The Global Competitiveness of Firms - Case Study Example

The reasons why location has again become a critical issue in explaining the global competitiveness of firms BY YOU YOUR ACADEMIC ORGANISATION HERE YOUR COURSE/TUTOR HERE DATE HERE The reasons why location has again become a critical issue in explaining the global competitiveness of firms Introduction Companies which operate in the global business arena, regardless of their particular industry, must work within unique operating environments and be adaptable to whatever external trend drives their business strategy. For example, a fashion retailer headquartered in the United Kingdom, with multiple divisions in Europe and North America, will have to consider cultural trends for each geographic market and create promotional materials which best fit their unique customer profile. The costs of this type of advertising which is concentrated in different market environments can be quite expensive. However, as part of the marketing mix, promotion has historically been most effective in differentiating one company from another in competitive marketplaces. Place, as part of the marketing mix, refers to “the location at which the activity takes place, or the distribution channel by which the product is made available to consumers” (Haugtvedt, Herr and Kardes, 2008, p.28). As a means to avoid costs, some companies are reverting back to more traditional elements of marketing by focusing on aspects of place in order to differentiate the business from competitors. Further, place is improving competitiveness in global companies because it improves community and consumer relationships, as well as giving businesses a positive identity in local markets with unique cultural values and preferences. This paper discusses the importance of place in securing global business competitiveness. The importance of place Customers in many different industries and different market environments want extra value when buying products. This seems to be an evolution which has occurred with the growth of competition and the need to offer incentives to customers in order to differentiate the business and make it appear to provide more value than competing firms. In order to provide this value, companies should “beautify marketing and gain the upper hand with customers” (Brandweek, 2004, p.25). Beautification of marketing refers to aesthetics and incorporating content which provides perceptions of value from target consumers. Appealing to consumer values related to aesthetics is not an easy task through regular advertising and other visual promotions, therefore markets which appreciate the aesthetics of a shopping experience can be exposed to place marketing. For example, companies which offer household goods to consumers might have a business model which supports stand-alone retail stores designed with more expensive architectural materials, such as marble or Roman-style columns. Companies which are looking for a means to differentiate, and have businesses which support more upper-class building materials, can emphasise these characteristics as a means of providing value. When the costs of heavy promotion and advertising to create emotional connection with multiple, international markets are too high on the budget, place marketing is a cost advantage and appeals to buyer needs for aesthetics. Focusing on place in order to gain competitive advantage involves working with local community officials or business representatives in many different industries on a regular basis. Ensuring compliance to local or national guidelines for fair business practices will involve routine interactions with the local community and governmental representatives. At the same time, strategic alliances with local businesses in order to promote a company’s product or brand can be developed in local markets, requiring “a collaborative approach in which all key stakeholders are engaged” (Dinnie, 2009, p.159). Because today’s consumer demands high levels of corporate social responsibility from businesses, companies can focus on place in many different formats, such as press releases or in-store advertising, which links the activities of local management with community leaders to provide a better sales experience. Building better community relationships is part of planning corporate strategy and “strategic planning and place marketing could not operate by themselves, but they need to be built on partnerships among local actors and decision-makers” (Metaxas, 2009, p.1357). These partnerships and community leadership connections which occur with different local businesspersons and governmental leaders gives businesses new opportunities to emphasise place-related activities in order to highlight their strong focus on corporate social responsibility. Even when businesses begin showing customers their environmental focus as part of corporate social responsibility, such as reducing greenhouse gas emissions, place becomes vital to giving customers a positive image of the company around the globe. For example, a company which produces paper products might be facing negative social outcry about their deforestation efforts, therefore higher budgets would be allotted to what might essentially be damage control through social responsibility promotions. The physical cutting of trees and the movement of these raw products through the supply chain is part of logistics focus and is therefore strongly linked to place. Local efforts with community organisations to plant new trees or improve wildlife regions occurs within a local region and contributes to not only consumer demands for aesthetics, but can also improve their shopping experience overall. Therefore emphasising the efforts which are occurring in local, foreign markets give society information about what is developing in each sales market to build a better global business image as one which identifies with social responsibility. In the hospitality industry, place has become even more important to gaining competitive advantage. In some situations, cities need to draw customers from around the globe and must therefore use place marketing in order to make their city shine in the hearts of global travellers. When travelling to a global destination, the buyer will be concerned with the duration of the trip (will the flight be too long) as well as the costs associated and the volume of activities available in the local region upon their arrival. These are logistics-related situations which will strongly determine which city the traveller decides to direct their tourism cash. “There is, however, great homogeneity in the way regions market themselves using logistics arguments” (Bergqvist, 2009, p.55). Therefore, more innovative and knowledgeable hospitality firms can differentiate their businesses by abandoning the logistics arguments and focusing more on issues of local culture, values and bargains, or any other place-related concept which appeals to specific target buyer preferences or values. Hospitality firms can therefore use place as a means to make a company stand out against competing hotel or resort chains by emphasising the benefits of the actual location (place) the tourist will be travelling. “Bringing the customer into the backroom operations processes of logistics complicates the transaction” (Andraski and Novack, 1996, p.23). Place essentially can be used as a method to distract the buyer from their concerns over logistics issues (such as price or travel time) to make a specific destination more appealing and give competitive advantage. In the United States, as one example, the state of Florida attempts to draw creative talent to look for jobs in this region through place marketing. The state believes that attracting these desired markets requires focus on “talent, technology and tolerance” (Zenker, 2009, p.23). The U.S. is a well-developed country with a great deal of educated individuals with specialised talents in different industries. Therefore, Florida must consider what is necessary in order to lure young and creative talent to the state and therefore have developed this Three-T programme which emphasises the benefits of Florida in terms of place. Viewing this entire state as a marketer looking to sell its products and services, Florida realises that it cannot use price or product to fully gain buyer interest but must focus on what makes this location more important and more advantageous over other states in the U.S. Therefore, from a macroeconomic viewpoint, marketing an entire region (state, borough or country) can gain competitive advantage only by focusing on place if they are attempting to draw creative talent for business leadership or simply to gain tourism revenues from travelling global citizens. The global wine industry uses place as their most important element to gain customer loyalty and earn a quality reputation in a market environment which is saturated with independent wine producers. At the consumer level, “Associations between place and wine are historically deep. Past and current narratives of wine production are wedded to environment attributes of particular places” (Banks, Kelly, Lewis and Sharpe, 2007, p.16). Even though some wine producers use unique television or print advertising to illustrate their wine products in different social scenarios to gain advantage, using place as a means to gain advantage can have longer-lasting rewards. For example, a unique variety of grape may only be available in a certain area of Europe, therefore the product is innovative in flavour and process. Rather than focusing on consumer attributes, such as taste or its social relevance, wine producers can create long-lasting connections with buyers by educating them on the unique agricultural aspects of the region. Through local partnerships with different travel companies, unique to the local markets, even tourism can be invited through focusing on the benefits of place. Similar to the wine industry, beer brewer AB InBev, producer of American-made Budweiser beer brand, operates in a very saturated marketplace with many different competitors. Dalton (2009) offers that InBev is currently focusing on the best method of promoting its products to markets outside of the United States. There are some emerging markets which value Westernised living and have very high demand for products manufactured in North America. In this type of situation, place becomes very important as linking its point of manufacture can be a strong selling point for different international buyers. Countries which have their own sense of national pride would likely not find benefit from issues of place by identifying point of manufacture, however in markets where North American products are in high demand place offers high competitive advantage even over other domestic product producers. Conclusion and recommendations Place has definitely become quite important to giving many different companies opportunities to improve competitive advantage. As the global marketplace becomes more saturated with new market entrants, being able to differentiate the company from other competitors becomes a primary focus. In different global market environments, place can be used to build better company reputation, reduce the costs of concentrated marketing which recognise all aspects of the marketing mix and also distract customers from over-analysing their purchase decisions. Because customers seem to care much more these days about the environment and the aesthetic aspects of place, it is recommended that companies which operate in multi-national environments should use better place-related promotion in order to gain competitive advantage. Companies have relationships with local community leaders, business representatives, and other governmental entities on a regular basis, but fail to capitalise on positive outcomes of these interactions at the local and global level. For example, the development of a new retail store which has been planned at the architectural level for quality and durability by using expensive building materials can utilise promotions which spotlight the local builders’ and architect talents to improve community relationships and focus. If this were to occur in the United Kingdom market, but be promoted to the broader European markets, foreign buyers can familiarise themselves with the cultural and business behaviours of local communities. In terms of inviting future investment partners or simply bringing more tourism revenues, focusing on place gives businesses better visibility and should be used more to promote local community initiatives or talent spotlights. It is further recommended that firms should consider heavier investment into consumer research, such as surveys or interviews, to understand the current beliefs in foreign markets about domestic market production. For example, a company producing clothing in Canada, but sells these items to Brasil, should be considerate of whether Brasilian consumers value their Canadian business partners. If it is found that the region has a positive view, then place can effectively link issues of quality by labelling products with a Made in Canada seal. Though this is only one example, it is a solid recommendation for any business to help them understand their buyer markets and then use point of origin marketing to capitalise on positive buyer views of place. References Andraski, J. and Novack, R. 1996. Marketing logistics value: Managing the 5 Ps, Journal of Business Logistics, Oak Brook. 17(1), pp.23-35. Banks, G., Kelly, S., Lewis, N. and Sharpe, S. 2007. Place ‘From one glance’: The use of place in marketing of New Zealand and Australian wines. Australian Defence Forces Academy, Australia. 38(1), pp.15-35. Viewed 6 December 2009 at http://www.informaworld.com/smpp/content~content=a778613397~db=all. Bergqvist, R. 2009. Place marketing in a logistics context: A Swedish case study and discourse, Place Branding and Public Diplomacy, Houndsmills. 5(1), pp.54-67. Brandweek. 2004. We’re all ignoring ads – now what?, 45(34), pp.24-28. Dalton, M. 2009. Corporate News: AB InBev Leans on Cost-Cut Efforts. Wall Street Journal, New York. November 13, p.B4. Viewed 5 December 2009 at www.ebscohost.com. Dinnie, K. 2009. Destination branding for small cities: The essentials for successful place branding, Journal of Brand Management, London. 17(2), pp.159-162. Haugtvedt, C., Herr, P. and Kardes, F. 2008. Handbook of Consumer Psychology, Marketing and Consumer Psychology Series. CRC Press. Metaxas, T. 2009. Place marketing, strategic planning and competitiveness: The Case of Malta. European Planning Studies, Abingdon. 17(9), p.1357. Zenker, S. 2009. Who’s your target? The creative class as a target group for place branding, Journal of Place Management and Development, Bingley. 2(1), p.23. Read More