector is Serbia creates roughly 60% of total labor demand in Serbia, and it is suspected to be the most disbursed sector of economy, operating in both large industrial and population centers, but also reaching the most rural areas of Serbia. 7 http://www.siepa.gov.rs/files/pdf2010/Uredba_o_uslovima_i_nacinu_privlacenja_direktnih_investicija_2012.pdf 27 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION TABLE 3 Data for 2011 Micro (0-9) % Small (10-49) % Medium (50-249) % Large (250+) % total 241 0 39 0 17 1 9 2 307.5711 13482 18 2634 29 866 41 217 45 17287.88 Electricity, gas, steam and air conditioning supply Water supply; sewerage, waste management and remediation activities 344 0 42 0 26 1 15 3 429.1729 490 1 151 2 124 6 30 6 803.2406 Construction Wholesale and retail trade; repair of motor vehicles and motorcycles 6118 8 887 10 223 11 52 11 7308.829 30034 41 2758 31 407 19 71 15 33361.1 Transportation and storage 4179 6 580 6 111 5 31 6 4918.441 Accommodation and food service activities 2077 3 317 4 80 4 6 1 2490.168 Information and communication 3411 5 422 5 73 3 18 4 3936.828 Real estate activities 730 1 41 0 9 0 0 0 781.8821 Professional, scientific and technical activities 9554 13 869 10 110 5 8 2 10568.96 Administrative and support service activities 2448 3 250 3 59 3 30 6 2795.932 Mining and quarrying Mnufacturing Source of data: Statistical yearbook of the Republic of Serbia, 2013 The data show that majority of the SME companies were working in wholesale and retail trade and repair of motor vehicles and motorcycles sector, 41% in micro, 31% in small and 19% in medium enterprises. It should be noted that medium enterprises represent 41% of manufacturing companies in Serbia. TABLE 4 Serbia - Basic Figures - 2013 Value added Number of enterprises Number of employees Micro 72,995 210,101 (Billion €) 2 Small 8,984 181,033 3 2,103 223,367 3 84,082 614,501 7 Medium-sized TOTAL SMEs Source of data: European Commission "SME Performance Review" Within the SME sector in Serbia, micro segment represent most of registered businesses in Serbia. However, the share of labor demand and value added is almost equally distributed between the three segments of SME sector, with medium size businesses being the strongest segmenting both indicators. According to EC The European Commission Annual Report on European SMEs, Serbia has implemented 12 new policy measures addressing seven out of the ten policy areas under the Small Business Act. European Commission generally follows ten policy areas in order to understand dynamics in the SME sector of Serbia. As giving in the cobweb diagram bellow, Serbia significantly fails to meet EU average in almost all of the observed policy areas. 28 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION GRAPH 10 Source: European Commission "SBA Fact Sheet 2013, Serbia" GRAPH 11 Source of data: European Commission, "SBA Fact Sheet 2013, Serbia" Serbian society seems to be more entrepreneurial compared to EU average, with higher percent of adults intending to start a business within three years, as recorded in 2009, and seem to be happier with media attention for the sector. However, Serbian society provides relatively lower status to successful entrepreneurship. Furthermore, SME sector in Serbia feels relatively more burden of Government regulation compared to EU average. 29 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION According to European Commission European Commission Annual Report on EU SMEs 2012/2013, “Serbian SMEs grew steadily in number during the period 2008 – 2011. Nonetheless, the job losses by Serbian SMEs were more pronounced than for SMEs in the European Union. In 2010, Serbian SME value added was over 18% lower compared to 2008. The following year Serbian SMEs experienced an increase of 8.6% in value added. The reasons behind Serbian SME performance can be attributed to the volatile business environment characterised by an unstable financial sector - the credit market for SMEs is heavily subsidised - and low demand. Although the pre-election expansive fiscal and industrial policies breathed some life into the economy, key sectors still performed poorly, with the exception of the information and communication service sectors that demonstrated a large increase of +10% since 2011, which continued into 2012.” GRAPH 12 Source of data: European Commission, "SBA Fact Sheet 2013, Serbia" SMEs in Serbia seem to be significantly lagging behind EU average when innovations are in question, either in terms of product/process or marketing and organizational innovations. Furthermore, we can assume that due to relatively uneasy access to financing and relatively inadequate capital levels, Serbian SMEs tend to relay more on “in-house” innovations. The figures clearly show the gaps of Serbian SMEs and should be used as a guideline for policy makers in Serbia how to help the SME sector. When compared in on-line sales and purchasing, Serbian SMEs sector does not significantly lag behind EU average. Serbian SME`s lack significantly in participation in EU funded research, if compared with EU average in 2010.8 It can be concluded from the available data that Serbia SMEs are lagging behind EU average in terms of offering green products and benefiting from public support measures targeting green products and services. 8 For more details, please see annex 30 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION SWOT ANALYSIS OF THE FDI / SME SECTORS IN THE DANUBE SERBIA REGION SME / FDI sectors in the Danube region are not significantly different to the rest of the country. Strengths Infrastructure integration with the EU as a key market - rail, road, river corridors The existence and use of agreements on free trade - primarily the CEFTA agreement, depending on the industry contracts with Russia and Turkey in focus Cost competitive workforce in relation to the quality that provides The availability of quality manpower in the areas of services, which can provide great added value Weaknesses The current state of the overall infrastructure River and railway infrastructure is in a very poor condition Infrastructure incoherence - river infrastructure, regulation of river banks, connections to other means of transport into intermodal transport, which potential is far below optimal exploitation Weak institutional system Inconsistencies in the implementation of legislation at both the national, regional and local governments level Efforts of local governments are not sufficient to take advantage of law to the level of competence that are received during the process of decentralization Business environment - regulation and support enterprises, taxation and bureaucracy, tax incentives are not particularly prone to the development of SMEs High administrative barriers The inefficiency of the judiciary - the slowness in the implementation (law enforcement) process The problems of collecting overdue debts (receivables), as a result of ineffective judiciary system (legal protection) The unpredictability of the market Height of bank interest rates, rigid banking business policies Unregulated assets and property relations Political (in) stability Threats The lack of coordination of representatives of different institutions 31 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION The adoption of shortsighted decisions at the local level that are inconsistent with the marketing plan. Some decisions at the city level (local governments) to significantly alter the business environment. Example - irresponsibly rising of local taxes or compensation to companies, with the aim of filling the budget gap in short-term. In the long run, such decisions have completely opposite effects. The limited capacity of marketing plan implementation at local level Discontinuity in the context of public policy or political environment Incompetence in the process realization of accreditation, standardization and implementation of projects The tendency of representatives of the state administration and local selfgovernment to follow legal procedures, which failure may harm reputation of institutions The inefficiency of the administration Stopping the process of EU integration and adverse consequences for the economy and society as a whole Abandonment of organized national approach in attracting large foreign investment at a time when the entire world is fighting for them Abandoning the reform of state administration, which includes the elimination of complicated bureaucratic procedures and the fight against corruption at any level Opportunities Improving all types of infrastructure Agriculture can be a chance if the government seriously addresses the implementation, i.e. application of the law on food safety, and in a broader sense of quality infrastructure (development of an institutionalized system for quality control) The existing network of institutions - chamber system, regional and local development agencies, associations and similar The possibility of further development of intermodal transport The strategic position of the region Danube Serbia The process of European integration, with the idea to use it in order to accept a higher value system and make government administration more efficient A different approach to SME&FDI marketing - both institutional and at the level of the relevant associations, established pursuant to the examples of international associations Development of franchising in order to secure faster transfer of knowledge and technology onto domestic SMEs Danube Strategy as the basis for project preparation and withdrawal of funds from European and regional funds Lowering the jurisdiction of the local government - the full implementation of all the laws in the process of decentralization to local government, particularly law on public property Political stability Implementation of planned reforms to improve the business environment 32 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Vast spaces and resources privatized and debt-ridden to the state and the public sector can be freed after the completion of privatization, i.e. insolvency proceedings. Example - unused office space in major cities in the context of the development of ICT (incubators, start-up's etc.) CONCLUSIONS GCI Global Competitiveness Index rightly puts Serbia in a very bad place – ranked 95 out of 144 listed countries for the period 2012/2013. While there are areas in which Serbia ahead of the countries in the region, an area in which it is necessary to make a serious effort, in which Serbia is at the very bottom of the list are legal certainty, the overall quality of infrastructure, training of the labor force, availability of new technology. In the context of SMEs and innovation and ICT, the poor economic situation influenced the attitude of SMEs towards innovation. It is evident that the communication between SMEs and research institutions is rather poor. Furthermore it is noted that Serbian SMEs have relatively low capacity to access EU funds, which has resulted in relatively low level of innovations, which, as a consequence, resulted in low presence of Serbian SMEs in innovation intensive sectors of economy. The majority of SMEs is characterized by indifference to innovations. Partly this might be a rational choice of SMEs themselves, because in times of crisis their focus is on investments in those tasks and activities that provide instant effects. They do not have the financial capacity for long-term planning and investment, and especially not for innovation. ICT industry, without any tradition, but with strong scientific and educational centers, includes 2,500 companies and recorded more than 15,000 jobs in 2011. Although the majority represents micro businesses (under 10 employees), with a growth rate of 10% per annum, it is part of the Serbian economy with the greatest potential and stable growth. Bearing in mind that each year more than 5,000 students at different levels begin studies directed towards information technology, and that the industry itself is already a net exporter - there is great potential in further promoting Serbia as a destination suitable for outsourcing, which is a global trend in which Serbia must find its place. Some of the success stories are companies on the global market are Nordeus Belgrade, Novi Sad HINTTECH. Organization of SME in clusters or business associations is at a very low level. The main reason for this is the lack of motivation among SMEs themselves. The entire SME sector in average when one looks, has a fear of losing competitive advantage on domestic market and is afraid of sharing their own work and experience among similar companies. From the perspective of the average companies in Serbia, the association also represents a fairly risky business, 33 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION because in the event of a dispute there is no adequate legal support. Litigations are too long and complex, and require significant financial costs that the average company cannot sustain. All this affects negatively on the relationship between international associations, companies and individuals themselves, which is at a relatively low level, providing long-term negative impact on the perception of Serbian Danube region and the whole country as an investment destination. Taxes that SME sector pays should be re-invested through the national program of support to promotion and sales of their products. One possibility can be to support organizing and joining professional associations and their links with international associations, which would contribute to the realization and strengthening business relationships in order to create favourable business and learning environment. Territorial marketing is not just branding, but also sale of products and services. Therefore, in this segment is very hard to come up with a precise answer. The SME sector in Serbia has a very low capacity, a step down compared to developed countries. Data show that 300,000 registered businesses (enterprises and entrepreneurs) only 500 are big companies. Even 90% of those 500 in the developed countries would belong to the category of small and medium enterprises. Examples of good practice (successful investment and generally successful companies) should be promoted, and on the other side of a territorial marketing strategy integrated into the company's plans. Successful investments can easily influence the formation of brand perception. For example, large multinational companies can engage in the supply chain a large number of SMEs and thus promote the region as a destination for investment. Such activities, through a vertical chain of energy production in a very short time give excellent results. On the other hand similar channels (the multinationals) open up a whole new space for SMEs – manufacturing of private label for known buyer. Used in this field of business it can be a multiple of domicile SME – apart from secure sale, it is possible to integrate into larger and stronger market, supply chains, transfer of new technologies and for new products etc. Current reputation of Serbia and Danube Serbian region is contradictory. On the one hand, it becomes stronger, because investment community feels the concentration of power through consolidation and enlargement of ruling parties on the political scene, which provides them with optimistic outlook in terms of predictability and political stability. On the other hand, the economic situation is difficult, and implemented reforms do not produce the expected results in terms of a significant improvement of the business climate, and companies over the years are facing falling business activity as a result of the fall in aggregate demand. 34 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 3.4. ENVIRONMENT Protection and improvement of working and living environment, rational and ecologically acceptable exploitation of resources, preservation of non-renewable natural resources, improvement of environment protection systems, reduction of pollution (air, water, soil, wastes, noise, etc.) and pressure on environment as a whole represent the priorities of the Strategy of Sustainable Development of Serbia. The strategy has eight parts from which part five are dedicated to the environmental protection issue and to the sustainability of natural resources in the Republic of Serbia together with the impact of economical development on the environment. Economic potential of the environment sector in Serbia is increasingly recognized both by domestic and foreign investors. Investments into clean technologies, energy efficiency, development of new and ecologically acceptable and innovative products and investments in recycle plants for products that after use become special wastes will enable increased employment, business competitiveness and improved quality of life of the citizens. Green economy and investments into environment can become one of the strategic directions for the development of the Danube Serbia region economy in future. It is a big opportunity for new employment and drawing of financial resources from pre accession funds of the EU with the aim to build the sustainable system of environment protection. The environmental sector is highly complex, being comprised of a diverse set of activities. These activities range from segments such as carbon emissions reductions, waste management and natural resources, with high influence on economic development and investment trends. Within each domain of the environmental sector, there are sub-sectors. The environmental protection domain includes protection of ambient air and climate, water protection, treatment, supply and conservation, waste management, remediation, protection of biodiversity and landscape, noise abatement, and other environmental protection segments. I The resource management domain is divided into management of natural resources, management of energy resources, and other environmental resource management activities. In addition, there are some segments existing across both domains. These include environmental education and training, environmental policy and legislation, environmental research and development, eco-innovation, environmental health and safety, environmental communications and public awareness, and other environmental segments. 35 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Environmental development is local, but at the same time it has important regional dimension and influence. Therefore, environment becomes one of the strategic directions for the development of the Danube region economy in future, where Danube Serbia has an important role in implementation of environmental priorities. SWOT ANALYSIS OF THE SECTOR OF ENVIRONMENT IN DANUBE SERBIA Strengths Environmental protection recognized among national priorities; Presence of sound EU policy in environmental protection actions; Increased awareness of the need for development of the environment sector; Actual reform and strategic planning processes in environment sector; Human resources - a stable size of the total population and its educational structure; Improved water quality in the Danube flow through Serbia; Reserved quality of the environment in areas that are not industrial develop; Preserved and good valued status of protected areas and nature resources; International importance of the protected nature and of the planned areas for protection; Nature resources, particularly in protected areas; High level of biodiversity; Diversified natural resources Weaknesses Strong differences in regional and local development; Lack of planning and projects approach to the sustainable use of natural resources; A low share of GDP invested in environment protection; Low level of citizens participation; Excessive pollution of the water, air and soil; Inadequate waste management practice; Lack of incentive measures to reduce pollution. Opportunities Further development and strengthening of institutions for the increased responsibility in the sector of environment; Integration in the EU; Utilization of EU funds; Cooperation with the Danube region countries; 36 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Introducing EU standards and norms to provide quality of the environment; Establishing a system of sustainable nature protection management in order to improve the current situation; Multifunctional protected areas of nature and culture heritage, whose resources support the public interest in science, education and culture and at the same time provide the basis for sustainable development; Introducing and acceptance the concept of cleaner production; Increasing energy efficiency and rational use of nature resources; Inter-regional and cross-border cooperation and implementation of joint projects through partnerships and European funds; Joint environment investment of the Danube countries. Threats Industry with obsolete technology and its influence as the big polluters; Increased unemployment, poverty and slower economic growth; Unstable economic situation; Lagging behind the region due to unresolved legal, strategic and planning issues; Vulnerability of water resources from pollution; Uneven spatial distribution of the population and its strong concentration in regional centres; Insufficient protection, conservation and development of nature; Insufficient presentations and undeveloped interpretation of nature heritage; Possible lack of stakeholders willing to implement environment legal reforms; Possible lack of institutional support for acquisition of latest environmental technologies; Insufficient public information and insufficient public awareness; Lack of investments for environment; Starting industrial production with obsolete technologies. For economic potentials in Serbia, as well as for affirmation of environmental protection and sustainable development of Danube Serbia region, it is important to reach quality parameters of the environment concerning its resources and potentials: maintaining and improving the water quality of the Danube; improvement of the air quality; the possibility of funding the projects from preaccession EU funds for the establishment of integrated air quality monitoring in all municipalities of the Danube Serbia region, particularly in the area of industrial zones, energy facilities, shipyards and harbours; conditionally favourable environmental quality in most urban and industrial part of the region; quality of the environment in the nature protected areas; increasing environmental awareness of citizens; active CSOs in the field of environment; the possibility of establishing an integrated management of ecological status of the Danube to achieve higher degree of cooperation of all Danube Serbia 37 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION communities in the implementation of national and international legislation, conventions, strategies and plans. Identification of environmental objectives for Danube Serbia region is based on general and operational strategy priorities. The general priorities of environmental development in the Danube Serbia region are: monitoring and managing the impacts on the environment; implementing the measures for the protection and improvement of the environment, in particular for the prevention of water pollution (from industry, households and agriculture), soil, air, noise impacts (industrial plants, ports and harbors), collection and disposal of solid municipal and industrial wastes; prevention against accidents and pollution by hazardous substances; providing conditions for environmentally sustainable socio-economic development through the rational use of land, energy, water and resources implementing proposed measures for environmental protection and nature conservation. According the general priorities of environmental development in the Danube Serbia region, the operational environmental priorities are: Achieving a "good ecological potential" of the Danube Serbia region; Limiting and controlling impact of the activities without conflict with Danube environmental protection; Reducing emissions of harmful substances into the air from industry, energy, heating system and transport; Development of plant systems for primary and secondary treatment of wastewater; Implementation of the Waste Management Strategy (2010-2019); Reducing emissions of noise from ports, harbors, industrial facilities and traffic; Reducing the use of agro technical treatment which adversely affect the environment; Increasing investment for environmental protection, through investment funds; Improving information and environmental protection education for the population; Increasing a public participation in decision making about a quality of life and environment. In addition, identification of objectives of nature values for Danube Serbia region are based on general and operational priorities. The general priorities of nature protection are: protection and development of nature values, biological diversity, beauty and diversity of landscapes, objects and phenomena of geological heritage at national, regional and local level; implementing a measures to protect nature values, based on adopted international regulations by the Republic of Serbia relating to the nature protection; sustainable use of nature resources with minimizing adverse impacts. 38 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION According the general priorities of nature protection in the Danube Serbia region, the operational nature values protection priorities are: Activation a potential of nature heritage as a development factor; Protection and development of nature reserve areas; Preservation and valorization of the diversity of Danube wild life: flora and fauna and its increase by reintroduction of missing indigenous species of animals and plants; Identification and protection of ecological important areas or habitats, wild flora and fauna through the program Natura 2000; Conservation of nature protected areas in conditions to protect and present its phenomenon; Integrally preserving the authenticity of nature heritage and its environment; Presentation and interpretation of nature heritage, creating the conditions for the regional and international integration of Danube nature heritage identity. CONCLUSIONS The environment is an under-pinning element of all human activities. As such it is taken into account in many sectors, either voluntarily or, when that is not the case, through legislative requirements, strategies and investments. The general priorities of environmental development in the Danube Serbia refer to rational and ecologically acceptable exploitation of resources, preservation of non-renewable natural resources, development of environment protection systems, reduction of pollution (air, water, soil, wastes, noise, etc.), protection and valorization of the biodiversity of Danube wild life. Also, the natural heritage of the Danube Serbia region is of wider - European importance. The region contains a large share of remaining great wilderness areas, as well as rich nature heritage sites. The Danube Serbia region with Danube river and its tributaries are vital to the wildlife ecosystems and indeed provide ecological connections that are essential for environmental health. The environmental situation in the Danube Serbia region enjoys a relatively clean natural environment, however certain environmental issues, such as pollution of river by industry sites are areas of concern. Air pollution is relatively low, but with regard to pollution of waterways, environmental protection and collaboration in region is a priority. The priorities of environmental development of the Danube Serbia region have to be considered with other policy fields and sectors and require an integrated approach. For example: improving transport infrastructure has a positive impact on the business environment, on the attractiveness of cities and regions or on the mobility of citizens, but it can also have negative impacts on landscapes, biodiversity, quality of air, soil and water. All these matters require integrated 39 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION approach, viewing all relevant sectors together, with imperative to find the most sustainable solution as joint investment for the future. 3.5. CULTURE Serbia has been accelerating its EU accession as a full-fledged member, thus there are many priorities to consider as well as to support the implementation of foreseen EU standards, policies and programmes. The focus is certainly on the fields where the existing assets and resources gain comparative advantages. Yet, as battling with negative international image and poor perception for many years, mostly as consequences of the conflicts and transitional (political) instabilities, the supporting fields that shift perceptions, and more essential facilitate the new (positive) image, adding value on living and working ambience are untapped potential. Culture represents one of those untapped potential which with coordinated and strategic approach successfully response on polycentric urban and sustainable rural development, encourage entrepreneurship, especially in the frame of creative industries, allows meaningful work on communication corridors and enhance marketing of destinations and regions, including the Danube region in Serbia. Therefore, taking cultural context into account and including recognition of diverse local values, conditions, resources, skills and limitations should lead to transformative and sustainable change in the Danube Serbia region too. A people-centred and place-based approach integrated into development programmes and strategies which contribute to empowerment of communities, enabling them to take ownership of the development processes, contribute to growth of the creative economy in general and the creative and cultural industries in particular, increase the production of new creative ideas or technologies, and the creation of a non-monetized social benefits are crucial according to the opinion of stakeholders interviewed in the frame of the project on “Socio-economic development of the Danube region in Serbia” run by the Danube Competence Center and Horwath HTL. The findings of our researches guided us toward the perspective that centers on the interplay between following FCS (Framework for Cultural Statistics) 9 categories: A. Cultural and Natural Heritage; B. Performance and Celebration; F. Design and Creative Services. Those categories are important because since they encompass the broader ways of understanding of the role and potential of culture in the Danube Serbia region and revealing how identities and lifestyles are intertwined with the production, distribution and consumption of cultural goods and services. 9 Please refer to the analysis of Cultural context presented in Annex 40 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION The contribution of creative services/creative industries to the Serbian economy and job creation can be seen as an inevitable part of priorities in process of future Danube Serbia region development and sustainable growth. In Serbia in 2009, the direct economic impact (primary and secondary economic impact) as well as induced economic impact of the creative industries were 7.2% of total employment and 9.89% of total Gross Value Added (GVA). Depending on sub-sectors in the creative industries, the average growth rate of employment was between 1% to 6.4%, while the GVA growth rate was between 0.2% and 10.8%. Table 5: Preliminary results on economic impacts of Creative industries in Serbia, in ERU, 2009 Total economic Primary Secondary Economic indicator impact of creative impact impact industries Turnover 2.1 billion 7.72 billion 9.82 billion (16.8%) Formal employment full time 76.035 73.724 149.759 (7.28%) Contribution to Gross Value 2.94% 6.95% 9.89% Added (GVA), real price 2002 Induced economic impact of creative industries -Private consumption 634 million 385 million 1.019 million -Public consumption 172 million 248 million 420 million -Tax revenues 22.4 million 138.9 million 161.3 million Source: Mikić, H. (2011) Expert report on economic analysis of creative sector in Serbia, SFBC-Creative Economy Group, Belgrade. In 2009, the creative industries (core, partially and independent) accounted for 9.8 billion EUR of turnover, while the average annual turnover growth between 2004 and 2009 was 25%. The average productivity of the creative industries was 12 000 EUR and it was 35% higher than the economy average. Each job in the core creative industries created 1 job in the partially and independent creative industries, while 1 job in the supporting sectors is created per each 5 jobs in the creative industries. Each enterprise in the creative industries engaged about 70100 freelancers, which is about 570,500 freelance contracts per year. The export potential of the creative industries is also evident: the emerging export industries-export of creative services was 2.5 times higher than the export of creative goods, with a value of 493 million USD (4.5% of total export in 2008). Cultural and natural heritage is one of the basic elements of a community identity; it provides people with the cultural memories, knowledge and skills vital for the forging of sustainable relationships with natural resources and ecosystems. Safeguarding that heritage at the same times means safeguarding the differences that are common to specific communities. Those cultural differences are very often and easily promoted through tourism activities when larger markets are allowed to learn about specific heritage, enjoy in it but also gain competitive advantages at the markets. In the immediate surroundings of the Danube, there are 1,186 material remains and sites that are confirmed as or are presumed to be cultural attraction of general importance. So far, only a 41 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION relatively small amount of cultural heritage has been registered, about 43% (140 categorized and 374 registered immovable cultural goods), having in mind that the categorized cultural goods are only 11%. In line with this, the part of registered goods, that is – goods that have previous protection is 58%. The degree of endangerment and damage of cultural heritage and other material goods on the whole area has not been systematically researched so far. Maintenance of cultural goods is a particular problem, due to lack of management planning which would specify the conditions of their use and presentation, so after the research and conservation work, the cultural goods are usually quickly forgotten and neglected. In addition, the cultural institutions in charge of maintenance of heritage sites have no specialized marketing and PR services, animators and professional cultural managers nor legislative support to involve for example the public-private partnership when it comes to valorization and marketing of heritage sites. That is another reason why the broader public remains insufficiently aware of the values and significance of their heritage. Performance and celebration – the organization of events and festivals can meet a number of objectives such as offset seasonal imbalance, improving international perception and image (as it is in the case of EXIT Festival, for instance), and attracting visitors segments to whom the territories other attractions do not appeal – for example open air music events at Roman heritages sites such as Viminacium and Felix Romuliana. It is clear that such events can reflect the spirit and sense of particular place within Danube Serbia. SWOT ANALYSIS OF THE SECTOR OF CULTURE IN DANUBE SERBIA Strengths • • • • Number of cultural heritage sites interlinked with large number of natural heritage sites with diversified natural endowments; Solid contemporary production, knowledge and awareness of cultural sector potentials and strength; Building up on multiculturalism, common heritage and dynamic cultural exchange; Urban zones with extensive influencing zones. Weaknesses • • No integration of culture aspect into preparation and adoption of the (territorial) strategies. Understanding of the concept of territorial development via cultural / creative industries should be visible on several levels: from local government, professional cultural associations, cultural creators to key stakeholders for development and promotion of territories; Cultural identity of the Danube region is not (yet) clearly designed therefore the actions are fragmented, disperse and usually linked to a 42 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION • • • very few assets mostly to different forms of cultural tradition and ethno products, while the other assets are not utilized; Very few or no investments at all, in the systematic production of contemporary (local) cultural / creative products nor in the promotion and export of the existing cultural products; Unfavorable demographic and educational conditions in rural areas; Lack of intra-, inter- and cross-sectorial cooperation in planning, protection, management and promotion of cultural assets along the Danube in Serbia. Opportunities • • • • • Interest for sustainable management methods to be developed and implemented both in terms of preservation and exploitation of the cultural and natural heritage; Possibility to interlink natural habitats and wildlife corridors with cultural heritage of the Danube region; Promotion of sustainable development of the Danube in Serbia with special regard to the people-centred and place-oriented cultural approach; Base a touristic offers on complementary cultural and natural heritage; Potential in the joint development of multi-locations / thematic routes. Threats • • • • • • • • • Culture is treated in a static way while the concept of "industry" linked to culture is almost totally rejected; Lack of institutional and infrastructural framework and cross-sectorial policy instruments; Lack of effective information sharing, mutual learning, dialogue and integrated approaches of risk management and management modules; Administrative boundaries act as barriers for potential collaborations; Prioritization of monocentric initiatives due to the lack of political commitment to development of effective cooperation between cities and regions; Inadequate or non-sustainable use of landscape as part of cultural and natural heritage; Lack of sustainable offers mix and developed financial scheme able to support those mix offers; Initiatives not expanding development impulses to their surrounding influencing zones – competition instead of innovation and co-operation; Lack of respective and strict legislation able to put the sustainability principle into practice and carry out systematic reforms. CONCLUSIONS In the past years, numerous projects on national, regional and local level have been focused on the culture and cultural-historic heritage in Danube Serbia 43 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION region, covering two development aspects. First is infrastructural development and include various “hard” elements (in the field of construction, reconstruction and building). Second are activities, focused on the market valorization of the cultural heritage, through tourism. In addition, several development and investment teasers along the Danube Serbia region have been developed under the auspices of Ministry of Tourism, Trade and Communication (former Ministry of Economy and Regional Development), but rare or only some of them have been implemented. The reasons for that should be searched in absence of almost any co-ordination and co-operation between various decision-making levels and inter-sectorial approach. The inter-ministerial co-operation on the level of the Serbian government has never been institutionalized. On many occasions, that has been underlined, especially regarding the links between culture, education and science. Not less important is the common ties between tourism and culture, also between the cultural industries and the economic sector, have not yet been sufficiently recognized. Therefore, the necessity of creation of the interministerial working groups and even inter-ministerial funds is of utmost importance. Likewise, the existing cultural potential along the Danube in Serbia, is a lacking (political) recognition and understanding as well as professional determination to be able to organize and contribute to sustainable development of products based on cultural assets and creative industries. in this region. . To achieve a higher degree of territorial integration culture should be a catalyzator for development and practical implementation of policy frameworks, tools and services and specific pilot investments. Yet, cultural products need to be extracted from the environment of the cultural sector and matched with the industry sector. Secondly, the product will not be recognized nationwide or even internationally if not properly marketed. Openness to the private sector’s views and opinions, knowledge and experience, both in product and market development strategies and initiatives, also a practical assistance and support to public-private partnership need to be continuously ensured. 44 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION IV KEY ASSETS AND VALUES OF THE IDENTIFIED SECTORS 4.1. AGRICULTURE AND RURAL DEVELOPMENT Looking at the national level, Serbia is a net exporter of agricultural and food products, and agriculture sector contributes significantly to the balancing of the foreign-trade balance. The share of agriculture in total value of exports of the Serbian economy is about 22% and it is higher than the share of agricultural imports in some years, in some years even triple. The total volume of trade in agricultural and food products has been constantly increasing. However, in terms of the value of the trade balance in relation to the volume of available agricultural land, Serbia is placed at the bottom of the list among European countries with positive trade balance of agricultural and food sector. This group of countries also includes Poland, Lithuania and Bulgaria. The cause of such low value of balance in relation to the available land area is in the structure of export, where raw materials, grains (21% of exports) and fruit (17 %) are highly represented. The share of commodities that include expensive products and produce of higher processing phase is much smaller, which practically positioned Serbian agriculture as a supplier of raw materials. Agriculture and Rural Development key values/assets identified through analysis and during the work with the focus group are the following: Corn export and export of grains, fruits and nuts, sugar, fats and oils, beverages Richness of cultural heritage and biodiversity Potential for direct marketing and creation of value added products in farm households Quality of fresh fruits 26 potential Local Action Groups (LAGs), including 605 rural stakeholders, and covering 15% of the national territory Diversification of rural economy - rural tourism High potential and natural resources for creating energy from biomass Soya and sunflower oils, as major export products of Serbia to EU Accessibility of the raw materials produced in the country; Significant areas of High natural value fields. Value propositions for the purpose of territorial marketing Agriculture and Rural Development key value propositions: Danube Serbia Region has arable land with favorable climate Fresh fruits and vegetables, o Processed fruit– made in the Danube Serbia region From waste to taste – using bioenergy from biomass for food production Multicultural and multinational Local Action Groups of Danube Serbia 45 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 4.2. TRANSPORT Key assets of transport industry of the Danube region in Serbia are geographic position and natural resources, but also existing infrastructure, means of transportation and educated workforce. Big potential in means of geographic position is that Danube region in Serbia is point of connection of Danube Macro-region and Adriatic-Ionian Macro-region and its hinterland. Those two Macro-regions provide solid basis for future programs in the framework of new EU transport policy. The key assets, ongoing efforts and value propositions are presented separately: Road Road freight transport is most developed and well distributed in average. Main routes are with good connections, linking Danube region with other areas. The only part of it where road infrastructure is lacking is east or south-east of Danube-Serbia where fast links to main Corridors are missing. Main road routes of Danube region in Serbia are Corridor X with its branches and Route 4, crossing the region and linking it with neighboring areas. Total value of state road network in Serbia, without local roads, is estimated at 4,2 billion euro. Total value of maintenance cost is estimated at 40 million euro every year. According to relations of density and surface covered by municipalities belonging Danube region, value of road network without local roads is between one third and one half of total value. Construction works are undergoing on Corridor X (Projects East and South – from city of Niš to Bulgarian and Macedonian border, as well as Belgrade bypass. Furthermore works are undergoing at construction of Route 4 on the south side from Belgrade to Montenegro. At some parts of main routes and on the local level, particular efforts have been made in the renewal and development of the transportation infrastructure in areas affected by floods in the late spring of 2014. To complete the bypass around Belgrade cca 95 million euro are needed, and for the construction of Route 4 from Belgrade to Požega cca 400 million euro. Rail Rail transport has the same main routes as road network, but condition of infrastructure and density are far below the desired level. Total needs of maintenance in past are covered with only 11 % on average, resulting with maximum speed below 60 km/h on 50 % of rail network. Basic characteristic of rail transport is still closed market without real possibilities for running operations beside „Serbian railways“. 46 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Urgent investments in railway infrastructure of Serbia are estimated at around one billion Euros, and for bringing the railway infrastructure on the level of satisfactory standards in the future, some 4 billion Euros are needed. In addition to investing in the tracks, the necessary investments are in signage and rail transport management systems, station buildings, equipment for cargo handling and equipment for intermodal transport. Although a few years ago, the company "Serbia-kombi", was founded as a subsidiary of Serbian Railways, activities aimed establishing “Ro-La” technologies in Serbia is practically non-existent and the company has no employees. Investing in Ro-La technology besides economic, also brings significant environmental benefits, where trucks over Serbia could transiting by rail rather than by road. Inland waterways As already mentioned, priority projects on a system of inland waterways in Serbia are: Arrangement of the Danube waterway upstream from Belgrade Removing sunken remains of the German fleet from World War II in Prahovo Removing unexploded bombs from NATO bombing Construction of Zezelj Bridge in Novi Sad Reconstruction of the locks on the Danube River (Djerdap) In addition to Corridor VII (Danube river), important parts of network are river Sava, River Tisza and fairway system DTD. To bring the inland waterways to satisfactory level for safe and reliable navigation, total investments are estimated at 2 billion euro in next 15 to 20 years, but maintenance has to be on regular basis, including dredging, cleaning and signaling of waterways. River information System is implemented fully at the river of Danube, ensuring by the tracking and positioning of vessels, traffic safety, directing and managing of traffic, optimizing the use of waterways, enabling quick response in urgent situations, distribution of information and compliance with the International Border Management Strategy and other existing RIS in the region. Inland waterways are biggest potential of development together with intermodal transportation where is a lot of unused resources. The main constraint is limited quantity of goods and old fleet which mostly is not fulfills standards for navigation in EU. There is another possible area of development connected with IWW transport – modernization of shipyards aiming to ensure maintenance of vessels but not only for the ship’s hulls, but also for upgrades and modern equipment of vessels. Air Air transport is fastest growing sector of transportation. Number of passengers is almost doubled in last decade. Main assets of these mode of transport are airport „Nikola Tesla“- Belgrade, followed by national airline company „Air 47 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Serbia“ managed by „Etihad“ group and several small agriculture and military airports that can be converted for civil purposes. The airport “Nikola Tesla” will reach its full capacity if current trends continue, before planned period. In the near future it will be necessary to invest in construction of additional runway and increasing the number of floors of the airport building. On the other hand, the airport is accessible only by road public transport - there is no connection by rail or light-rail to the city of Belgrade. The airport is 18 km far from city Centre and in the period of rush-hour it takes almost one hour to reach the city centre by bus. Intermodal transport At the moment, there are no activities on construction of intermodal transport infrastructure, except few strategic projects on enabling the intermodal transport. In last 10 years there were 5 projects particularly dedicated to intermodal transport development, funded by EU programmes and some governments of west Europe countries. The only operational development exists at the level of procurement of private vehicles for the transport of containers by road, but on very low level. For construction of Intermodal Centre in Batajnica, near Belgrade, investment needed is 15,5 million euro. Other investments in intermodal infrastructure in Danube region in Serbia were not considered in short term, because of lack of quantity of goods and undeveloped IWW and rail transport. Possible small investments in intermodal equipment and processes could be interesting at river ports locations - Novi Sad, Belgrade and Pancevo, where Ports of Belgrade and Pancevo are private owned. It was already mentioned that development of Ro-La technology (Trucks on Wagons) brings cheaper but also environmental friendly way of transport of goods. This can become important and valuable asset, but only if neighboring countries develop the similar compatible system enabling loading / unloading of trucks from dedicated railway wagons. Model of PPP (public-private-partnership) in development of intermodal transport could be the solution for construction and operating of intermodal centers or new technologies implementation. This is because the start and sustainable work of intermodal transport needs critical minimal quantity of goods and intermodal units with acceptable prices of operations. 48 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 4.3. SME DEVELOPMENT Human Resources If we want the economy to evolve into a knowledge economy, the current education system needs to be significantly improved, so that the acquired technical knowledge and "talent" is enriched with entrepreneurial skills. To do this, we need to have entrepreneurial education in technical colleges. The current technical "talent" should promote and enhance the entrepreneurial skills and knowledge. The only successful examples are those who have been indoctrinated with the idea that you are trying to ultimate success, and that failure is just one step along the way. The Global Competitiveness Index in this regard clearly shows that Serbia is relatively highly ranked on the number of enrolled students, but it lags in the segment of applied knowledge. Therefore, though we rank relatively high, the education system does not provide adequate personnel, as also confirmed by a survey carried out by foreign investors in Serbia. With the necessary improvements, i.e. additional training or specialization in specific areas of interest markets can provide the required level. At the same time, in addition to educational profiles that require correction, there is the question of motivation of students for training in specific occupations. An example is the textile industry, where despite the innovation in teaching in secondary vocational education, there is no required number of employees for fulfilling capacity. Despite the perceived and presented the problem, according to the actual AHK / DIHK poll in Serbia, 95% of German investors would re-invest in Serbia. The basis for such an opinion in the field of human resources is recognized and acknowledged their quality, which in the affirmative environment (company) with appropriate training provided in the short term would raise the required level and standards applicable to the parent companies. If such a quality workforce is coupled with a high degree of loyalty, the result is a fairly low staff turnover, as measured by all sectors of the economy, which is an important factor in the operations of every company. Free Trade Agreements Free trade agreements with other countries are a very important factor in making investment decisions. Specifically, primarily CEFTA agreement, which relates to the regional market, but also the agreements with Russia and Turkey, as well as with the EU, are a very important basis which defines the position of Serbia as the most desirable destination for investment projects. In addition to 49 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION having largely open access to all these markets, viewed in the context of relatively low labor costs, it allows foreign investors significant price competitiveness compared to other countries in the region. Infrastructure and intermodal transport For some industries, the possibility of intermodal transports and related lower costs of transport are the essential question of the business model. Although it was noted that the entire infrastructure in the Danube through Serbia is far below the level of infrastructure in the river valleys in developed countries (industrialized regions in the EU), the existence of even the current level is sufficient for providing a perspective in relation to other parts of the country. Specifically, it is clear that the process of EU convergence will increase availability of funds for infrastructure development, which directly depend on the ability of a candidate country to create infrastructure projects and successfully implement them. Setting such a goal as one of the priorities infrastructure development along the Danube and intermodal transport in each of its segments, will allow attention to be focused on concrete and visible results, which have a direct impact on the economy. An example is a recent initiative of Austria on the exploitation of river transport along the Danube as an alternative route for the delivery of LPG (liquid petrol gas) from the port of Costanzia to Vienna, which would then partially mitigate the dependence of the Danubian countries on the availability of any pipeline. As in the context of carrier promotion and development should focus attention on the free zone along the Danube, which are highly specialized. Free zones should position themselves in the value chain through the contact carrier and attempt to reach investors. A good example is municipality Apatin or company Knauf in Batajnica - a factor that influenced the decision on the location is primarily the possibility of favorable costs of transport. Municipalities in the Danube have great advantages because it allows large cost savings by combining the various possibilities of intermodal transport. Large companies investors are willing for this reason to invest in a river dock! Finally, it is necessary to invest in continuous and organized training of local stakeholders (empowerment through decentralization), to develop the local communities, which primarily rely on their own capacity to develop and implement ideas, initiatives, projects… Value propositions for the purpose of territorial marketing There is a great need for internal marketing, so that all involved stakeholders at all levels understand the necessity of coordinating their activities in the context of improving the business environment in Serbia Danube region (and 50 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION beyond), and then a systematic approach in promoting the region as the best location for a potential investment. In the target market, i.e. among potential investors, there are several courses of action that are considered to be complementary to existing channels (the efforts of existing agencies and programs – SIEPA, VIP, Chamber of Commerce, regional and local agencies for development): Direct marketing, custom made – the most efficient way is through direct (organic marketing), with mediation of existing companies (investors) in Serbia or through their group companies or through a network of suppliers, directly in communication with potential investors! Cooperation with associations abroad, through personalized communications for specific projects Through twinning projects to initiate Cities and Local Governments, in cooperation with other cities in Europe and all over the world. 51 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 4.4. ENVIRONMENT The environment sector in Danube Serbia region is important for community cooperation with joint interest in identification and capitalizing the Danube river resources and its heritage potential as a factor for reaching better quality of living in the region. The first coordinate, to strengthen cooperation in the area of resources and heritage is aimed not only at implementing actions of research, conservation, protection, restoration and capitalization of the resources and heritage, but also in implementing of inter-connect environment objectives. From this perspective, it is necessary to integrate the environment values and dimension in the framework of other policies and sectors that contribute to the sustainable development. The assets and values of the Environment sector of the Danube area in Serbia characterize a relatively clean natural environment and diverse nature values of nature heritage. According to the national legislation of the environmental and nature protection, international conventions and programs, and other documents, the nature values of the Danube areas in Serbia acquired the status of protected natural areas, as protected areas and protected species of wild flora and fauna, and or status of areas and species of international importance for nature conservation: 17 protected areas, 2 national parks, 5 special nature reserve, 7 natural monuments included an additional 18 natural monuments (mostly individual trees or groups of trees). The total area of the Danube protected areas in Serbia is 1,072 km2, of which 77.4 km2 includes a watercourse of the Danube. Protected areas are on the length of 230 km of the Danube banks. In addition, rich and diverse wild flora and fauna of Danube Serbia region, geological sites representing a various paleontological sites and phenomena of fluvial land forms and karsts are a real treasure, not only for the Danube Serbia, but for the Danube Europe as well. Along the Danube there are many diverse, colourful and attractive landscapes mirroring in the water of the Danube. This is the most attractive individual landscape element and highlights the Danube going smoothly through Serbia. Environment sector key values/assets identified through analysis and by focus group are as follows: Relatively clean natural environment, Improved water quality in the Danube flow through Serbia, Richness of natural heritage and biodiversity, Significant areas of high nature value, Increased awareness of the need for environment development, 52 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Potential for funding and support in environment priorities, High potential of alternative energy sources. Value propositions for the the purpose of territorial marketing Environment protection, risk prevention, management, valorisation and protection of the natural heritage through sustainable activities are essential value propositions of the Danube Serbia region. The protection of the water resources and air quality are not only essential requirements to ensure the environment protection, but they are also very important value propositions to improve life quality and to increase the attractiveness of the rural areas. The improvement and expansion of the water distribution, sewage and wastewater cleaning networks, as well as of various other traditional activities may contribute to the joint efforts to ensure the sustainable growth of the Danube Serbia region communities. The construction of an appropriate rural infrastructure essentially contributes to the development of business activities in the rural area, to the increase in the share of services, and in the number of jobs. Other propositions refer to the rehabilitation and expansion of the environment infrastructure for all urban settlements; industrial pollution prevention and control; industrial risk prevention; decrease in the surface and underground water pollution with nitrates from farming sources in all vulnerable areas; integrated waste management implementation; closure of landfills which are not in line with the current standards and the setting up of ecologic landfills to cater for all settlements; reduction in the soil and coastal area erosion; protecting and capitalizing on the natural heritage; maintenance of the current protected areas and their promotion for scientific and tourist purposes. The national and international value of the nature heritage of Danube Serbia region (nature areas protection, nature habitats observation, valorisation of the nature resources potential, traditions, health, security and safety of citizens and tourists) refer to the community and public enterprises cooperation in integration processes for common Danube sustainable development. 53 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 4.5. CULTURE Detailed list of tangible cultural assets is presented in the previous chapter. The cultural asset mapping was done in close collaboration and involvement of relevant stakeholders from public and civil sector from the Danube Serbia region. The activities included the concentrated workshop and in-depth interviews with selected key players. The mapped assets include individuals, local – regional – national associations and institutions, existing practices, heritage sites, traditions, environmental qualities, business and physical infrastructure. The list of individuals and institutions co-operating with us in various phases is available in appendix. The cultural resources that are available in the Danube Serbia region are in essence comprised of the human and cultural capital whose services provide a range of benefits over time. Essential, according to stakeholders involved in the process is the human capital e.g. the artists and other creative workers who live and work in the area. Equally important is seen the infrastructure that support cultural activities and cultural and natural heritage of the region. The resources could be classified in five groups as follows: 1. Creative workforce 2. Cultural institutions Museums, galleries, libraries, archives, cultural centres, etc. Theatres, cinemas, performing arts venues 3. Heritage buildings and sites Number of buildings/sites accessible/not accessible to public Significant heritage clusters Number and type of visitors to publicly accessible buildings/sites Condition of heritage buildings/sites: proportions in good condition, needing restoration, etc. 4. Intangible cultural heritage Traditional creative skills Rituals, fairs, festivals Traditional knowledge of indigenous inhabitants: – stories, images, music, etc. – land management – biological resources and their use 5. Creative businesses Small and medium-sized enterprises (SMEs) in the creative sector Domestic businesses producing cultural goods and services, e.g. publishing houses 54 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Yet, a critical success factors include providing participatory approach of target groups and new pathways for development. Ability to deliver economic, social and cultural benefits of the Danube Serbia region emerge both from resources listed above as well as the principles defined by stakeholders as follows: Creation of a system of core and optional indicators for sustainable development and utilization of cultural resources People – centered development where the expressive and emotive dimensions is highly ranked as generator of authenticity and in-site experience Pro-active communities approach where networks and topological flows of people, ideas, resources and products are encouraged and supported Advancing professional skills and local capacities Sustainable development of knowledge and awareness of its own potentials and strength, and building trusts and promoting community cohesion and well-being In-depth mapping of territory specific cultural assets and potentials. Value propositions for the the purpose of territorial marketing The stakeholders proposed the concept of terrafilia for the Danube Serbia region, which combines people's attachment to a particular space that encourages action and development. This starts from the premise of active control over knowledge generation by communities, which pursue conversations around assets that could be used or built upon, together with evidence of the strengths and capacities of the community. Collaborative and consultative activities (involving local citizens, municipal officials, private, public and civil sector representatives) are needed to makes these goods and capacities visible, and to determine their volume as well as their vulnerability. They are no longer just statistics or beneficiaries, but individuals and/or groups whose rich cultural and social lives define them far more than their narrow economic roles. Another benefit is in creating opportunities to generate a community debate on the value and purpose of culture for development. Culture with its products and services might be a catalytic force within local and regional economies, not so much as a discrete sector but as a form of “glue” that binds together existing cultural, service, transport, tourism and supply industries. Its depend on individuals, groups but also intermediary people for their success and sustainability, therefore the adequate „opinion makers“ in local communities and „shakers – leaders“ should be involved from the very begging of any process. Equally necessary is the ability to get people to work together across the bandwidth of different cultural sector streams and form durable associations and collective interests in the process. The following initiatives and programmes were highlighted as some examples reflecting on above proposed concept: 55 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Roman Emperors Route // Cultural Routes in the Middle and Lower Danube// Danube Wine Route Fortresses on the Danube project // with emphasis on programme Revitalization of Golubac Fortress, as an example of good practice Dunav fest Cinema City concept, and the Danube Festivals Network project EDEN - European Destinations of Excellence Memory Based Living History concept The CULTEMA project – Cultural Value for Sustainable Territorial Governance and Marketing 56 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION V UNDERSTANDING TERRITORIAL MARKETING STRATEGY Global economic crisis and recession heavily influenced the competition to become fierce among the regions, competing for investments, knowledge and people, with the aim to restore sustainable growth. The level of integration in the world economy is increasing and all the regions and places are affected with changes in the regional and even economies of distant countries. In addition, rapid technological advances unleash the most potent changes in the way that people work, live, travel and communicate10. As a result, global competition combined with improvements in communication, transportation and scarcity in available finance, significantly complicate and intensify the scope and nature of the competition among countries, regions and cities (places in general). Places are more and more often perceived as products, which need to have their identities and values and those are to be well designed and marketed. Places which are lagging behind in this global race, are in the risk of stagnation and decline. In that respect, some of the answers to this global pressure that places provide can be following: 1. Attracting investments and businesses – chambers of commerce and economic development agencies / offices offer a variety of inducements (tax reductions, subventions, etc.) to hunt down new and expand existing business possibilities; 2. Attracting tourists – this is the activity of paramount importance, since the tourists are very important "sellers" of the destination, especially in the era of social networks. Perception of a place can be dramatically changed with a well planned and delivered experiences to tourists and visitors. This is why a separate Strategic and Operational Tourism Marketing Plan for Danube Serbia is developed together with this Territorial Marketing Strategy; 3. Preventing existing businesses from exiting in search of lower-cost labor or taxes or higher inducements; 4. Financing construction of expensive infrastructure projects and attractions that can drive additional businesses and tourists to the region; 5. Intensifying communication and image making – airing positive stories and advertisements about the destination and preventing negative stories, which describe troubles affecting the place. In general terms, a “marketing strategy” is the particular vision or expression of strategic direction that serves to underpin a firm or an organization’s efforts to maintain and expand market share. 10 Marketing Places, Kotler P., Haider D., Rein I.; The Free Press, New York, 1993 57 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION In the economic development context, it is usually applied to the notion of external communications, advertising and promotion focused on increasing a community or region’s “market share” of new investment. However, these basic understandings do not adequately address the significant variation in theory and approach that characterize a range of significantly different tools that all fall under the “marketing strategy” label. It is obvious that places need a comprehensive, problem solving approach, that will provide a solid framework for building a reputation of a place and its competitive identity. This framework is provided with strategic planning and Territorial Marketing Strategy for the Danube Serbia region. The Danube is a name that is globally recognized. In addition, the wider Danube macro-region is being perceived as a source for a sustainable growth of the European economy. On the other hand, Danube Serbia does not have visibility as the region, nor there is a conceptual framework at the national level that would provide instructions for a proper positioning of the region as a place that is to become a global hub for investments, trade, jobs, education and living. In the previous sections current status and trends, key strengths, assets and values in the identified 5 sectors (agriculture, transport, environment, SME development and culture) of the Danube Serbia region were analyzed. This will serve as a basis for further elaboration of strategic alternatives. Speaking in general, but having in mind the nature and the scope of future territorial marketing efforts for the Danube Serbia region, marketing strategies can be focused in one of three possible directions: 1. Cost leadership strategy (defined as a “broad” strategy) – building market share by creating the lowest cost option in the marketplace. In economic development terms, this approach emphasizes attraction factors such as low taxation, low land costs, low regulatory hurdles, etc. 2. Differentiation Strategy (defined as a “broad” strategy) – building market share by de-emphasizing cost factors, and instead suggesting that potential customers / investors cannot access what they need from other sources or in other jurisdictions. In economic development terms, this approach emphasizes unique or near-unique resources and assets (access to required raw materials, for example) within a community that will dictate an investor’s location decision in a global context. 3. Segmentation Strategy (defined as a “narrow” strategy) – building market share by recognizing that the value proposition is neither lowest cost nor most unique, this approach emphasizes the targeting of specialized industry niches, and works through the development and maintenance of relationships, specialized knowledge and customized support structures. In the case of Danube Serbia marketing efforts, the latter approach is most appropriate from a marketing strategy perspective. The Danube Serbia region is not the lowest cost area seeking investments in the target sectors, but have certain distinctive advantages that can be used to attract investments. Similarly, 58 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION while the Danube Serbia region has assets to anchor investments and improve overall climate in the context of the "sense of a place", it is not sufficiently differentiated from a range of other places / regions in the nearest proximity to suggest that businesses and people must locate in the region. Segmentation suggests a "narrow" and targeted focus, which should provide effectiveness and tangible and practical results. In essence, a segmentation approach aligns with the opportunities identification process across the identified sectors that are outlined in this report. While all investments, businesses and people are welcome in the Danube Serbia region, economic development perspective indicates a set of target products / areas that should be well positioned to support and attract new investments and iduce overall economic growth. To pursue these opportunities, Danube Serbia must intensively focus its efforts on these segmented targets, creating relationships, expertise, capacity, networks, support structures, academic linkages and a range of other specialized segments – serving instruments and programs. Each of the identified sectors should be addressed through a separate, but similar streams of activity, having in mind three pillars: Linking local assets in the sector to support marketing efforts – assets of the target sectors were presented in the previous chapter, but key players are still to be gathered in the advisory structures that should direct and support efforts on an ongoing basis; Building and communicating specialized knowledge of each of the sectors – Danube Serbia must develop specialized marketing materials speaking to needs and opportunities within each of the key target sectors, and make these available through dedicated (possibly standalone) aspects of its web presence, with summary materials in print form for supporting direct contact in the market; Relationship building within the segment – to underline the direct interest and connection to the segment, Danube Serbia must develop direct links and contacts to the industry in its own space and in its own events, and maintain that contact over time. 59 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION PROPOSED VISION OF THE DANUBE SERBIA REGION Danube Serbia is an internationally recognized region, known for its quality products, dynamic and prosperous environment that fosters creativity, knowledge and sound business development; it creates welfare for its communities through the mechanisms of sustainable growth. With its diverse, vibrant , safe and connected communities, Danube Serbia has it all – rich national and cultural diversity of its people, unique areas of natural heritage and biodiversity and strong outlook for a sustainable economic growth. Truly European – it is Europe in a nutshell. PROPOSED MARKET POSITIONING OF THE DANUBE SERBIA REGION Danube Serbia is positioned as a prosperous European region on the Danube – a global trading region, utilizing its favorable geo-strategic position as a transport hub of the South-East Europe, offering quality products, services and experiences. With the unique combination of resources – water / river, protected natural areas, biodiversity, cultural heritage and tradition, fertile lands, blend of urban and rural areas, infrastructure and public service, it is the region with an outlook of a stable and sustainable economic growth, which opens its gates and provides a chance to everyone – buyers, tourists, prospective investors, entrepreneurs business developers, workers, students, retirees and other entities seeking safe and prosperous environment. Considering previously said, two positioning statements emerged that can be used in further marketing efforts: Danube Serbia – Where the Danube meets the Balkans (in accordance with proposed positioning for tourism marketing / synergies can be achieved) Danube Serbia – Reflecting Danube, Connecting Europe 60 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION VI STRATEGIC MARKETING GOALS 6.1. TO CREATE AWARENESS OF THE DANUBE SERBIA REGION AND ITS POTENTIALS 1. Develop the Danube Serbia umbrella brand 1.1. In the process of building the marketing system of the Danube Serbia region, starting point will be an effort to operationalize proposed strategy for branding of the region. This will create unique umbrella brand, with recognizable visual identity and set of instructions how to use the brand in the most effective way – it is the first activity in the operationalization of the territorial marketing strategy. Branding of the Danube Serbia region should start immediately after defining precise and thorough operational marketing plan. Special focus should be on image-making for various target audiences – through the measures of internal and external marketing – this should be previously elaborated within operational marketing plan. 1.2. 1.3. 2. Develop (interactive) online communication platform 2.1. Since the Internet is the place for all target audiences to discover the Danube Serbia region, it is THE primary source of information, advice, transactions and exchange of experiences. All other means of communication should direct interested parties to the appropriate Internet page – depending on the target audience. 61 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 2.2. Special attention should be paid to pages created by Internet users themselves, especially those that, in the meantime, can become influental in the virtual world, when decisions about doing business, investing, travelling, learning, working, or living are commented. Appropriate approach to opinion makers should be taken to win them as advocates for the Danube Serbia region. 3. Communicate emotional benefits of the region (unique selling propositions - USPs) 3.1. Using the chosen unique elements, that define the overall nature and distinctiveness of the region in all communication channels and instruments towards the relevant markets should generate positive emotional reactions with target audiences. This is being done with usual image-building activities (to be described within communication and distribution strategy). 6.2. TO ENSURE THE QUALITY IN THE MIX OF OFFERED PRODUCTS AND SERVICES 1. Develop recognizable quality labels for products / service providers 1.1. 1.2. Introduction of quality labeling should encourage standardization and improvements in quality of services delivered. In addition, this will enable differentiation among existing service providers (entity offering authentic service or product should definitely be clearly differentiated from ordinary resellers). For this to happen, it is important to set quality criteria for each of the segment that appropriate label is to be applied within. Some of the potential quality labels could be – for products that satisfy criteria: produced in Danube Serbia (or Danube Serbia – the best of the Danube), authentic/ traditional food, place/ village with the most beautiful scenery, wine cellar with authentic wines, etc. Each label should clearly communicate the message - should be understandable to everyone. The promise standing behind the label must not be betrayed under any circumstances - control of entities bearing quality labels has to be strict and defined standards have to be fully respected. 2. Increase skills of the workforce in target sectors 2.1. As it is the case in every sector / industry, knowledge, skills and capabilities of the workforce in sectors targeted with this strategy are essential. This is even more important considering that marketing of the segments actually depend on direct communication / relationship between a producer / service provider and a customer. In that respect, constant professional education and training should be performed, to maintain the level of services delivered and to use existing human capital in the Danube Serbia region as a strategic advantage comparing to competitors. In this respect, cooperation with relevant schools / universities / institutes is a key for increasing the quality of products and services and is a must for all target sectors. This should be in special focus of the future marketing management of the region – to provide connections and cooperation of the sectors with relevant education 2.2. 62 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION providers, both for maintaining the level of quality and as a means of keeping the capable workforce in the sector / region. 3. Encourage development of product / marketing alliances in the region 3.1. Today's consumers are looking for a quality products / services that will satisfy their needs, but also require certain standards in public service. In that respect, prospective development of the sectors targeted with this strategy need to bear in mind this simple rule and to adapt to the reality if they seek for a market success. In addition, this is the way to achieve satisfying level of competitiveness of the overall Danube Serbia region as well as sustainable economic growth. The best way to deliver quality products / services is joining forces through product clubs and clusters that will work on quality standards, quality assurance, quality labeling and market research in order to be in line with relevant market trends and requirements. In addition, competitiveness clubs and marketing alliances for joint efforts in increasing competitiveness and marketing the Danube Serbia region can be a strong driver of sustainable growth, but require strong leadership. 3.2. 6.3. TO FOCUS ON MARKETS / SEGMENTS WITH THE HIGHEST POTENTIAL 1. Target segments as a priority / focus on prospective new businesses and investors 1.1. It is important to determine precise market segments that will be targeted - how much of which segment will be in marketing focus should underline strategic directions of the development of the region. Current model, according to “give me what you can” principle is not sustainable in the medium run, and will ultimately lead to confusion in marketing efforts and among the identified segments. One of the requirements of territorial marketing of the Danube Serbia region was to put emphasis on the prospective new businesses and investors, that will bring new technology, know-how and access to foreign markets in order to reach the vision of the Danube Serbia as "a global trading region". A professional, coordinated approach to attract new businesses and investors is needed, recognizing achievements of the investment promotion agencies (SIEPA and VIP), but including entities that should work as enablers of competitive and healthy business environment (such as Serbian Chamber of Commerce, Regional Development Agencies and local economic development offices). 1.2. 2. Professional marketing approach to specific geo markets 2.1. Contemporary electronic and other marketing tools, in combination with careful people – to – people contacts, provide efficient approach to target geo markets and to target audiences, fulfilling the ultimate goal - bringing the target segment to the region – to buy products, visit, invest, develop business, work, or provide support to further sustainable economic development of the Danube Serbia region. Focused marketing activities at selected source markets, in their biggest cities / regions, should provide aiming at groups that should have the greatest interest for the Danube Serbia region. 2.2. 63 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 2.3. Starting from the current conditions at the source markets (considering buyers of products from the region, prospective travellers, prospective investors), the most important step for focused geo marketing effort should be a systematic approach toward selected foreign markets (including regional markets!), for which, based on secondary market research, targeted online marketing performance is introduced. This effort follows raising awareness / image building activities and is a purposeful, direct communication with selected audiences. 3. Support mechanisms innovation clusters 3.1. Online tools for sales and customer management need to be introduced – ecommerce tools, as well as B2B (business to business) and B2C (business to customer) tools should encourage and stimulate marketing experts to use them as often as conventional marketing channels. Customer – care / investor – care mechanisms should be developed; both using online support and appropriate on-site (personal) support when needed – this is particularly important in cases of infrastructure development (public-private partnerships) and big industries, generating jobs and prosperity. It is extremely powerful marketing tool, extending safety of the business environment and building trust among various stakeholders in complicated multi-phased ventures. Examples of good practice from SIEPA and VIP can serve as a guideline for this (see Investment promotion chapter for further information). 3.2. to buyers, investors, new businesses, 64 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION VII PRODUCT STRATEGY Considering that the "narrow" segmentation strategy is proposed for the purpose of this territorial marketing strategy, and that one of the key strategic marketing goals is to ensure the quality in the mix of products and services offered by the Danube Serbia region, it is important to ensure that the right portfolio of products and services ultimately get the Danube Serbia brand – quality label. All the key challenges, assets and values, as well as relevant products and intervention areas, for the identified five sectors under this strategy are described in previous chapters; however, it is important to create a platform for cooperation of the key stakeholders in each of the identified sectors to establish rules and procedures for assigning the Danube Serbia brand to specific products, services and actions / events to take place in the future. For the existing base of products, services and actions that can be used to build competitive identity of the Danube Serbia region in the future, following strategy is proposed: 1. To make a selection of top products, services and actions / events with high-level of quality and high recognizability that can be marketed immediately to identified target audiences – this action should be coordinated with tourism marketing efforts; 2. To make a selection of top opportunities to be further developed, which will serve as a base for future growth and upon which the future competitive identity and reputation of the Danube Serbia region will be built; 3. To clearly identify overarching / cross-sectoral resources that have to be managed / improved in order to make the region an attractive place to visit, work, do business, invest, learn and live (infrastructure, nature protection, accessibility to amenities and public services, etc., and to select and prioritize measures and responsibilities for improvement). Implementation of the tasks mentioned above will be done with operational product marketing plans. As a part of this strategy, it is important to recommend establishment of product clubs / clusters in order to facilitate elaboration and implementation of operational product marketing plans. PRODUCT CLUBS / CLUSTERS Product clubs / clusters are recommended to be established with aim to provide support for development of existing and new products, services, activities and markets for outputs of the Danube Serbia region. This action is most needed in agricultural sector, but can be applied to other sectors, especially small and medium enterprises. In addition, environmental and cultural clusters can bring 65 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION significant value to the overall perception of the Danube Serbia region and strengthen the efforts in building its sustainable competitive identity. In further stages, product clubs could be transformed in other organizational forms (cooperatives or clusters), according favourable legal framework – it has been assumed that this will be possible after adjusting legal framework according to rural development needs, examples of good practice and European Union regulations. A good example in agricultural sector can be Italy, where cooperatives are very successful and supply the market with agricultural and foodstuff products. One of the most important tasks of a product club is improvement and standardization of quality, as well as optimization of quantity of local / regional products and services. Lack of standard quality and (often) low quantities of local products come as a consequence of lack of knowledge and skills, as well as lack of communication among main actors in supply chain. As it will be shown within the framework of the branding strategy, coopetition is a main pillar for building successful territorial umbrella brand. Tasks of product clubs, in cooperation with key stakeholders and according to the needs of supply chain actors, are following: • • • • • • • • • To organize trainings and educations for the improvement of conditions for production and quality of products and services (engagement of domestic and foreign experts, presentation of the best practice examples within the country and abroad, study tours etc.); To provide quality assurance mechanisms – for example, in agricultural production it would be essential to ensure free-of charge sanitary and veterinary controls of final products before they are placed on the market; Encourage the establishment of entrepreneurs associations, professional associations (for example chefs), as well as local action groups (LAGs territorial) in order to strengthen intra-regional cooperation; Organize meetings of value chain actors – panel discussions or informal meetings of producers, tourism sector, regional development agencies, chambers of commerce in order to synchronize the efforts; Develop synergy and coordination in marketing efforts among various producers and service providers – for example, food production, tourism, events, old handicrafts and other service providers through improvement of the existing and creation of new events and introduction of old handicrafts in tourism offer; Connect local products with health and other motives for visit; Initiate distribution of local products in different packages, carrying the common Danube Serbia quality label; Create and advocate proposals for improvement of legal regulations according to the needs of a specific club / cluster (taxes, subsidies, inspection controls, procurements etc.); Initiate improvement of the region's overall offer through cross-sectoral teams. 66 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION It would be the most logical choice for Serbian Chamber of Commerce to become a facilitator of establishment of product clubs for the Danube Serbia region, considering its network of affiliates and internal structure that is suitable to support this kind of action. In that respect, Serbian Chamber of Commerce will play the role of an agent of transformation process, increasing competitiveness of the region through better structuring of businesses, imposing standards of quality and coordinated marketing efforts. Each club / cluster will have its manager, who will be, in the same time, in charge of the territorial brand attribution to specific products and services of the club / cluster. Establishment of the clubs / clusters can be supported through technical assistance programs and initiatives, while their long-term sustainability should be ensured through collection of membership fees, providing specific services to members and income gained from better commercialization of the club's products / services. Development initiatives should be financed through separate projects and programs. DANUBE SERBIA AS AN INVESTMENT DESTINATION Economic development of the Danube Serbia region, based on export oriented investments represent a credible strategic choice, especially in times of scarcity in financial resources avaliable to public sector and cautious investors. Danube Serbia as an investment destination, can be perceived as a product that is sold at the relevant investors' markets. It can be noted that Danube Serbia is not recognized as an investment destination, so it does not have any reputation in that respect, apart of that Serbia as a country has. However, although there were significant movements in order to make a stronger position for Serbia towards international investors markets, there is still a long way to shape this product and make it more appealing to target markets. Depending on the phase of shaping the investment destination, a following relationship in comparing perception (visibility) and credibility of an investment destination can be presented: Visibility (perception) Credibility High Low Low Undiscovered Unknown High Unparalleled Undesirable Source: Thomas J. Kosnik, "Corporate Positioning: How to Assess and Build a Company's Reputation", working paper, Harvard Business School, 1988 It is clear that Danube Serbia should avoid a scenario to be an investment destination with low credibility and high visibility, and, as such, undesirable. 67 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Extensive research has shown that Serbia's starting position is with low credibility and low visibility. The two are interconnected. Low credibility is a consequence of negative perception of international business community, which is reflected in related corruption perception index, which is still rather low and places Serbia among countries with widespread corruption. In addition, Serbia has experienced a significant setback in terms of overall ranking - has worsened its relative rank position from being 77th to 91st among the compared economies, according to 2015 "Doing Business Report"11. We have found the evidence of low visibility of Serbia among the investors by comparing the dynamics of total levels of FDIs. Not only that Serbia shares challenges that Europe faces as a whole, but is also increasingly failing to attract FDIs. Europe falls behind both OECD countries and total world in attracting FDIs, while Serbia falls behind its regional peers, as it can be clearly visible on Graphs 4 and 512. Furthermore, relatively high concentration of FDI inflow into two sectors (financial services and manufacturing) also indicates relatively low visibility for Serbia as multi-opportunities investment destination, as shown in the table 1. The only possible strategic choice is to move from unknown to undiscovered investment destination, based on increasing the credibility of Danube Serbia. Once the credibility is established, image building efforts should be intensified, using proposed means of communication, to move further Danube Serbia as an investment destination to the unparalleled position. Main prereqisites for tackling the above mentioned obstacles, with the aim to navigate Serbia as an investment destination from unknown to unparalleled is to successfully implement significant reforms in public sector. In that respect, a serious commitment to prevention, active prosecution and accountable judiciary is needed. One of the actions within the framework of this strategy is to contribute to improving the business climate and better position regarding perception of corruption within target investment communities by bringing relevant questions to the agenda and building preassure to address them. Looking at the other components of the investment environment, the region can become favorable location for expanding / starting a business, utilizing a good geo-strategic position, providing accessibility to a relatively favorable workforce, tax policies and available incentives. DANUBE SERBIA QUALITY PROGRAMME Following strategic marketing goals, it is important to introduce one of the product related tactics within the framework of the strategy – i.e. Danube Serbia quality programme. 11 12 For more information, please see Annex of the Strategy See Section II – Economic Development and Investment Trends 68 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION It was already mentioned that reaching and maintaining quality in mix of product, services and activities is of paramount importance for building the competitive identity of the Danube Serbia region and that focus on quality will provide a good reputation of the region in the long run. Looking at the analysis of the key identified sectors, it is clear there are various quality gaps and variations in delivery of products, services and actions in the Danube Serbia region. Since quality improvements require long – term perspective, quick actions need to be done instantly. In that context, Danube Serbia should show which entities have alredy reached satisfactory level of quality in their performance and, therefore, build its strenghth and competence upon the examples of good practice. The main idea is to introduce quality label that will bear Danube Serbia brand (Danube Serbia – the best of the Danube). This process presupposes structuring and implementing a quality label scheme, which is based on the international standards, and will be specially designed for each of the sectors separately. Quality labels should be addressed at all components of respective sectors value chains. The ultimate goal of quality labeling is to bring more transparency, competitiveness, trust in a product, new marketing opportunities and more customer protection. Under the scope of quality programme a network of centres / professionals is proposed to be established inside existing associations / organizations – Serbian Chamber of Commerce and a network of regional chambers of commerce; regional development agencies and local economic development offices (depending on region / muinicipality). Since the quality of products / services and activities is proclaimed as the ultimate goal of territorial marketing, technical assistance in that respect would be very improtant in order to setup all prerequisites for achieving quality in targeted sectors – this is particularly important in domains of safety standards, technologies applied and long-term quality assurance. 69 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION VIII STRATEGY OF TARGET GEO MARKETS AND SEGMENTS 8.1. TARGET GEO MARKETS With the objective of rationalizing the marketing efforts it is necessary to prioritize source investment markets. According to different variables with respect to identified prirority sectors – agriculture, transport, SME development, environment and culture, specific geographical markets have been identified. It is important to note, though, that a strong coordination with geo marketing strategy for tourism is needed, since it is more likely that the investments will come from the source markets from which tourists (visitors) come from regularly, because they already visited and know the image of the Danube Serbia region (presuming that the visit produced a strong and positive image). Beyond simple country targeting, approach to relevant target audiences is extremely important when planning the promotion and commercialization / building the reputation of the Danube Serbia region. For example, it is much easier to gain a good reputation in the geo market from which there is a company running good business in the Danube Serbia region. Most likely, those are the markets where SIEPA and VIP have taken considerable investment promotion efforts. Only by choosing rationally the source markets will the promotional investment maximize its effectiveness. Considering the priority sectors (excluding financial services), having in mind the structure and countries of origin of the foreign direct investments in the period from 2005 – 2013 (see chapter "Global and national trends of FDI") following countries have been identified as relevant foreign markets for the purpose of this strategy: Neighboring countries including all countries of Former Yugoslavia Austria Germany The Netherlands Italy Switzerland USA For the purpose of Territorial Marketing Strategy, considering Danube Serbia international opportunities, Serbian diaspora provides a broad opportunity for opening doors and leveraging existing connections, combined with current business community efforts. At the investment level, it appears that Danube Serbia is "disconnected" from the people who originate from the region and Serbia in general. More than 2,6 million people of Serbian diaspora live in following 10 countries (figures are in thousands)13: "Strategija očuvanja i jačanja odnosa matične države i dijaspore i matične države i Srba u regionu" (Strategy for preserving and strengthening of the relationships between Serbia and its diaspora and between Serbia and Serbs living in 13 70 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION It is obvious that Serbian diaspora is a huge, but still underutilized economic potential and that there is a huge space for intensive cooperation. In the context of geo marketing, relevant representatives of Serbian diaspora can be the channel for opening doors for the identified opportunities in the relevant sectors. In general, in order to go one step beyond and establish priorities by cities and specific geographical areas, all the direct air connections should be considered. Considering top investor countries, combined with the number of Serbian citizens living in diaspora, the following markets have been prioritized, although not completely neglecting the other markets which could have some impact on the further development of the Danube Serbia region in identified sectors. A Domestic market and neighboring countries / Former Yugoslavia EEA and Switzerland (Germany, Austria, France, The Netherlands, Sweden, Italy, UK and Norway) Russian Federation B C Peoples Republic of China Canada United States of America Australia Middle East (UAE, Qatar, Azerbaijan) Other countries the region) – Ministry of Religion and Diaspora, 2011 – (http://dijaspora.gov.rs/wpcontent/uploads/2012/12/strategija_mvd2011.pdf, accessed on October 15th, 2014) 71 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION A category – key markets for the Danube Serbia region for further enhancement of its visibility and reputation, out of total marketing budget for promotion and other activities, up to 80% should be invested in this category (and out of this at least 60% in priority EU countries). B category – markets that need to be developed and to which a significant marketing efforts should be invested in the period of 5 – 10 years. The important factor is accessibility - within the areas where there are flights connecting these countries with the Danube Serbia (Belgrade). For the next 3-5 years, out of total marketing budget up to 15% should be invested into marketing activities at these markets. C category – markets for which there are not many activities, they are to be followed-up and if, in the longer run, one or some of markets show significant growth, total amount of marketing budget limited to 5%, should be reconsidered and redistributed. These markets might become important, considering the number of Serbian diaspora living in these countries (Canada and Australia). 8.2. TARGET SEGMENTS / AUDIENCES OF THE TERRITORIAL MARKETING STRATEGY For the purpose of this project, the target segments / audiences include a variety of stakeholders, since the nature of territorial marketing is to sensitize and induce their active engagement. All these stakeholders can and should contribute to building of competitive identity of the Danube Serbia region and its good regional and international image and reputation. Residents of the Danube Serbia – raising awareness / building commitment of residents In the first line, the most important audience are the residents of the Danube Serbia region. These include current and prospective residents – families, retirees. It is important to communicate the message of assets, values and bright perspective of the Danube Serbia to residents. In that way, they become active element in "waving the flag" - understanding this region as a place which is attractive to work, get education, invest, do business and, generally, live. In essence, when considering international opportunities, Danube Serbia's local population provides a solid opportunity for opening doors and leveraging existing connections, which should be used with existing efforts of public sector (Chamber of Commerce, SIEPA, VIP, etc.). Many of the people still living here have inextricable connections with their friends and relatives in diaspora, but lack business orientation and drive to start working – rather, they enjoy benefits of direct money transfers which go directly to consumption. Local communities – mobilizing local communities The outcome of a territorial marketing is a strong "sense of place", sense of belonging to a prosperous region with a good reputation. Thus, it is of great importance to mobilize local communities – municipalities, (sub)regions and 72 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION civil society organizations to recognize the opportunity of a joint marketing of the Danube Serbia region in supporting their businesses, exports and actions, as well as further sustainable development. They should be involved on continuous basis through offices for local economic development and regional development agencies, in cooperation with relevant provincial and national bodies and associations. In that way, they can receive proper assistance and be active in building more competitive environment for doing business and improving living conditions for their people. Tourists – attracting visitors / tourists A separate document thoroughly elaborates marketing strategy of the Danube Serbia as a tourism destination. However, it is important to recognize visitors / tourists as one of the most important target segments / audiences of territorial marketing, since understanding of the region and the first step in building its reputation starts with visits of tourists. They might become prospective investors, business developers, or can simply repeat their visits to Danube Serbia. However, they can become active advocates of the region, using word of mouth as a very powerful and effective marketing communication instrument. Export markets - consumers of the goods produced in the region This segment reflects the ability of Danube Serbia to produce goods and services that other places, people and businesses are willing to buy. In this context, it is of paramount importance to base the communication efforts to this audience on the quality and uniqueness of the goods / services that are produced and delivered by Danube Serbia. If certain places have poor reputations for the quality of their goods, this will certainly inhibit exports from those places. In that respect, it is important to communicate and deliver only the goods with a quality seal (label) that will contribute to the affirmation of the future Danube Serbia brand. Investors – encouraging small business development This applies both to current and prospective businesses. It is very important to find a way to join forces of the public and private sector in strengthening competitiveness and building credibility of the Danube Serbia region. Existing small businesess often need help in accessing foreign markets and broadening their capacities. Small businesses (production, service, retail) provide a variety of opportunities, especially utilizing "people" connections. In that respect, it is important to attract and provide technical assistance to interested people starting (a new) business in the prosperous Danube Serbia, helping them to shape and communicate their enterpreneurial ventures. Investors – accessing "local" multinationals Serbia is increasingly becoming a destination of interests to multinationals Molson Coors, Carlsberg, Pepsico, Rauch, Nestle, Siemens, Gorenje, NCR, IBM, Microsoft – to name some of them. By operating in Danube Serbia, each of these companies has an understanding of the positive developing in local business climate and related success factors that come with locating a business unit or 73 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION division in Danube Serbia. This raises the possibility that they may become allies or champions in efforts to identify, target and recruit other divisions in their corporate structures to also locate to Danube Serbia. The "domestic" market of multinational companies is a logical action area for territorial marketing. Marketing acitivites should involve building strong relationships with the local management team of these multinationals, with the intention of outlining the advantages associated with locating further business units and activities in Danube Serbia. Potential partners – utilizing links with Danube Serbia neighboring areas Links, communication and cooperation of the communities in Danube Serbia with local communities in neighboring countries has become very strong, with a fairly good perspective. Some of the most important issues affecting overall competitiveness of the places along the Danube have been resolved in close cooperation with neighboring communities – joint infrastructure development, enhancing people to people contacts, cultural exchange, environmental protection projects, education projects, etc. Cross-border cooperation and communication should be further enhanced, building a good reputation of Danube Serbia and the Danube in general. Sponsors – ensuring further support from EU and bilateral donors Transformation of the profile and image of the Danube Serbia region has been significantly influenced with support coming from EU funds and from bilateral donors. Programs to support infrastructure development, environment protection, cultural exchange, tourism development, administrative reform, capacity building and overall socio – economic development will be important factor of further enhancement of the profile and image of Danube Serbia in the future as well. In that way, the region and Serbia in general will be integrated in the overall profile of the EU Danube region and become its important part. 74 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION IX BRANDING STRATEGY The real challenge of this strategy is the fact that it preceeds definition and development of a country brand. This is important because usually, the most basic place recognition is through the identification of country of origin (COO). Thus, it significantly defines perception of the target audiences about a product or a service – where the product is designed, where it is made, where it is assembled, what is perception of delivery of service, etc. – it all have a huge impact on perception of a place and its people. On the other hand, regional or local brands are based in one area, and as such are associations to a territorial brand. Region of origin can particularly become important as a cue for high added-value products. However, it is important to bear in mind that associations with a specific region might bring negative impressions, especially if some previous events that took place in the region have such a connotation. For example, there is still much to do to improve the reputation of Serbia in the minds of foreign audiences – this can be done with affirmation of particular regions as places of exellence in specific fields / sectors. In addition, the use of regional branding must consider a number of stakeholders (which have their brands as well) within a region (as they act on their own), but still influence consumers' perceptions of the region in question. Finally, consumers cognitively associate a region with a brand, but this does not mean that the brand cannot be moved anywhere – in this context, regional name does not define all regional brands, and these don't need to originate from that particular region (for example, some food products and wines bear names of the regions / places, but are produced all over the world). For the purpose of the Danube Serbia Territorial Marketing Strategy, we propose the following characteristics to be recognized as important: 1. Utilization of the most obvious natural links to the Danube Serbia region – in that way uniqueness of the place can become essential component of a product / a service (differentiation); 2. Danube Serbia brand should be overarching – it should encompass all the proprietary brands within the territory – should become recognizable, common label for products and services that originate from Danube Serbia (establishing relevance). The use of Danube Serbia brand should be directly related to the place of origin; in that way the indigenous product can be recognized as a quality that originates from the Danube region within Serbia. Hence, territorial brands often seek legal protection or recognition in order to distinguish from other similar products without a specific link to a region / place. This is a relevant course of action for such products within the Danube Serbia region as well. However, it is important to bear in mind that when using Danube Serbia as an umbrella brand, no proprietary brand should be dominant, since there is a 75 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION danger for the proprietary brand to usurp the position of the brand of the Danube Serbia region. Instead of that, careful co-branding should be implemented to strengthen the position of the umbrella brand. In that way, a vast number of products and services can enjoy benefits of having the label. In that context, territorial brand is most often a result of organic development, evolution of recognizable products / services over the time. Of course, this can be a result of a deliberate strategy and determined leadership, but still it is important to note that the effort needs time to give the results (in the case of Istria - a region in Croatia - for example, it took almost 20 years of combined efforts in territorial and tourism branding). Since the Danube Serbia region is at the very beginning of building of its reputation and that there is still no clear perception on what would be the unique picture of the region in the minds of target audiences, the most important job ahead of the region is to establish the power of the Danube Serbia brand. The power of a brand is built through 4 main pillars: THE POWER OF A BRAND DIFFERENTIATION RELEVANCE RESPECT FAMILIARITY It is an essence of a brand, providing yield to the product/ place of the supply side; what is the market share and sales performance of the consumers, status and image; it is related to the promise Internal understanding of a brand; it is related to experiences of the consumers STRENGTH REPUTATION Adapted according to the model of the Young & Rubicam Group This means the following: 1. Differentiation – what makes a brand unique, what is the essence of a brand – what is the margin created? 2. Relevance – what spontaneous associations and wants have already been fulfilled (existing proprietary brands within the Danube Serbia region), what kind of value and market share has been created with the elements of differentiation? 3. Respect – what is the possible level of absorption of products / services that originate from the region, what is the perception of popularity and quality? 4. Familiarity – what is a personal understanding of the brand, what kind of experience buyers / consumers have, is the communication strategy successful? 76 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION As with all brands, in order to be strong, each territorial brand of the Danube Serbia region needs a consistent position, a clear identity and a defined personality. Looking at this requirement from the regional level, it seems especially important for an effective umbrella territorial brand to understand the split nature of the territorial and the proprietary brands, and the need for cohesion between them. This requires a course of action comprising from following components: 1. 2. 3. 4. An effective and sensitive brand manager for each of the key categories / sectors; A willingness amongst rivals to co-operate to maintain the territorial brand; A common story which offers a collective focus for the individual enterprises and; Local engagement. An effective brand manager. The functions of a territorial brand manager are similar to those as it was the case with particular (proprietary) brand, and focus particularly on the volume of supply, the quality assurance, protecting the brand's reputation, general promotion of the product(s) / services and engaging in research and development. Considering the number of products and services being delivered in the Danube Serbia region, appropriate number of brand managers for specific segments are to be appointed, following dynamics and priorities identified within sectors. Territorial brand manager must oversee and improve product quality for all producers in the region. The brand manager has the job of defending the name of the overarching territorial brand. By doing this it prevents counterfeits from inundating the market and diluting the value of the brand. The manager may have a role in the general promotion of the territorial product. In particular, for origin-based goods maintaining an external awareness of product quality is important in order to solidify the value of the origin. Finally, as a part of building the overall credibility of the region, it is important to introduce research and development function in coordination with academia and relevant institutes – all producers should share some technical advances in order to ensure the quality of the overall offer. Encourage cooperation. It was already mentioned that one of the main problems in the Danube Serbia region is a lack of cooperation among producers and service providers in the same sector. Strength of a territorial brand depends on the willingness of the individual brand owners to link their products to the umbrella brand, and accept to express the same values to the consumers as other producers / service providers in the region do. In that respect, Danube Serbia, as a strong territorial brand will exists only if businesses and other entities associate their individual products / services / efforts with the quality and the label of Danube Serbia. The most common way to encourage cooperation is through clustering and coopetition. For example, this kind of clusters / cooperatives gave important and visible results in Istria, both in establishing / building credibility of the region, as well as its visibility and reputation (i.e. cluster of wine makers). This can be applied to almost every relevant sector and 77 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION field, but require a strong leadership. Have a story to tell. Reputation of a brand is highly dependent on cohesive measures to be initiated by a brand manager – balanced inter-business cooperation is necessary to maintain the Danube Serbia brand's reputation. In this respect, it is important to collect and communicate a series of stories from the region, which emphasize the individual brand's integration into the territorial whole – this is to achieve the evolutionary success of the brand. From regional and brand histories, texts and symbols can become important markers for consumers, allowing them to perceive value. As the brand management encourages a rigorous quality offer and ensures the promotion of the territorial brand, stories and myths pave the way for specific, integrative rituals related to the territorial products. Local engagement. Stakeholders within the territorial brand must create value for consumers via unique, invariable features stemming from the local context. In order to create this value, they must work together. Because territorial brands are inseparable from their place of origin, the individual brand owners are situated in a social and community context, rather than a merely economic one. Territorial brands extend the idea of mutual economic dependence, into a form of mutual social dependence. This action is to be executed through product clubs / clusters, previously described as a part of the product strategy of this territorial marketing strategy. For the purpose of the Territorial Marketing Strategy, following elements of the Danube Serbia region brand were proposed: Primary' brand' a+ ributes' •!Good!geo' strategic! posi/ on! •!True!European! iden/ ty! •!Rich!natural! heritage!and! biodiversity! •!Combina/ on!of! urban!and!rural! areas! •!Rich!cultural! heritage!and! tradi/ on! •!Unique!travel! experiences! Ra1onal' benefits' Emo1onal' benefits' •!Danube!Serbia! as!a!transport! hub! “Unique! combina/ on!of:! urban!and!rural;! natural! landscapes!and! rich!biodiversity;! fer/ le!lands!and! industry! poten/ als;! astonishing! heritage!of! civiliza/ ons!that! lived!and!died!in! the!region,! combined!with! rich!tradi/ on! and!a!way!of! life,!make! Danube!Serbia!a! perfect!place!to! visit,!invest,! work,!do! business,!study! and!live!in.”! •!Clear!European! perspec/ ve! •!Untapped! resources! •!Fer/ le!lands! •!Competent! and!credible! workforce! •!Sa/ sfactory! infrastructure! •!Constantly! improving! public!service! ! !! Personality' •!Different! •!Crea/ ve!! •!Innova/ ve! •!Revealing! •!Mys/ cal! •!Dynamic! Values'of'the' brand' The'essence' of'the'brand' •Uncompro' mising!quality! •!Prosperous! •!Discovering! •!Involving! •!Authen/ c! •!Highly! valuable! “Danube!Serbia!! '!where!the! Danube!meets! the!Balkans”! ! “Danube!Serbia! –!Reflec/ ng! Danube,! Connec/ ng! Europe”! Source: Horwath HTL, 2014 78 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Brand development and branding strateg(ies) for Danube Serbia must become a separate supporting project, targeting relevant sectors and relevant groups. However, considering the umbrella brand for Danube Serbia, as well as components of the brand that are shown above, the following can be concluded: 1. Brand represents an unique collection of experiences; 2. These experiences enable a mix of rational, emotional, social and cultural advantages and benefits for potential consumers; 3. Consumers choose brands because of emotional values that brands promise. Following this pattern, territories become brands, having their strongholds in the economy, communities and heritage. The key message that should be elaborated in the process of a brand development need to focus on the Danube as a key ingredient in the connection of Danube Serbia with relevant markets and target audiences. We strongly believe that valorization of "the Danube" and its riches, as well as additional afirmation of Belgrade and Novi Sad as urban centes of Danube Serbia can be a "quick win" for future branding efforts. From the branding point of view, this can be observed as a sort of "hub and spoke" model, where the rest of Danube Serbia utilize well positioned and branded Belgrade and Novi Sad regions (capitals of culture, transport hubs, SME incubators, university and knowledge centres). Neither one of the regions along the Danube does not use "the Danube" in its image positioning, although it represents a striking resource on a global scale. In addition, the size and importance of the Danube corridor through Serbia can focus the desired development momentum in all other parts of Serbia to achieve "spill-over" effects. The Danube in Serbia can be perceived as a nationally cohesive and globally competitive resource. In the operational elaboration of the branding strategy for Danube Serbia, following steps (tasks) are to be carried out: 1. 2. 3. 4. 5. 6. 7. 8. Elaborate brand brief; Create a visual identity and logo for Danube Serbia; Launch the brand strategy; Create internal "experience planning" process; Create internal "idea incubator" activities; Create internal brand recognition programme with approprate quality labelling; Establish cross – sectoral identity design advisory working group; Provide appropriate brand messages and tools for communication and distribution purposes; 9. Start brand partnership programme with committed stakeholders from public and private sectors; 10. Provide monitoring and evaluation using predefined brand metrics. 79 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION POSITIONING IS ABOUT STORYTELLING Having in mind the selected segmentation strategy and the proposed positioning of the Danube Serbia Region - Where the Danube meets Balkans - one of the essential steps in the implementation would be to further develop and implement the message strategy by emotionally relevant storyteling developed through all sectors, aggregate of assets and opportunities. "His childhood and turbulent adolescence is spent in Europe and he goes through these areas with full force! But then, something completely different happens. He meets an unusual beauty, a bit wild, uninhibited and natural – her name is the Balkans. He falls in love with her beauty, all of her magical parts, her untouched and unspoiled nature. He falls in love with her origins and her stories about to whom she has given shelter – from prehistoric civilizations to Romans and Goths... He falls in love with the tastes that she offers, the full flavors of fruit, vegetables, meat and life. Most of all, he falls for the nights spent with her that are full of passion, music and merriment. Nights that do not end until dawn. Her qualities and her authenticity. The Danube is in love with her dark side as well, her challenging and difficult life story, her stubbornness and unattachable nature. She is untamed and he has never experienced that before. He tries to outwit and conquer her. He carries heavy burdens on his shoulders, making coastal towns more developed and important. He takes her heart with his courage and strength that pierces through the mountains. Toward the end of his journey through the Balkans, he creates a key, a fascinating landscape, as if he wishes to lock this story forever in his heart and keep it there evermore. This love unites many civilizations, many cultures, many people and their lives… This love is best explained with only their names. Dunav+Bal+Kan or Water+Honey+Blood=all that one needs in life." STORYTELLING IS ABOUT EFFECTIVNESS Behind this story is a life in quality details. To highlight the most relevant specifics in different sectors inside the region, our approach is to create the system of quality labels. That system has to be in line with the positioning and storyteling. The aim of the system is to spread the message, to keep attention, to raise interest and desire and to push to action. It is of utmost importance to create quality labels specifically for different sectors and in that way transparency is achieved and credibility built. 80 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION EFFECTIVENESS IS ABOUT RELEVANCE Still, the quality labels would be fully aligned with the umbrella positioning. One of the possibilities to use the positioning statement, considering target sectors, can be formulated in a following way: Umbrella: Where the Danube meets the Balkans Culture: Where the Danube inspires the Balkans Tourism: Where the Danube kisses the Balkans Agriculture: Where the Danube tastes the Balkans Transport: Where the Danube nudges the Balkans Environment: Where the Danube enjoys the Balkans Please note that this is just one of many possible proposals, professional agency needs to be engaged to conduct all the steps and tasks of the branding strategy. RELEVANCE IS ABOUT BENEFITS The time-related benefits resulting from this: - - Short-term: Danube Serbia would show which entities have already reached satisfactory level of quality in their performance and, therefore, build its strenghth and competence upon the examples of good practice. Long-term: The creation of quality labels would give a boost to other entities to work as to achieving the satisfactory level of quality. Furthermore, the creation of quality labels brings about rational and emotional benefits for the Danube Serbia Region: 1. Emotional benefits - creating, building and developing the sense of belonging - empowering the sectors and their representatitives in promoting their services and products 2. Rational benefits - setting examples of good practice for all sectors - highlighting the specificities within the region 81 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION X COMMUNICATION AND DISTRIBUTION STRATEGY Communication strategy that is proposed within the framework of a broader Territorial Marketing Strategy needs to be adjusted and implemented with the communication strategy and tools proposed with Destination Marketing Strategy (Strategic and Operational Tourism Marketing Plan of the Danube Serbia Region), which is integral part of a set of documents elaborated in correlation within the framework of SEDDSR programme. Both communication strategies aim to communicate Danube Serbia region as a prominent and livable place that is attractive to visit, invest and do business. The main recommendation that can be made in this respect is to focus the promotional efforts on the vast population that falls into the target segments / audiences described in previous section and to attract first-time visitors to the region. Apart from the segments that live and work in the Danube Serbia region, broader reach should be attained to induce initial interest for the region. Once the people become interested for a particular place / destination, they look for information on that place, and this they do using the Internet. The web has become the key in communication and sales of the place – both its tourism and business potentials. The general strategy for communication should rely basically on the Internet as the most successful means of spreading the message and selling out the products. Of course, offline channels must be conveniently used in the next years, but always as a support to online materials and campaigns implemented. Major communication strategies for the Danube Serbia region in the following period should be firstly focused on the brand awareness building through following strategies: Start with awareness campaign – to start as soon as possible awareness campaign on multinational level – using main international channels, which should be chosen according to the global reach / defined markets in previous section. Start brand communication program – create awareness on the new brand from the start-on, with well-planned actions at multinational level and using different communication channels. It is of utmost importance that all media activities are harmonized with each other in order to reach critical mass across media and reach the interwoven communication objectives. Television is powerful but expensive way to raise awareness for the Danube Serbia region. It is not even the most efficient way to inform travellers and potential investors about the region. However, television can be a good channel to raise awareness about the region and to communicate a "sense of place". 82 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Once awareness is created in the mind of the target audiences, it is important though, to make it easy for them to find relevant information about the region. The most logical and powerful way will lead an interested consumer after having seen the TV spot to the region’s tourism and investment promotion websites. It is therefore important for the TV promotion to direct interested viewers to the websites, which should be fully prepared to provide full information to the prospective consumer. At the same time, print advertising, Public Relations and documentary coverage in target group(s) relevant magazines should be done in order to increase the impact of the TV and online activities and really make a strong impact in the consciousness of the target group(s). Communication path – inform, motivate, act Source: Horwath HTL, 2014 10.1. Internal communication strategy Looking at the target segments / audiences, many of the key elements of the communication strategy will, in fact, play out at the local (rather than international) level. In pursuing "narrow" segmentation marketing approach, one of the most compelling aspects of the Danube Serbia value proposition is the fact that many European / international players have already chosen the region as their base of operations. In addition, large number of people living in diaspora originate from the region (especially from eastern part of the Danube Serbia). Mobilizing the existing presence of various actors – investors, business developers, consultants, artists, etc. as a testimony to the qualities of the community, while simultaneously developing local champions who may lead 83 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION elements of the investment attraction process, will certainly contribute to further building of credible business environment in the region. Engaging directly with entities that operate in the region will allow economic development staff the opportunity to entice additional efforts / investments from international entities already located in the region, while identifying those domestic entities that have pursued opportunities and established links to international partners. In that respect, key elements of internal communication strategy should be: Creation of an International Partnership Program – the aim is to gather and focus the key region stakeholders in the process of attraction of foreign direct investments / implementation of programs to enhance business and overall environment (donors' programs) throughout the Danube Serbia region. In this way, key stakeholders from public sector (regional and local authorities, various institutions) will be involved together with key stakeholders from private sector to efficiently create favorable environment for implementation of new ventures. Creation of an International Business Community program – the region must work to build strong relationships with the international business community and with representatives of the five key identified sectors. This process will anchor company retention, talent retention and business expansion efforts within the key sectors, while also providing high level information to those companies to then share within their network of contacts / business communities. This program is to be implemented as a joint effort of representatives of foreign investors (chambers of commerce, associations) doing business in Serbia. 10.2. External communication strategy External communication should be directed toward target audiences, following strategic marketing goals, product and branding strategies. In the first phase, it is important to raise awareness about the Danube Serbia region – its export goods, tourism destinations, investment and business opportunities, culture and the way of living. It is important to know that this strategy is to be implemented in coordination of tourism communication efforts, since the effects for the region will be much stronger. Main communication instruments in this respect are as follows: TV advertising campaigns. These campaigns should be very seductive and attention creating, inviting to explore more and to redirect to the Internet portal for additional information. It is important to use Danube Serbia umbrella brand in all efforts, including separate campaigns launched by entities from the region. In order to gain best results from TV campaigns, it is strongly recommended to engage media companies, since in-depth and smart media analysis and planning is required to catch hot moments for broadcasting (measured by GRP – gross rating points and GRT – gross rating targeted points). Online marketing. This instrument should increase online visibility and web traffic through a combination of search engine optimization, video / interactive 84 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION banners, promotional messaging, key word campaigns and similar tools. This action will help to increase awareness, will attract target customers (according to the key identified sectors) to the respective Internet portals and will feed database of potential customers / clients. This action should be jointly implemented with tourism online marketing, either through internal online marketing team (can be supported by some of the available technical assistance programs being implemented in the Danube Serbia region), or by engaging specialized agency. Printed advertising. The recommended form of printed advertising is placing extraordinarily explanatory advertorials in specialized printed press (depending on the sector). An advertorial is an advertisement written in the form of an objective article, usually designed to look like a legitimate and independent news story, being a part of the whole publication. The messages to be conveyed should be clearly defined, and draft of texts must be curiosity rising, jointly packed with appropriate images (available marketing infrastructure should be used). Media agency with deep knowledge on which type of press to be used at target markets, taking into account key sectors, should be engaged for this task in order to be professionally conducted. Collaterals production. Collaterals are meant to be physical support, in different sizes and formats, to the efforts in brand communication. This is almost exclusively tactics of tourism operational marketing, but can be used to support awareness building of the Danube Serbia region in general. The most usual materials produced in this respect are following: USB flash kits containing TV ads, brochures, images and films, pre-written text for journalists to be used in their copies, a list of contact information for each of the key sectors, etc.; emotional brochures; posters; souvenirs and merchandising material using the identified symbols of the Danube Serbia region. PR strategy Investment promotion agencies, business associations, chambers of commerce, as well as tourism organization should seek for a professional help – proposals from creative agencies to develop a creative communication plan and strategy which meets the objectives of the Territorial Marketing Strategy for the Danube Serbia Region. This strategy should be read and applied together with Strategic and Operational Tourism Marketing Plan for the Danube Serbia Region to ensure that the PR agencies understand the context within which the PR strategy will occur. Depending on an occasion, but in close coordination with other entities / key stakeholders, one or more of the aforementioned entities should seek proposals from public relations companies with experience in international, integrated communications campaigns, to develop and implement the public relations components of a public awareness campaign on the Danube Serbia region for a period of at least 5 years (considering all relevant aspects of the region). 85 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION The above-mentioned circumstances indicate that campaign must achieve following goals: 1. Increase awareness of the Danube Serbia as a prospective region at European / international level, neutralizing any possible negative perceptions 2. Increase demand for exported goods originating from Danube Serbia, as well as demand for visiting, doing business, working, learning, investing and living in the region. To be able to reach the goals, several strategic topics need to be highlighted: a) Target groups - defined in previous section – external stakeholders – consumers and businesses that have potential benefits buying products and doing business in Danube Serbia. b) Frame of Reference – Danube Serbia is for those who are seeking personal and business experiences and success, moving around and living rewarding experiences. c) The core differentiators - there are following core differentiators providing for the uniqueness of Danube Serbia as a region: good geo-strategic position; unique mix of urban and rural areas with a strong economic growth potential; transport hub of the South – East Europe; rich natural and cultural heritage; competent and credible workforce. All these elements make a strong combination of resources and people that is unique, and therefore it can be justified to position the region in a following way: "Danube Serbia – the best of the Danube". Entity responsible for this part should stipulate in the PR brief (public procurement for PR agency) all the above mentioned goals and strategic topics and especially those requirements which are expected as agencies’ proposal as mix of following activities (in terms of percentage of the total budget and markets): Educationals; Journalist visits; Media briefings; Product placements; Media events; Award ceremonies; Publicity activities; Timeline of activities; Cost structure of all activities. 86 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 10.3. Sales and distribution strategy Marketing strategy should focus on developing the main distribution channels for the overall Danube Serbia region, e.g. for products, services, information providing etc. through carefully developed strategies: Powerful web strategy B2B (business to business) platform for stakeholders - creation of media and materials for communication to business partners to make easier selling of the Danube Serbia region's products and services – workshops buy / sell Danube Serbia Fairs and exhibitions strategy – to select best options in fairs and exhibitions (general or specialised) and push sales Out of total marketing budget spread-out for the online and offline effort should be as following: Distribution channels – total distribution Online 1.0 Advertising 30% Publicity / PR 20% Publications 20% Source: Horwath HTL, 2013 2.0 50% 40% 30% Offline 20% 40% 50% Marketing tactics for sales and distribution strategy are as follows: Internet portal(s) of last generation. This is one of the most important marketing tools that the region can have for conveying its message(s) to relevant markets, communicating its image and values, presenting products and services. This is actually a set of interlinked Internet presentations, which altogether provide the information on the region. The most important in this context is a tourism web portal, providing comprehensive, updated and full-detailed information on the tourism attractions and experiences to be lived in the region (containing accommodation information and booking tool). In addition, web sites containing information on investment opportunities provided by investment promotion agencies (SIEPA and VIP), information business opportunities and clusters (ministries, development agencies, associations and chambers of commerce), as well as information on cultural events should be well coordinated with main tourism promotion web portal. "Buy" Danube Serbia. Working meetings to which a limited number of potential business partners from the source markets are invited to visit the region and discuss possibilities of purchasing the goods, starting a business in the region, or undertake joint ventures with entities from Danube Serbia. These efforts should be well planned and organized, usually coordinated by chamber of commerce, 87 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION taking into account key target sectors (agriculture, transport, environment, SME development and culture). Similar tactics is applied as a part of tourism marketing operational plan (marketing toolbox). "Sell" Danube Serbia. Very similar to the "Buy" tactics, but organized in the relevant source markets. "Sell" action takes form in a one day event, when domestic companies have the chance to visit potential partners and present their products / services / business potentials and negotiate for possible arrangements. These efforts are usually organized by Serbian Chamber of Commerce, using its network of branches at the main source markets. Similar tactics is applied as a part of tourism marketing operational plan (marketing toolbox). Target mailing. This action suggests mailing (e-mailing) segmented offers and / or information to potential customers / clients / investors / partners which are included in particular databases formulated for the Danube Serbia region. Mailings should be executed with a well articulated opportunity / offer, containing all relevant information for those who continue to pusue further information, or take action in that respect. Fairs and exhibitions. It is important to provide presence of relevant entities from the region at target (general or specialised) fairs and exhibitions, considering target segments of this Territorial Marketing Strategy. It is basically one of the tactics that provide direct communication with relevant target audience, depending on the sector. Thus, it is very efficient in reputation building, following the recommendations of achieving quality mix of products and services in the Danube Serbia region. These efforts are to be coordinated with efforts in tourism marketing as well. The idea is to go with online marketing activities as much as possible, because targeting is much easier (it is easily possible to pinpoint exact target of an action). In addition, cost-wise, online activities are much cheaper with greater return on invested marketing budget. Strong efforts will be needed in internal marketing with regards to online communication. If entities in the region do not go for online strategies, all public efforts will be practically useless. Therefore, it is crucial to understand that Serbian Chamber of Commerce with the network of regional chambers of commerce / regional development agencies, SIEPA, VIP, Tourism Organization of Serbia should devote major efforts to bringing companies related to target areas into the online community (get into the 2.0 world, be top ranked on Google, create multimedia promotional material, expose new and attractive experiences in a catchy way, etc.), not forgetting that the trend is going for interactive contents rather than simply displaying more or less attractive and well organized pieces of information. In the end, the idea is to communicate and sell Danube Serbia as a prominent region with a great perspective and full concious about its important role in the overall Danube region development context. 88 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Investment promotion Following recommendations received from ADA during elaboration of this strategy to put special attention on potentials in attracting foreign direct investments, investment promotion strategy will be presented separately, as a part of overall sales and distribution efforts of the Danube Serbia region. The emphasis of investment promotion efforts is usually to attract foreign direct investments (FDI). In that respect, FDI can be defined as the establishment or purchase by residents of one country of a substantial ownership and management share, usually measured by a minimum equity stake of 10 percent of a business in another country14. Investment promotion is a deliberate effort of a country / region (place) aimed at attracting investors and new businesses. It is important to say that stakeholders from the Danube Serbia region insisted that the prospective projects from the target sectors should be articulated in a way they should attract export oriented (foreign) direct investments. Basically, a country (or a region, place) seeks to accomplish following objectives with investment promotion efforts: 1. To improve the image of the region among prospective investors and communicate the region as a place which is favorable for investments; 2. To stimulate investments directly (investment generating activities); 3. To provide support and services to prospective and existing investors. Using the results of the research / interviews with officials from promotion agencies 15 , following promotional techniques are used in the context of investments promotion – parallels with previously mentioned tactics and specifics for the Danube Serbia region are given where appropriate: 1. 2. 3. 4. Advertising in general financial media (online and print ads); Participating in investment fairs and exhibitions (sales and distribution tactics); Advertising in industry- or sector - specific media (online and print ads); Conducting general investment missions from source country to host country or from host country to source country (similar to "buy" and "sell" Danube Serbia tactics); 5. Conducting general information seminars on investment opportunities (using the network of branches of Serbian Chamber of Commerce and diplomatic missions); 6. Engaging in direct mail or telemarketing campaigns (target mailing tactic); 7. Conducting industry- or sector – specific investment missions from source country to host country or vice versa (again, similar to described "buy" and "sell" Danube Serbia tactics); Marketing a Country: Promotion as a Tool for Attracting Foreign Investment; Wells, Louis T.; Wint, Alvin G.; World Bank, 2000 15 Ibidem 14 89 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 8. Conducting industry- or sector – specific information seminars (using the network of branches of Serbian Chamber of Commerce and diplomatic missions); 9. Engaging in firm – specific research, followed by "sales" presentations; 10. Providing investment counseling services; 11. Expediting the processing of applications and permits (providing support and service to prospective and existing investors); 12. Providing post investment services. Techniques 1 – 5 can be classified as image building / raising awareness tehniques and are being used to change the image of the country / region as a place to invest. In that respect, it is strongly recommended that these tehniques (tactics) should be used in the first phase of the implementation of this Territorial Marketing Strategy. As it was explained in Product Strategy, there is a strong correlation between credibility and visibility of an investment region. Having in mind that the strategic choice recommended with this strategy is to pursue "narrow" segmentation approach, it is of paramount importance to put emphasis on quality component and build credibility of the region on the basis of quality of goods, services, people, business climate, etc. It is imperative to build credibility among targeted group of investors, before broadening image-building effots. This is also a good way to support building of competitive identity of the region and its overall reputation. In that respect, this strategy proposes courting a narrower range of prospective investors and, accordingly, seeking to build credibility among a narrow group of investors before engaging in more visible image-building activities. During the early stages of investment promotion, it is strongly advised to use impersonal promotional techniques (online and offline). Personal techiques are used in the later phases – when a focus on image building shifts toward the focus on investment generation (techniques 6 – 9). Investment promotion agencies and supporting institutions move their focus on investment generation when a majority of prospecitve investors are in the later stages of the investment decision process. Finally, techniques from 10 – 12, are usually classified as investment – service tehniques. These activities are undertaken by investment promotion agencies, but with a full support and cooperation with relevant institutions and other bodies. It is not important which entity will provide services of investment counselling, expediting the processing of applications and permits and providing postinvestment services; what is impotant is that these services have to be available and easily accessible to investors who decided to invest in the Danube Serbia region. It seems as the most logical choice that these activities should be provided and coordinated by the Serbian Chamber of Commerce, with a support from investment promotion agencies (SIEPA and VIP), relevant ministries, as well as from regional and local economic development entities. 90 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Public diplomacy The main goal of this distribution and communication strategy, within the framework of territorial marketing efforts of the Danube Serbia region, is to contribute to building the credibility of the region, establishing its competitive identity among other regions and, ultimatelty, gain solid reputation for products, people, communities, businesses, public service, etc. originating from Danube Serbia. Public diplomacy is very important as a part of overall distribution and communication strategy, since it aims to present and represent government policies to other publics / target audiences. In a broader context, public diplomacy can be understood as a useful discipline in building international relations, especially when there is a good image of the government and its institutions. With systematic communication of the values and perspectives of the Danube Serbia region, public diplomacy can gain a substantial support to the building of its reputation, as well as support from various sponsors for projects of the Danube Serbia – from international development agencies, bilateral donors, EU programs, etc. In fact, it is logical that the diplomats, or managers of international institutions / programs that operate in Serbia, are fully prepared to change their minds about a region, or the country as a whole. This further creates a positive wave toward the investment community and other foreign target audiences. Public diplomacy should help to other efforts in the context of this territorial marketing strategy in answering the following questions: who (what) is the Danube Serbia, how it is perceived (seen) and what it does (what is done within the region). 91 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION XI MARKETING INFRASTRUCTURE To make professional strategic marketing, it is necessary to have the "material" of high quality to be used in accordance with proposed communication and distribution strategy; desired impact can be multiplied when combined with the appropriate media. Having in mind that there is a rather challenging task – to position and communicate Danube Serbia as a prominent, European region, it is necessary to identify initiatives that will have content of high value-added particularly through the UGC (user generated content) which increases target audiences' desire to discover and learn more about the region and its offer, and even motivate them to visit Danube Serbia. On the other hand, in order to reach and maintain competitive edge, as well as to enable meaningful decision-making process for the key stakeholders, it is necessary to provide a platform for cooperation among interested parties to be able to provide accurate and timely market information. This cooperation should result with a market research system, that will provide relevant information about market tendencies, innovations, potential competitors, etc. Key strategies in marketing infrastructure: 1. Multimedia production Production of multimedia content (films, videos, video clips, vignettes, DVD loops, presentations short films, etc.) used in fairs, presentations, TV ads, Serbian Chamber of Commerce / SIEPA / VIP official websites, YouTube channel and social web. Strong coordination with National Tourism Organization of Serbia for this activity is needed. The main steps for multimedia production can be summarized in following phases: Revision and evaluation of existing material – definition of new multimedia material standards and selection of the attributes and messages to communicate whilst, eliminating those materials which not comply with the standards defined. Production of new multimedia material - preparing for new material production (both images and videos should be strongly oriented to attributes, attractions and resources) Use of multimedia material – definition of usage conditions of multimedia material by third parties (media, private sector, public entities, etc.). It should be a free service available from the Serbian Chamber of Commerce / SIEPA / VIP websites, after logging into the web’s database. Basic tactics in multimedia material: 92 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Image bank DESCRIPTION OF THE ACTION Creation of a photo library containing a selection of the best shots of Danube Serbia. All images included should get their message across by the use of emotions, feelings and experiences. The main difference between a Photo bank and a traditional photographic archive is that all images included in the Photo bank have a clear communicational message: images are conceived to lure viewers into exploring Danube Serbia opportunities and even experiencing the destination by themselves (coordination with National Tourism Organization of Serbia, especially in the fields of nature and culture). The photo bank becomes, therefore, an indispensable tool to: 1) support the marketing activities undertaken by investment promotion and tourism promotion agencies; 2) control the image of the destination, communicated by third parties (specialized magazines, websites and other entities) The Photo Bank provides with deep insight in assets, values, opportunities and experiences comprehending site-, product- and people-related images. It would be good to split the Photo bank in 2 sections: One containing “institutional” or generic images One containing product-related images to be used in the promotion of specific products / services The image bank will be accessible on the web portal, under restricted access managed by Serbian Chamber of Commerce with its in-house online team. In addition, the photo bank must be partly updated with fresh images at least once a year. IMPLEMENTATION PROCESS BASICS Pre-production stages are key to the development of the Photo Bank and include the following phases: To identify themes to be photographed and locations. Selection of existing free of rights photos Purchase of interesting existing photos Photos that will be used in a specific campaign will be described in detail, including pencil drawing, description of actors appearing in the image, etc. For its production, these tasks have to be realized: 1. Identification of locations to be photographed 2. Selection of themes, outline and story boards 3. Selection and purchase of interesting existing photos of Danube Serbia 4. Production of new pictures 5. Selection, digitalisation and manipulation with Photoshop 6. Inclusion of some selected images in the main search engines in order to link Danube Serbia with those images KEY SUCCESS FACTORS The quality of the creative team in producing enticing and suggestive images on to reflect the spirit of the region and its opportunities Monitoring the outcome in terms of quality of each image and use thereof 93 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION HOW TO BENEFIT FROM THIS ACTION Product clubs and their members will have free access to a big part of the first class images of the region with appropriate themes for their communication material at no charge. This will be direct support to profesionalization of their design, promotional and sales efforts. In addition, images will be used by official investment promotion agencies – VIP and SIEPA, other national and provincial bodies – ministries and secretariats, as well as by National Tourism Organization of Serbia. Film bank DESCRIPTION OF THE ACTION A Film Bank represents the basic infrastructure for the production of advertising campaign and promotional videos and movies. A Film Bank is a file of approximately 50 highly emotional and exciting situations in Danbe Serbia, already classified in major themes. The Film bank should be split in 2 sections: One containing generic situations – activities, events, landscapes, heritage sites (30 shots) One containing product- and target-related shootings (20 shots). The film bank will be accessible on the web portal, under restricted access managed by tourism organisation. Parts of the film bank will also be uploaded to a YouTube Danube Serbia Official channel (in coordination with National Tourism Organization of Serbia), which should be created and managed by the in house online team. IMPLEMENTATION PROCESS BASICS The film bank production will require the accomplishment of following tasks: 1. Pre-production phase including theme and motive search. 2. Film script and technical script writing. 3. Logistical video production management. 4. Filming. 5. Post-production and edition of master. KEY SUCCESS FACTORS The quality of the creative team in producing enticing and suggestive films on Danube Serbia's most attractive spots and activities available for the discerning traveller Monitoring the outcome in terms of quality of each film and use thereof HOW TO BENEFIT FROM THIS ACTION Product clubs and their members will have free access to a big part of the first class videos of the country at no charge. In addition, videos will be available to official investment promotion agencies – VIP and SIEPA, other national and provincial bodies – ministries and secretariats, as well as by National Tourism Organization of Serbia. 94 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 2. Market research Improved marketing intelligence system which will start collecting updated and relevant information about the relevant market data across identified sectors (demand, supply, competition, intermediaries, etc.), as well as other significant data for development and promotion of the region as a whole or its products / services. From the demand point of view, up to 5 relevant source markets should be analysed in detail for each of the identified sectors. Main steps for market research: Define, in collaboration with Product clubs / clusters and main sector stakeholders, the objectives of the new Market Intelligence system: understand their needs and requirements, their priorities, their trusted sources of information, etc. Plan the researches to be undertaken - define knowledge objectives, choose research method (quantitative, qualitative, desk research, external sources to be consulted/ acquired, etc.), launch the tenders for research companies Conduct the researches and share online the results with the Product clubs / clusters, investment promotion agencies, relevant national and provincial institutions / bodies, as well as with relevant regional and local entities – regional chambers of commerce, regional development agencies and local economic development offices This activity should be coordinated by Serbian Chamber of Commerce. 3. Online team support As a part of Communication and Distribution Strategy, online visibility was marked as a conditio sine qua non in the modern world. In order to build and sustain desired reputation of Danube Serbia, it is important to manage its web content. Estabilishing an online team that will deal with challenges of digital environment is an essential task, if a message is to be properly communicated. This activity should be done in close cooperation with National Tourism Organization of Serbia. Having in mind that Product Strategy proposes establishing of relevant Product clubs / clusters, this task might be entrusted to one of the ICT clusters, but should be coordinated by Serbian Chamber of Commerce. 95 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Online team DESCRIPTION OF THE ACTION This is a top priority activity, given that the online team will be responsible for several key issues: Managing the web portal, both from content and outlook perspectives. This will be the major task, given that there is vast workload related to constantly managing the offer database Steering the online marketing actions across all markets in collaboration with selected agencies Managing the Social Media channels opened Managing the photo and film banks IMPLEMENTATION PROCESS BASICS This team will necessarily be composed of technicians / web masters / programmers and, preferably, of young people. They have a much closer insight to all web constraints, trends and main issues. Initial programming and set-up can be entrusted to one of the ICT clusters (product clubs). KEY SUCCESS FACTORS Hiring top notch professionals in each field required Providing latest technology in all aspects Offering excellent contract conditions for assuring continuity to a highly specialized staff 96 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION XII MANAGEMENT AND ACTION PLAN Sound territorial marketing strategies must build on the unique assets and resources in the region to build a framework for achieving economic prosperity and marketing that communicates to the relevant target groups / target audiences. This strategy contains inspirational objectives, as well as a set of associated proposals / actions for achieving the desired outcomes. The most successful strategies are community-based, with the ability to draw on the expertise and connections of other organizations to achieve the vision for prosperity. For that reason, the strategy was generated from a detailed assessment of the sectors' economic and social assets and connections, aiming to achieve the insights and consensus within the target sectors and with the local communities in the Danube Serbia region. Communities face new challenges in an economic development and international marketing context. These challenges are fundamentally altering the tactics that are being used as well as the goals and objectives that communities are aspiring to. Several broad economic trends will undoubtedly affect any community’s territorial marketing plans, regardless of their target markets or sectors, such as: • The continuing rise of knowledge-based industries that require new skill sets within the labour force, and the opportunities to source that talent from a more global catchment area. • The ongoing globalization of the economy and the need for more regional partnerships and collaborations to increase connectivity and available resources. • The increasing economic prominence of many of the worlds developing economies, creating new sources of outward FDI and new sources of competition for developed economies in attracting FDI. As it was repeatedly outlined, the main purpose of this strategy is to increase credibility and visibility of the Danube Serbia region, in order to become the place for exports of quality goods originating from Danube Serbia, to travel, to do business, to invest, to work, to learn and to live in. The aim of the Danube Serbia Region territorial marketing strategy is to convey the spirit of the region as somewhere that is attractive to invest, do business, visit, work or live in and to buy products from the region. The challenge is to find and point out relevant and inspiring point of differences and to keep the effective point of parity. Danube Serbia Region territorial marketing strategy is, in fact, a gathering together of an aggregate of assets and opportunities, directed at an audience whose needs have been identified and understood. It is a way to build competitive identity of the region. It is about the quality of life – the quest for livable, investible and visitable region. 97 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Since there is no formal jurisdiction that covers the geographical scope of the Danube Serbia defined with the task of elaboration of this strategy, during the interviews with relevant stakeholders, and as outcome of the workshops that were organized in the scope of elaboration of the Territorial Marketing Strategy for the Danube Region, stakeholders agreed that Serbian Chamber of Commerce should be the key, but not the only institution responsible for implementation of this strategy, especially having in mind focus on improving the business climate, setting the quality mix of goods and services and utilizing existing network of associate institutions and branches in the Danube Serbia region and abroad. The focus of the Strategy is in attracting FDIs, identifying new business opportunities and making Danube Serbia appealing as a heart of new Europe, having in mind its European prospect. During workshops that were organized in the scope of this project, stakeholders and experts identified Serbian Chamber of Commerce as a central entity that should articulate common vision and coordinate interests of various stakeholders. It has a tradition, infrastructure, favourable organizational structure and network of partners and associates that can ensure the tasks will be carried out professionaly. In its expected strategic reorientation to a service based organization, Serbian Chamber of Commerce, along with a network of regional chambers of commerce, provides a solid framework for the acitivities that are proposed with this Strategy. Within the organizational structure of Serbian Chamber of Commerce, there are relevant associations and centres that can support further elaboration of strategic recommendations and guidelines that are presented herein, especially considering that these are to be further developed through operational marketing and other development plans. In that respect, relevant associations and centres within Serbian Chamber of Commerce that can use recommendations of this strategy are following: Association of Agriculture, Food Industry, Forestry and Water Management; Association of Transport and Telecommunications; Association of Electronic Communications and Information Society; Association of Creative Industry; Entrepreneurs' Community; Centre for Small and Medium Sized Enterprises; Environmental Protection Centre; Quality Infrastucture Centre. In addition, Serbian Chamber of Commerce has two very important divisions that can support implementation of this Strategy: International Economic Relations Division – with Project Management Centre, Bilateral Cooperation Centre, Multilateral Cooperation Centre, Diaspora and Representative Offices Centre, and 98 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Education Division – education centre that is capable of organzing training for trainers and capacity buliding sessions. In addition, it is proposed to form a group for coordination that will work on harmonizing the missions and interests of various regional and national stakeholders, especially for the purpose of implementation of branding and communication and distribution strategies – Danube Serbia Brand Committee. This body should include relevant representatives of business community (through Serbian Chamber of Commerce and regional chambers of commerce), as well as representatives of relevant minitries and provincial secretariats in charge of trade, tourism, economy, agriculture and culture and export promotion agencies. This body should coordinate activities and distribute tasks, but will engage expert support, especially in branding and PR efforts. Activity should be initiated and managed by Serbian Chamber of Commerce, and requires formal support from the both National and Provincial Governments. 99 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION ACTION PLAN In the following tables basic framework to support implementation of this Strategy is presented, with the focus on FDI attraction activities, in addition to the identified leading marketing strategies. As it was already mentioned, all proposed actions need to be further elaborated through separate projects and operational plans; at the level of this Strategy these should serve merely as an indication for relevant stakeholders. Action set 1 - Ensure requirements / prerequisites for achieving quality Key Elements Priority Resources Lead Partners Agriculture: Agriculture and rural development are one of the target segments of this strategy. As such, it is important part of the overall identity of Danube Serbia and it is important to allign its delivery according to the potentials and expected standards of quality to be able to target relevant investors' and customer markets. Having in mind key value propositions defined, following activities are to be implemented: Clarification of role of different stakeholders – who is doing what; Provide incentives and technical assistance for production of high value-added products Provide incentives and technical assistance for production of organic products Technical assistance in professional promotion and marketing / protection of geographical origin / quality labelling Support traditional products and wine making – ensure sustainable quality of these products in longterm Identify opportunities to invest in production of higher Project manager for agriculture / Serbian Chamber of Commerce High Support from donors' programmes and available budget funds, according to relevant project proposals Serbian Chamber of Commerce / setting standards and elaborating action plan Ministry of Agriculture, Provincial Secretariat, Regional Chambers of Commerce, Regional Development Agencies, Local Economic Development Offices 100 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION processing phases Promote production of biomass and use of crops waste Support establishment of Local Action Groups and product clubs / clusters Key Elements Priority Resources Lead Partners Transport: Following the vision of Danube Serbia to become "transport hub" of the wider region, these key interventions should be considered: Investments in new transport infrastructure – railways, waterways and intermodal transport connecting main routes and corridors on the crossings of two European macro-regions Reconstruction and rehabilitation of existing transport infrastructure Harmonization of regulation, capacity building, raising competences Provide an open market of transport services Implement soft measures to reduce waiting times on border crossings, time losses at customs and other controls and procedures in foreign trade Provide favourable conditions to attract transit trafic Key Elements Ministry of Trade, Ministry of Finance High Funding from National / Provincial Budgets, International financial institutions, bilateral loans Government / Ministry of Infrastructure Provincial secretariats, cities and municipalities Chamber of Commerce, Professional Associations Priority Resources Lead Partners Serbian Chamber of Commerce / Universities Regional Chambers of Commerce, Provincial authorities, city and local economic Small and Medium Enterprises Small and medium enterprises provide a chance for a thorough change of profile of Danube Serbia. In order to make a shift in this segment toward high value-added businesses, it is recommended to implement following activities: Develop human resources and increase motivation of target groups, especially young entrepreneurs through High Project based financing / technical assistance from existing EU funded projects / support from National and 101 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION raising awareness and training programmes (see next chapter) Provide support through research and development activities Provide access to venture capital Support establishment of product clubs / clusters (ICT, new/ green technologies, creative industries hubs) Key Elements Environment: Green economy and investments into environment can become one of the strategic directions for the development of the Danube Serbia region economy in future. It is a big opportunity for new employment and drawing of financial resources from pre accession funds of the EU with the aim to build the sustainable system of environment protection. Among others, following activities should be taken into consideration: Support to production of green energy Support to green technologies / efficient use of materials and energy efficiency Support to sustainable waste management and recycling Rehabilitation of damaged areas and environmental protection measures – allignment with European standards and their implementation Key Elements Culture: Culture with its products and services might be a catalytic force within local and regional economies, not so much as a discrete sector but as a form of “glue” that binds together existing cultural, service, transport, tourism and supply industries. In addition, it can significantly "shape" the image and reputation Provincial budgets / contributions from participants Priority Resources development offices Lead Partners Ministry / provincial secretariat in charge of energy, Serbian Chamber of Commerce, professional associations and civil society organizations High National and Provincial budgets/ EU funding Ministry / provincial secretariat in charge of environmental protection Priority Resources Lead Partners Project based financing / Serbian Chamber of Provincial 102 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION of Danube Serbia as a true European region. These activities should start in main urban aglomerations and will be spreaded into other areas of Danube Serbia. Following actions require efficient reaction: Support creative industries hubs to enhance innovations, new business models, access to relevant markets, etc. Support high-budget films production Support application of Belgrade and Novi Sad for European Capital of Culture Support internationally recognized events Support production of handicrafts Support cultural routes as a means of Danube Serbia promotion Commerce / Cities of Belgrade and Novi Sad / Ministry of Culture Secretariats, export promotion agencies, High National and Provincial Budgets / Budgets of cities of Belgrade and Novi Sad / EU funded technical assistance programmes Priority Resources Lead Partners High Full-time Manager (to become brand manager of Danube Serbia) Action set 2 – Building Administrative Capacity Key Elements Develop dedicated resources in Serbian Chamber of Commerce to support international marketing activities Establish a dedicated Manager position focused on international marketing and development Form a small team of economic development and communications staff on a semi-regular basis to provide strategic direction on international marketing activities Provide a pool of financial resources to support international marketing initiatives, including print/electronic materials, communications, web sites, and travel Serbian Chamber of Commerce Annual funding from Serbian Chamber of Commerce own Investment and Export promotion agencies (SIEPA and VIP), Ministry of Trade, Ministry of Economy, Relevant Provincial Secretariats, Cities of 103 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION funds with technical and financial support from export promotion agencies – SIEPA and VIP Build a network of partners to undertake joint marketing initiatives, such as sector- specific efforts, or materials to support work with local multinationals in efforts to attract additional business lines from within their corporate structures Key Elements Priority Resources Belgrade and Novi Sad Lead Partners Building web presence of Danube Serbia with new marketing materials – gaining globally recognized identity Support creation of web-based microsites (one to six page sites) separate from the Serbian Chamber of Commerce / SIEPA / VIP websites, focused on general international marketing and promotion of Danube Serbia (consider the overarching value proposition) and Danube Serbia’s positioning in the target sectors (e.g. - one site for each target sector) Buy / rent more promotional internet domains for web-based marketing initiatives (microsites or the Serbian Chamber of Commerce website) Design short (two to four pages) visually appealing print materials for each target sector that build on the sector-specific value propositions and offer content relevant to potential target markets. Materials should be developed in digital “print on demand” format to minimize costs associated with frequent updates. Start with social media activities and presence, research best practices in Web 2.0 international engagement and marketing activities. High Portion of Annual funding from Serbian Chamber of Commerce own funds with technical and financial support from export promotion agencies – SIEPA and VIP Serbian Chamber of Commerce Investment and Export promotion agencies (SIEPA and VIP), Ministry of Trade, Ministry of Economy, Relevant Provincial Secretariats, Cities of Belgrade and Novi Sad 104 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Action set 3 – Building Community Capacity Key Elements Priority Resources Lead Partners Serbian Chamber of Commerce Investment and Export promotion agencies (SIEPA and VIP), Ministry of Trade, Ministry of Economy, Relevant Provincial Secretariats, Cities of Belgrade and Novi Sad Create network with local multinational companies, export-oriented businesses and entrepreneurs to create connections with relevant markets Create an inventory of export-oriented small businesses headquartered in Danube Serbia with direct and established links to international markets and partner firms Establish connections with national business organizations (e.g. American, German, Austrian, Japanese, French chambers of commerce; Foreign Investors Council) to develop specific marketing messages and tactics to best reach their members and the business connections of their members. During Danube Business Forum, organize an annual “International Investment” summit focused on Danube Serbia's place in the European and global economy, aimed at the local business community to disseminate information about the previous year’s successes and the coming year’s activities. Key external stakeholders should be invited to this event, including provincial and national trade officials, and representatives of foreign trade offices High Engagement of Marketing Manager with support of expert staff from Associations and divisions of Serbian Chamber of Commerrce To become regular activity financed from annual budget Professional associations and chambers of commerce 105 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Key Elements Priority Resources Medium Coordinated by Marketing Manager Lead Partners Serbian Chamber of Commerce / regional chambers of commerce Cities and municipalities along the Danube Utilize connections with local cultural organizations to create new connections with international markets related to Danube Serbia's diverse population base Create network of local cultural and national organizations representing Danube Serbia's cultural and national communities Start partnership programme to engage these communities and consult on strategic marketing directions and connections with their connections in their respective home countries Establish a clear protocol between the State / Province, municipalities and national communities related to incoming business and trade missions, cultural representations and delegations. This protocol should indicate who leads community response and how these communities will benefit from joint engagement in attracting potential investors and business developers from their home countries Budgets of Cities and Municipalities / support from National and Provincial budgets 106 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Action set 4 – Targeting Strategic Sectors and Relevant Markets Key Elements Priority Resources Lead Partners Consolidate and leverage Danube Serbia's target sectors strengths to access new markets, growth sectors and current flobal FDI opportunities Build relationships with key multinational brands to promote the advantages of Danube Serbia as a region to consider for additional business units Work with all levels of government to establish lead generation strategies focused on key growth subsectors Organize presence at key tradeshows and outreach activities related to the target sectors Establish partnerships with economic diplomatic missions and consulates of key international markets related to target sectors Key Elements Marketing Manager High Serbian Chamber of Commerce Annual funding from Serbian Chamber of Commerce own funds with technical and financial support from export promotion agencies – SIEPA and VIP Priority Resources Investment and Export promotion agencies (SIEPA and VIP), Ministry of Trade, Ministry of Economy, Relevant Provincial Secretariats, Cities of Belgrade and Novi Sad Lead Partners Serbian Chamber of Commerce / regional chambers of commerce City of Belgrade, ministry of infrastructure and transport, Belgrade Airport, Railways of Serbia, Roads of Market Danube Serbia as a strategic logistical hub in this part of Europe Work with key sector companies to understand key multimodal transportation requirements and advantages Market the City of Belgrade as a key exit and entry point for logistics and goods in the region stressing the intersection of ICT and logistics opportunities. Expand to other parts of Danube Serbia using "hub and spoke" model Establish links to key European supply chain and trade Low Coordinated by Marketing Manager 107 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION initiatives to promote Danube Serbia's potential in developing multimodal logistics companies Key Elements Serbia Priority Resources Low Coordinated by Marketing Manager Lead Partners Serbian Chamber of Commerce / regional chambers of commerce Cities and municipalities along the Danube Use traditional manufacturing strenghts of Danube Serbia and establish the region as a key location for advanced manufacturing technologies Work with key local industry to understand the elements of the value proposition that will most appeal to technology-based manufacturers Establish marketing materials that build on the advantages of environmental policies and incentives relevant to green and technology-based manufacturers Consult key multinational / regional companies in the target sectors to build the profile of Danube Serbia as a location for additional investment Budgets of Cities and Municipalities / support from National and Provincial budgets 108 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION CROSS CUTTING ISSUES Apart from precisely defined scope of the key areas to tackle (agriculture, transport, environment, SME development and culture) with the Territorial Marketing Strategy (Strategy) for the Danube Serbia Region, the range of imperative cross cutting issues needs to be addressed in addition. Highlighted cross cutting issues requires special attention and needs to be an inevitable ingredient of proposed strategies and activities, and in operational work of all involved stakeholders. These issues represent the horizontal aspects of the Strategy and caontribute to its implementation in a responsible manner. The crucial thing in process of planning and further implementation of the Strategy, it to build relevant stakeholders' awareness regarding the importance of sustainable behavior (local, environment and financial sustainability of defined areas). It is crucial to have all the stakeholders aware of the issues that underpin sustainable development and responsible operations, most important of them being environmental sustainability, gender mainstreaming and minorities' inclusion. These issues are necessarily taken into consideration by each proposed step, as well as integrated in the overall management of the plan in a reliable and rational way. Environmental sustainability Environmental sustainability is focused on the preservation of natural and environmental settings in which local business and economy is conduct. No action prescribed by the Strategy may expose environment with the negative effects or threaten the preservation of the already limited natural resources. The Strategy, within provided solutions and tactics, pays attention to the issue of environment and further sustainable development. All the activities will necessarily imply strict accordance with nature preservation regulations, as well as the processes that are not obligatory by the relevant laws and acts, but are stimulating sustainable environment, such as biomass utilization, recycling, green waste water treatment etc, and especially in the field of agriculture and transport, where certain effects of resource exploitation and infrastructure building may cause impacts on the environment. In addition, preservation of environment and usage of clean energy from natural sources or from recycling materials, is a base for SME development on a local level. Minorities inclusion Besides the fact that the Strategy pays attention to the issue of minorities inclusion in the activities, this aspect is especially important because the existence of national and cultural diversity, with over 12 nations habituating the Danube Serbia region, makes it a propulsive and business culture diverse region. All covered sectors (agriculture, transport, environment, SME development and culture) enable all of the minority groups to freely to use their customs and way 109 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION of doing business. People, companies, SMEs and entities from the minority groups are encouraged to participate in all the activities implied by the Strategy. All the Strategy tactics are designed to stimulate minorities inclusion and contribute to their better positioning in the Region. Moreover, the minorities' culture and heritage will remain and the visibility will be supported. Having in mind that culture is one of the key areas tackled in the Strategy, and that culture is a part or influences other segments, it is obvious that there is no limitation in regards to minorities communication expected. Gender equality Gender sensitivity is a characteristic of every developed community and society, so paving the road for the Danube Serbia Region towards an internationally recognised territory is one of the prerequisites for its good image and viable development. Gender issues need to be tackled within each and every tactic and activity, ranging from supporting female business initiatives or preserving their arts and crafts to encouraging their employment, self-employment and education. Equal opportunities principle and promotion of women’s participation in the all spheres are the area of special interest to the Territorial Marketing Strategy of the Danube Serbia region. Agriculture and SMEs are presenting the dominant major source of income in the rural areas of Danube region in Serbia, and the women are seen to have an important role. Women are also dominant workforce in areas of culture and environment, while in the transport they are not visible or compensated enough. The Strategy should further women employment and raising the standards of women working in the key areas. The Strategy implementation will enable full inclusion of women into the development of Serbia Danube as a business territory. With this cross-cutting issue, all the groups of tactics have a similar role - to involve women in their realisation, be it the product, sale or infrastructure. The skills the women of the region possess need to be validated and made visible, but also stimulated for further development. Strategy further stimulates the issues of women employment, women entrepreneurship, capacity building - lifelong learning, adult learning, representation and visibility), as well as demonstrating female skills, arts, crafts, that altogether contribute to selling the destination. Women can be taught to interpret the regional heritage, even stimulated to take the roles of local guides. All of the cross cutting issues of the Strategy for the Danube Serbia Region will be visible throughout the whole process. They will be given special attention in marketing, promotion and campaigns, as they are the fields that require special social responsibility and consideration by all the involved stakeholders. 110 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION COMPETITIVENESS PROGRAMMES Having in mind broad and diverse coverage of sectors that are in focus of this Strategy, as well as numerous target gropus / audiences that are to be involved, we propose to structure and implement three programmes to raise competitiveness of Danube Serbia and to provide solid grounds for reaching main strategic marketing goals, ensuring quality in the mix of goods and services offered to relevant markets in the first place. These programmes are proposed to sensitize residents and local communities, representatives of small and medium enterprises, local authorities, civil society organizations, business representatives, as key target groups that will be responsible for delivering the value for the relevant markets, as well as for increasing of overall appeal of Danube Serbia. The programmes presented herein can be understood as measures of internal marketing, so that all involved stakeholders at all levels understand the necessity of coordinating their activities in the context of improving the business environment in the Danube Serbia region (and beyond). 1. DANUBE SERBIA AWARENESS PROGRAMME Concept This programme presupposes awareness raising initiatives for residents and local communities on the importance and benefits of the new approach to Danube Serbia economic development, based on its potentials in target sectors: agriculture, transport, environment, culture and SME development. This programme should start as soon as possible and carry on continuously. Its focus should be twofold: this programme promotes increases the awareness of importance of the relevant sectors in Danube Serbia economy in general, and it should contribute to the improved image of the region as a whole, as well as it raises awareness on the increased job opportunities in respective sectors for local communities along the Danube. another very important aspect of this programme is related to the necessity to achieve quality in products and services offered to the relevant markets The main goal of the programme is to develop and promote the Danube Serbia umbrella brand and to communicate emotional benefits of the region to be recognized as unique 111 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION selling propositions for the relevant markets of Danube Serbia products and services. This programme is for guidelines purposes only – a detailed project must be done prior to start of the implementation of this programme. Key elements The key purpose of the awareness programme is to enhance local communities' awareness and understanding on the overall economic development of Danube Serbia; to introduce the positive impacts of activities in the target sectors to local residents for further enhancing the quality of available resources in Danube Serbia and constructing a business-friendly environment so as to enhance the overall satisfaction and to create a ‘feeling at home’ experience to all target groups. As this is a long-term project, the objective for the next few years (until 2017) is to start with awareness building on proposed strategies and measures within Territorial Marketing Plan and its further elaboration through operational marketing plans and activities. With this in mind, the awareness campaigns that should be introduced as a part of this campaign are: 1. Danube Serbia Month / Danube Day (June 29th) – targeted at the small and medium enterprises, local authorities, and civil society organizations. It will take place every year at the same time and it should have a different theme every year: natural heritage – assets and values; cultural heritage – assets and values; how to start a business and provide funding for a business idea; small-scale agricultural production – satisfying needs of sensitive markets; soft mobility along the Danube, etc. The local communities of Danube Serbia are ‘educated’ about the importance of relevant sectors for their wellbeing and the link between different stakeholders, culture and the economy. A variety of activities can be organised during this month, and some of them can be: Danube evenings – the participation of communities in the events with an interactive section, where representatives of SME's, local authorities and civil society organizations can be rewarded for their discussions and ideas, answering some questions about relevant topics on the main subject of the month, etc. These events can be organised at several cities / municipalities along the Danube, mobilizing participation of local communities. Radio Quizzes – throughout the Danube month organise radio quizzes on different local radio stations, about cultural and natural heritage of the communities, main economic activities, agricultural products and related facts. Winners receive rewards (free T-shirts and similar). This activity is closely related to tourism awareness programme and should be conducted in close coordination. School visits – a team of ‘Danube Serbia promoters’ (a team that is organized by Serbian Chamber of Commerce and relevant cluster / product club organises visits to secondary schools with an aim to introduce topics related to the respective subject of the Danube Serbia Month with students – culture, nature, agriculture, creative industries, ICT development, career opportunities, etc. ) 2. Danube Serbia business forum – Serbian Chamber of Commerce with the network of 112 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION local partners can organize business forum each year, with relevant topics. The Forum will feature roundtables on: role of agriculture in the economic development of Danube Serbia; impact of transport and telecommunication infrastructure and the economy development of Danube Serbia; small businesses opportunities in Danube Serbia; sustainable use of resources in Danube Serbia; promotion of investment opportunities in Danube Serbia – system and challenges, etc. In making it a memorable and exemplary event, eminent private and public individuals should be invited to speak at the forum. 3. Champions of the Danube – each year a most successful representative of the respective sector is elected to become a champion of its local community to compete with colleagues from other cities / municipalities from Danube Serbia with the business idea, innovation, new concept of production, or contribution to preservation of natural and cultural heritage in order to become the Champion of the Danube in the respective field. This activity is closely related to promotion of quality and developing new standards and procedures in doing business. In that way, this activity will contribute to increasing skills of the workforce in target segments and will contribute to reputation of quality labelling efforts. Business / management model o Publicly financed project / supported from donors' funds, starting with the structuring of the awareness programme. Team of professionals from the Serbian Chamber of Commerce and its respective associations / centres, together with product clubs (to be established as proposed with this Strategy in the latter stage) will structure the whole programme, making a detailed plan for awareness activities for each year, and for a 3-5 year period. o The team will work closely with industry professionals, government officials responsible for development of target sectors, and will engage these individuals into various activities within the programme o Participation fees can be applied for Danube Serbia business forum 113 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 2. DANUBE SERBIA QUALITY PROGRAMME Project reasoning One of the main marketing goals of the Strategy is to ensure the quality in the mix of offered products and services. Product strategy proposes that quality should be in the focus of future activities, considering establishing of respective product clubs / clusters that will ensure that products, services and actions delivered should be based on solid standards of quality with a system of monitoring and quality assurance. In that respect, it is important to ensure that the right portfolio of products and servies ultimately get the Danube Serbia brand – quality label. Since quality improvement is a long term process, quick actions must be done instantly. Namely, Danube Serbia should show which objects and partners already now offer competitive and quality products and services to relevant markets, even before product clubs / clusters are established. Concept Danube Serbia Quality label presupposes structuring and implementing a quality label scheme, which is based on the international standards, especially designed for producers and service providers that achieved significant market success. In that respect, Danube Serbia quality label should be addressed at all components of the value chain that contribute to delivery of quality products and services in Danube Serbia – production of seeds and raw materials, traditional agricultural production, food industry, accommodation facilities and restaurants (in coordination with tourism marketing), carriers, natural and cultural heritage sites, events, consumers products, innovations, etc. Evaluation criteria include both ‘soft’ (quality of offer, level of service, etc.) and ‘hard’ elements (standard of facilities / safety, functionality of spaces, technology applied, etc.) Participation in the Danube Serbia Quality programme should be promoted via various benefits for members: Quality label sent to each member (window sticker and indoor area certificate, online logo for website, digital logo for documents, etc.) Free and / or priority listings in official publications or in sections of publications, depending on target audience and member product or service; Priority and preferential rates on advertising in brochures (if and where applicable); Access to cost-shared programs, including cooperative advertising and promotions (if available); Priority participation in activities such as study trips, fairs, conventions, conferences and exhibitions; Exclusive members-only representation by Serbian Chamber of Commerce and its partners in selling efforts; Display of member promotional leaflets at information centres and points (free display space available per member - up to A4 dimensions or similarly prescribed 114 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION by Serbian Chamber of Commerce / VIP / SIEPA); Information on confirmed MICE events, fair-trade shows, and incentive tours for members Consulting / advisory services provided by Serbian Chamber of Commerce; Contact list of clients met at promotional activities organized by Serbian Chamber of Commerce / VIP / SIEPA; Key elements Quality assessment is being performed through following methodology. 1. What is being assessed? Implementation of international standards of quality in the respective field, customer service, available information about the product / service, avaliable facilities, etc. Different weights are applied to each criteria, where quality standards can have no less than 50% of weighting. 2. How is the assessment is performed? Assessing team visiting the facility will have assessment sheets where grades are being given based on situation and previous results of assessment (mail inquires, internet search, etc.). Each category and subcategory has two sets of criteria: a. minimum requirements – if not met, quality label cannot be given. Only after all minimum requirements are met, label is given. b. achieved score – based on additional criteria and grading guidelines. Assessment is performed based on subjective experience and feeling of assessing team – thus relevant expertise of members of assessing team is needed. In the first stage, assessing team can be elected from the representatives of relevant associations in Serbian Chamber of Commerce together with professionals from universities and other professional associations; once product clubs / clusters are established, this activity will be their responsibility – to find and reward the best of themselves. 3. What are the assessment sheets? Assessment sheets are quality assessment factsheets where assessing team is marking achieved items/accomplishments. They should contain details on sale and purchase of the entity, its production, technology, quality standards implemented, mechanisms for customer protection / customer satisfaction and available facilities. 4. Calculating weighted score After assessing team has assessed all grading sheets, final calculation of weighted score and total score / percentage is being done. Special scorecard is created for this purpose as follows. 115 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Achieved score should be written for each subcategory, ranging from 1 to 5 according to previously defined guidelines for achieved scores. Next step is multiplying achieved score (1-5) with weights and in that way weighted score is being calculated. All weighted scores are then being summed up in “Total score” row. Based on all weighted scores, subject will have up to maximum, for instance, 500 points. Based on total score, percentage is being calculated (total score / 500) and written in form of percentage. Based on percentages, quality scores are given, as follows: 0-50% -> quality assessment failed 50-69% -> “good” quality label 70-89% -> “very good” quality label 90-100% -> “excellent” quality label Of course, once Product clubs / clusters are formed, with relevant support from professional associations and universities that will be included in the programme, adjustments and model improvements are suggested in order to tailor-made the grading system according to specific quality improvement goals (add/remove graded items according to quality policy goals – more items relating to specific quality indicators). Business / management model Programme is performed by assessment teams Operational specifics 1. Yearly licensing should be performed for the forthcoming year 2. Licensing is performed by assessment teams in relevant fields – based on application from received from interested entity 3. If the application is denied (not full set of documents required for application), stakeholder should be informed on documents missing in order to complete application 4. After receiving the application, assessment team performs study visit to assess conditions of the business subject 5. Followed by field assessment, final grading is performed and decision on quality label is being derived – approved or denied 6. Labelling is performed based on regular time schedule (for instance applications during spring, early summer; assessments during late summer and autumn) 7. Participation in the programme is subject to charge (there are various approaches on pricing – according to yearly income, according to type of business, according to number of employees, or similar) 8. Participation is open for all stakeholders in the respective sectors 116 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION 3. TRAINING PROGRAMMES FOR PROFESSIONALS IN TARGET SECTORS Project reasoning In the context of ensuring the quality in the mix of offered products and services, this is one of the main support programmes that should contribute to increasing skills of the workforce in target segments – agriculture, transport, environment, culture and SME development. Knowledge, skills and capabilities of the workforce are essential for future success of Danube Serbia as a prominent European region. This is even more important considering that marketing of the particular sectors depend on direct relationship between a producer / service provider and customer. Danube Serbia needs to improve the quality of its products and services, in the main sectors that are in focus of this Strategy, as well as in related ones. To achieve this aim, a training program for professionals is proposed. Concept and key elements Having a diverse coverage of the Strategy – agriculture, transport, environment, culture and SME development, designing of concept of trainings is a challenging task. However, all training programmes have similar approach, with the aim of acieving delivery of quality products and services, which is conditio sine qua non for successful branding and market success. All of the sectors are unique in their processes and delivery, but all of them require appropriate technical and management knowledge and skills. Thus, training programmes should be designed to result with deep understanding and adoption of necessary knowledge and skills on following topics: 1. International quality standards 2. Safety protocols and standards (especially in agricultural and food production, as well as in sector of transport) 3. Relevant market tendencies and priority markets for target sectors 4. Innovations and technology 5. Efficient and sustainable use, protection and preservation of available resources (lands, environment, cultural heritage) 6. Funding your project / buisiness idea (with special attention to available EU funding) 7. Technical skills – sales, communication, language skills, etc. The training program for professionals in service sector aim to train people who already have a professional life. Each training programme should be developed based on following criteria: General field of training 117 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION Objectives and priority themes: skills to be learned thanks to the training Type of training: duration, method, number of people… To be noticed: Training action is an educational process whereby people work and learn together by tackling real issues and reflecting on their actions. Learners acquire knowledge through actual actions and practice rather than through traditional instruction. Some training requires being in small groups in order to make participants take an active part: training action, role-playing, debriefing about personal experience etc. Language skills training are a mix between interactive training (in face to face or by phone) and auto training (on the internet). Business / management model We believe that the training of professionals, in the perspective of Danube Serbia territorial marketing is a program of wider / national interest. Indeed, the efficiency and quality of transition to the desired position will depend of this program. Thus, we believe that the State should have a very strong incentive policy for the development of this programme. But it has to involve private sector that will take advantage of training the employees. The rate of participation from the private sector has to be defined by the State and the Programme should be implemented by Centre for Education of Serbian Chamber of Commerce in cooperation with professional associations and universities, as well as regional chambers of commerce / local economic development offices – to be able to identify prospective attentants of training courses and adjust programs to their real needs and expectations. To provide sustainability, training programme(s) will be a responsibility of product clubs / clusters, once they are established; this first round of sessions should be used to provide additional incentives for producers / service providers to join and establish product clubs. Operational specifics The first step in implementation of training programme for professionals is the creation of a project team, that will include relevant representatives from the Ministry of Economy, Ministry of Agriculture, Serbian Chamber of Commerce, SIEPA, VIP, Ministry of Labour and relevant professional associations, as well as associations of employers in order to fine tune the programme and define the political willingness regarding financing. This project team will be in charge of: Defining political willingness: Training for professionals is an urgent necessity, but it has to be confirmed by clear political objectives, that will be translated in terms of number of peoples to be trained by 2017, priority segments, sources of financing etc. Making private sector aware of the necessity of training and sharing their experience, needs etc. A participative method is required for two reasons: in order to have a pedagogical approach and to convince private sector that training is crucial for 118 TERRITORIAL MARKETING STRATEGY DANUBE SERBIA REGION the sustainability and future economic growth in Danube Serbia, as well as to obtain appropriate financing, including donors' support. Fine-tuning the programme - at this stage of the project, advice from professional trainers is needed in order to : Confirm the general topics that have been recommended to be taught Adjust the content and objectives, regarding to the available financing means Adjust the method / type of training regarding to the objectives Think about priority segments to be trained Looking for qualified trainers. It is required to launch a bid based on very strict terms of reference. Indeed, it is very important to hire very qualified trainers so that the programme in successful. Launching of registration: Involvement in training process in based on volunteering. Companies and employees can register online. Then, they receive a notification. If there is too much registration, training is provided regarding to the date of registration and recommendations provided by local economic development offices and / or regional chambers of commerce. Proceeding of training session: During the first sessions, it would be required that a member of the project team attends in order to ask for adjustment in the content and the method if necessary. At the end of each session, trainer has to provide participants with an assessment form. 119