The Concept of Place Marketing - Research Paper Example

Place Marketing Introduction: Today the importance of place marketing has grown with the introduction of the managerial approaches like place branding city branding etc. (Place marketing 2009). Place marketing can be defined as, “Marketing activity intended to promote an awareness, and favourable opinion, of a particular place or region.” (Definition of place marketing, 2009). “Place marketing means designing a place to satisfy the needs of its target markets. It succeeds when citizens and businesses are pleased with their community, and the expectations of visitors and investors are met.” (Rainisto 2003, p.13). The concept of place marketing has emerged due to the structural, economical and political, and managerial changes in the industrial worlds. Since 1970s global industries have witnessed changes such as de-industrialisation, growth of service and private sector, globalisation in the areas of production, marketing and distribution, increased competition etc. Globalisation initially intensified the competition among the companies. Then each country competed with each other to attract the business houses. Later cities entered the scene which intensified inter city competition. As a result, city governments launched several urban development programmes for the development with an aim to attract more investment inflow to the city. As per Harvey, (1989), these efforts and proactive policies are referred as ‘urban entrepreneurialism’. (Course identification). This idea leads to the development of the concept of ‘re-invented cities’ which focuses on the city promotion and marketing. This concept originally came from the privatisation concept which was introduced in US in 1970s. Then it came to UK and other parts of the world. “City marketing entails the various ways in which public and private agencies-local authorities and entrepreneurs, often working collaboratively-strive to sell the image of a particular geographically defined place, usually a town or city, so as to make it attractive to economic enterprises, to tourists and even to inhabitants of that place.” (Course identification). Before the introduction of the place marketing, place selling is closely connected with promotion. Place selling is the main structure of promoting locations. Today place marketing has an important role in the economic development strategy, place development etc. and it faces competition with each other. The main reason of the competition is the absence of skilled marketing abilities. To compete successfully places must introduce a real marketing approach. The place competition when spread all over the country suggests to develop new capabilities to survive in the competition. The success of place marketing depends upon the ability to create a centre of attention to enterprises, tourists, and other institutions and events. Marketers require new thoughts and better suggestions about how to control the world wide competition between the locations. Place marketing – a general overview: Place marketing is an important tool in economical, social and political development of cities and regions. In strategic management and urban management, place marketing plays a very important role. In place marketing the term “place” is described as any kind of place such as city, city region, community, area, nation etc. Place marketing, include variety of knowledge but the private or public organizations deliberately introduce place logic. It makes it possible to consider places in competition and assistance with each other. The important point is that this competition between places has increased because of globalization and increased transferring of goods from one place to another place. Thus place marketing plays very important role in our economy. Place marketing is classified into two types. They are practice oriented part and theoritical –normative part. Practice oriented part is the transfer of towns identities, compared to the industrial identity and images to the post industrial identity and images. Marketing strategy is connected with the communicative strategies like developing the images, enhancing report and branding. The theoretical normative part consists of the relation between business and marketing with the role to help the business through the production of theories and other techniques of development of the business. The importance while applying the place marketing is that, firstly find out the SWOT analysis. It is the good starting for the marketing .SWOT analysis explains that strength, weakness, opportunities and threats. Then make clear communication between internal and external factors. Thirdly provide good images better than bad one. The city chosen is London from UK for the case study because London has high background of place marketing practices. Overview of London: London is the capital of United Kingdom which covers over 620 square miles. It is the most populated city having over 7.5 million residents with 4800 people per square kilometre. According to report of the Office for National Statistics (ONS), London is treated stronger than other regions in United Kingdom. London is comprised of 33 districts in which 32 are borough and a central district called City of London. Each district will fall under one of the five categories, viz: central, north, south, east and west London. Each zone has distinct characteristics as discussed below: Central Zone: It comprises the City of London and this area is the centre of financial and professional service firms. It contributes nearly half of the business in London and it is the main attraction for the tourism, leisure and entertainment business. North: It is the centre of immigrant people and it has a distinct characteristics compared to other zones. Even though it is known for manufacturing, logistics, and distribution, its business possibilities are yet to be tapped. It also builds innovative business clusters like science cluster in Innova Park, which differ from the traditional clusters. South: It is one of the most attractive and competitive business locations in London. That is why most of the international companies such as Nestle, AIG, Bank of America, PepsiCo selected this region as their headquarters. Having high-tech infrastructure and facilities it is regarded as the investment friendly place. East: It is the fastest growing region in Europe itself and therefore it also has the largest urban renewal program in Europe. Its main facility is its connection with other European destinations. It includes both residential and commercial neighbourhood and having a long range of industries in manufacturing, R&D, and logistics. West: It offers distinct business opportunities with the concentration of high technology industries such as IBM, GlaxoSmithKline, Diageo etc. Due to the presence of globally renowned Heathrow International Airport there are so many industries such as hospitality and service firms thriving around the airport. It is also becoming the hub for the media and entertainment business. The upcoming project of Terminal 5, which will connect 30 million passengers with the city, will be giving more boost to the developmental activity of West London. Business overview of London: London comprises a large portion of UK’s GDP and it is considered as the major business and commerce centre with numerous banks, investment centres, stock exchanges, insurance etc. Due to the relationship with US and Asian countries, there was a shift toward service based economy by the city. It is considered as the top industry with about 85% employment. Media distribution industry holds the second position and most of the media companies’ headquarters is in London. Among the biggest ports London has a valuable place and it makes the city a major cargo transportation hub. Each year million tonnes of cargo are handled. Tourism is the other industry which employs millions of workers. (London- the most symbolic city of the world). The average weekly income of London is 30 per cent higher than the national average of about £766. (News release 2007). Also the unemployment rate is high. One significant thing is that Londoners earn more than the UK average as they are self employed than people as a whole in UK. The GDP growth of London is of 3.9% during 2006 which is higher than the UK economy as a whole. Turnover, productivity and profit London has the higher Gross Value Added per head, household income per head and average earnings as compared to other UK regions and is treated as the fastest growing region. “29% of businesses believed that productivity had increased at their establishment, with 64% stating that it had stayed the same. Only a minority (7%) believed that it had decreased. 31% of businesses believed that profitability had increased, whilst 46% thought that it had stayed the same. Just less than a quarter (24%) stated that it had decreased. Businesses in some sectors (notably Manufacturing and Publishing) were more likely to state that turnover, productivity and profits were static or declining. Different factors affect different sectors. For example, long term economic restructuring is a key influence on Manufacturing, whilst Publishing, which is heavily dependent on advertising revenues which are currently depressed, is suffering because of the particular stage of the economic cycle. 39% of businesses have seen their turnover increase over the last 12 months; with 39% stating that it has stayed the same and 22% that it has declined.” (Executive summary of the London annual business survey 2003 2003, p.3). Changes in London economy: London is considered as the key source of growth of UK economy due to the following experiences. London employment compared with UK: The statistics shows that London employs about 15% of the total UK. In the past most of the workers were employed in the manufacturing concerns and London manufactured about one seventh of UK. Business overview of UK: It is the world’s fourth largest economy.  Year Unemployment Rate Annual Inflation Rate* GDP (million)  2002 5.3% 1.3% £1,484,822  2003 5.2% 1.4% £1,572,651  2004 4.9% 1.3% £ 1,665,543  2005 5.0% 2.1% £ 1,735,411  2006 5.6% 2.3% £ 1,827,732  2007 5.5% 2.3% £ 1,502,988 (British economy and business practices 2009). U.S. Exports to and Imports from the UK  Year Exports to UK (million) Imports from UK (million)  2002 $40,714 £ 28,379.6  2003 $33,204 £27,951.5  2004 $33,827 £ 29,358.5  2005 $36,000 £31,744.5  2006 $45,393 £ 36,659.2  2007 $50,229 $56,858  2008 $33,976 $34,764 (British economy and business practices 2009). (Montgomery). Key challenges facing the business enterprises in London are as follows: Cultural challenges: London city is described as a city of contrasts. Described as an economic powerhouse of UK economy, London contributes 17% of GDP. At the same time it is the city of unemployment, poverty, homelessness and crime. It is also described as city of diversity. It includes different cultures, ethnic groups and races and there 300 languages spoken in the city. And there is a flow of migrants from the new EU states and Asian regions over the last 20 years. And this diversity has been described as the major source of economic strength. Authorities of London feel that the main challenge is in maintaining the harmony and at the same time improving the developments of these diverse groups. (A changing London Challenge session). In case of Productivity: 29% of firms in London have an opinion that the productivity has increased over the past few months because of the increased demand for products and services. The present demand is met by the existing resources without improving their efficiency. Thus the staff productivity is the same which shows a limitation in the competitive capability. In case of innovation: The costs spent on research and development is relatively low. London Annual Business Survey declares that only 15% of firms have introduced innovative activities and about 63% have not done anything. It is a clear fact that innovation only increases the turnover and the firms should be encouraged to go for innovation. In case of management: Competent management structure and process is one of the key elements required by the business to be successful. Statistics show that 50% companies do not have a specific business plan, 58% do not have sales and marketing plan etc. This affects the competitiveness of the firms in London. In case of business information and advice: The managers lacks management qualifications which relate to the productivity and innovation. Policies formulated for the development: London city authorities are formulating policies in order to meet the challenges of the city. Due to the growth of industrialization and increased competition the policies should be flexible to meet the long term goals. And the local policy solution will be better than a national policy since each region has distinct characteristics. Policy makers should formulate different policy for each region to address any type of problems. In England, the policy formulation for the urban development is like this:” Practical strategies for innovation and industry building; integration of economic and spatial development –agglomeration and networking; territorial marketing/ place branding; attraction of talent; focal level for private sector; urban transport management.” (Montgomery, p.13). London Counsel, the coordinating body of London Local Government, is developing a broad political strategy to face the challenges by joint working and cooperation on both sub-regional and pan-London basis. London city makes huge effort to make it as a global city because it is hosting the 2012 Olympic Games. London authorities believe that theirs will be the top city in the world if they are able to tackle the challenges such as climate change, dealing with congestion, educating and skill enhancement of the local people for the new job opportunities etc. And they feel they have to compete with the new world cities from Asia such as Singapore, Hong Kong, Mumbai, Tokyo etc. (Press release 2007). “London's recently established Regional Improvement and Efficiency Partnership (RIEP), Capital Ambition, is recognised as one of the country's leading RIEPs; gaining increased government resources for the next stages in supporting partnership working and delivery of better outcomes.” (Mitchell). In 2004, London Mayor established a new plan known as “The London Plan’ which is aimed at making the city face the new challenges. The plan will position London as a world city, a European leader, and a reformed capital city for UK. The mayor will responsible for implementing the strategy. Now the London plan is known as Spatial Development strategy in which the policy will be formulated in the following areas: the broad development strategy, working in London, living in London, enjoying London, transport in London, designs in London, the sub regions, CAZ and govt., growth, climate change and London metabolism, the Blue Ribbon Network, and implementing the London Plan. Objective of London Plan: Accelerate the growth of areas in London through efficient and sustainable use of space. Make the city as a high quality and compact city through urban renaissance Make the centre of London as the main developmental areas to accommodate the growth and opportunities Concentrate the East London area as a space for new development, investment and quality development. Enable the town centres to meet the needs of the local people (which includes shopping, leisure, housing, local service and jobs) and promote London’s polycentric development. Encourage sustainable and mutually beneficial relationships through the cooperation of neighbourhoods. Find out the areas of regeneration in which there is a need for economic and social service to be co-coordinated. Promote the objective of the neighbourhood renewal program. Improve the facilities in suburban areas through better coordinated services and thus enhance the sustainability Protect the environment and other open space and Blue-Ribbon network. The mayor will work with other stake holders such as government and statutory agencies, communities, institutions, private agencies, voluntary and community sectors to implement the plan. (Mayor’s objectives). Analysis and discussion: London is rated as the number one European city for locating a business, as per the annual location survey European Cities Monitor (ECM), conducted by Cushman & Wakefield.(real estate firm). London is very far from the nearest rivals such as Paris. It has also become the top in the following measurements such as easy access to markets, qualified staff, external transport links, telecommunications, availability of office space, language spoken, and internal transport. London is also the number one for attracting foreign direct investment (FDI) as per the research of Ernst & Young European Investment Monitor. Its FDI contribution is 5.7% in Europe, the highest percentage of a European city. (Khan 2009). Guidelines for the successful place marketing-UK: The marketing systems extend and organize by planning group .It is guaranteed by sufficient public financing. The place marketing begins with strategic alliance of the place and branding. The progress of the brand depends on the essence of the place. Here the images and missions are modified. In place marketing the place must be arranged orderly through reliable, long term and united work. These require a real target and measures because then the place will get high result. The relationship between cross marketing and mutual help with practitioners will affect the success. There is a need for political agreement and regularity .Other wise the place marketing process will not be a success. It must be incorporated as a component of economic progress of the region. In fact human wants are unlimited but resources are limited. These limited resources in place marketing call for very careful actions. Leadership plays a very important role in place marketing. To build up leadership is a critical challenge for all the places. “The international firms based on the region are the best marketers in their locations (ambassadors). On the other hand, foreign companies exporting to the area form a great location potential for the region.” (Rainisto, p.29). The important thing for the place image is the brand images of the companies of the region. The solution of place marketing is on the basis of imagination. The actual solutions and place marketing will come next. As per the place marketing concepts, local development, and city competitiveness are some of the factors in place marketing. And London is able to satisfy those conditions. Another criteria is the measurement of 5Ps in place marketing. They are as follows: Product (city, city’s image, character, economic activities, natural environment, service and city’s distinctive characteristics), Price (value of land, pricing level in business activities), Place (different stake holders and institution that integrates the business flow), Promotion (strategy to enhance competitiveness, attraction of investments) and People. “The citizens’ contribution to the city’s development :“(3 REF). The citizens of a location have been recognized as one of the most important internal target markets (actors) of a city’s environment. According to Woolley (2000) ‘local people are the key to urban vitality.” (Theodoros 2002, p.13). From this discussion it is clear that London is able to keep up the guidelines of place marketing and they are successfully applying place marketing concept in their city. Conclusion: Cities are the economic powerhouses of every nation. It contributes a major portion of the economic activities of the nation. Since the cities are becoming the hub of all the economic activities there is need to develop the city to adapt these changes and provide a growth opportunity for its residents. In this scenario, place marketing has a huge role to play. Branding and marketing a place will help the city to position itself as a global city in the arena of globalization. Here the study illustrates the example of London city, the top city in the world, to describe about the place marketing. London is keen to keep its top spot in the world cities and they are formulating strategies for the purpose. Through their visionary outlook, London will be able to face the new challenges which may occur in future days. 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