Implementation of a city marketing strategy

Table of Content

Table of Figures

Table of Tabulations

List of Abbreviations

Preamble

Management Summary

1 Introduction
1.1 Problem Definition
1.2 Procedure and structure of the thesis

2 Fundamentals of research
2.1 Concept of Marketing
2.2 City Marketing
2.2.1 Definition and origin of City Marketing
2.2.1.1 City Marketing vs. Urban Development and differentiation to other measures by local authorities
2.2.2 Reasons for implementing City Marketing
2.2.2.1 Political change and competition on the global level
2.2.2.2 Political change and economical situation inside Germany
2.2.2.3 Problems of the retail sector
2.2.2.4 Structural problems of the cities
2.2.2.5 Competition between cities
2.3 The City Marketing Process
2.3.1 Tasks, measures and objectives of City Marketing
2.3.2 Target groups of City Marketing
2.3.3 Participants of the City Marking process
2.3.4 Implementation of a City Marketing Concept
2.3.4.1 Situation Analysis
2.3.4.2 Definition of Objectives
2.3.4.3 Strategies and Measures
2.3.4.4 Implementation and Controlling
2.4 Problems and limitations of the City Marketing concept

Literature

Journals

Internet

Table of Figures

Figure 1: The complexity of City Marketing

Figure 2: From Urban Development to City Marketing

Figure 3: City Marketing as a combination of public and private sector

Figure 4: Differentiation of local marketing concepts

Figure 5: Current challenges for cities

Figure 6: Trend of suburbanization

Figure 7: Marketing Mix of a city

Figure 8: Strategic Types of the City Marketing audiences

Figure 9: Roles in City Marketing

Figure 10: Requirements of a City Marketing concept

Figure 11: The process of City Marketing

Figure 12: Intensity of regional appreciation

Figure 13: Overall concept for a city

Table of Tabulations

Tabulation 1: Differences between businesses and local authorities

Tabulation 2: The target groups of City Marketing

List of Abbreviations

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Preamble

Fast, extensive changes in economy, society and an increasing global competition over the last decades are not only influencing companies and enterprises in their foundations; the effects reached German cities and their public authorities in the last years. The administration has to face phenomena like the death of inner cities, vacancies in business premises and a weak performance of the retail sector.

To ensure the performance of a city, its quality of living, infrastructure and to face the increasing competition between cities, the term City Marketing became popular in German municipalities since the late eighties. The number of cities adding a City Marketing approach to the urban development strategy is growing constantly.

Therefore, the transfer of the managerial concept of marketing to a city became object of extensive scientific research and publications. The Department of Business Administration of the University of Applied Sciences Giessen-Friedberg also examined this popular field of interest in marketing and economics.

This Master Thesis deals in particular with the overall concept of City Marketing and its implementation.

Therefore, this thesis gives an applied contribution to this emerging field in marketing research.

Management Summary

This thesis has the objective to discuss the general concept City Marketing by giving a detailed definition. Therefore, the history and origin of the term are explored. In addition to that, the target groups, the participants and their role inside a City Marketing process are identified. Furthermore, the four phases of the City Marketing process are described. In addition, possible problems of this concept and its implementation are revealed.

1 Introduction

From polis to metropolis, from ancient settlements to the urban society: The situation of German cities undergoes deep changes. An increasing pressure on their fundaments influences the cities in their structures. Caused by factors like globalization, political amendment, shifts in the society etc., the city is loosing its basic functions. The times of being a central marketplace or a melting pot for the population are gone. Today’s society is more critical, demanding and mobile. When a city does not meet the expectations of its citizens and customer they will probably look for another place to satisfy their needs. Even the industries lay a claim on their business location. If their demand for infrastructure, low taxes, well trained employees etc. does not meet the requirements, they will probably relocate. The competition between business locations and marketplaces increases.

Furthermore, this accelerating competition hits the cities in times of low financial resources and declining receipts. The public administration has to consider new concepts and different ways to meet the competition.

1.1 Problem Definition

The pressure on cities leads to a demand for effective new concepts to face the latest challenges. In the late eighties, City Marketing was introduced as a new model in addition to Urban Development and Urban Planning. Therefore, the concepts of Business Marketing were transferred to a city. Soon City Marketing became fashionable. Today the requirements and basics of City Marketing are widely discussed in the scientific literature. Nevertheless, many cities claim to use the City Marketing concepts while simply executing advertising campaigns. Some cities are just re-labelling their existing Urban Development strategies. But City Marketing is more complex. It is an ongoing process which incorporates a variety of objectives and measures. But before City Marketing can be implemented successfully, several factors have to be considered. The situation of the city has to be analysed accurately before any marketing measure can be executed. Based on the analysis, the continuous process of City Marketing can be started. An important objective of City Marketing is to create an overall concept and a vision for the city to reach a USP. Overall objective of City Marketing is to ensure the attractiveness of the city to satisfy its target groups, to attract potential customers and therefore to stay competitive. Nevertheless, most cities don not use a reference framework to implement their strategy, nor do they develop an overall concept. This is caused by the variety of definitions and interpretations of the term City Marketing.

1.2 Procedure and structure of the thesis

In the following scientific paper the German term „Stadtmarketing“ will be translated as City Marketing.

In the German-speaking Area, City Marketing usually describes a marketing approach for the inner city a.k.a. the city centre. Because there is no consistent translation for the concept of “Stadtmarketing” in the Anglo-Saxon language area, “City Marketing” will be used to describe the term “Stadtmarketing”, whereas Downtown Marketing is used for the special marketing approach for the city centre.

The theoretical part and literature review of the thesis discusses the basics and fundament of City Marketing. Initially, the origin and the definitions of the concept City Marketing are described and compared to Business Marketing. A differentiation to Urban Development and other public measures defines City Marketing more closely. After that, the participants and the target groups of the process are identified. Hereafter, the implementation and the different phases of this process are discussed. The final part of the literature review deals with possible problems of the concept.

2 Fundamentals of research

2.1 Concept of Marketing

Marketing is a widely used concept in today’s economy. In its classical interpretation it is limited to enterprises and businesses. Its roots in the modern context can be traced back to the beginning of the 20^th century^[1]. First lectures dealing with marketing were given at a university in Berlin, in 1913^[2]. Nevertheless, first attempts of marketing are identified as far as 7000 B.C.^[3]. In the 1950s, marketing was introduced as a managerial concept in businesses in the United States. First definitions were established at that time. Marketing was particularly interpreted as a selling and distribution function. The primary focus was on transactions and exchanges. Over the years its functions were enhanced. The orientation shifted from transactions to relationships. The concept of marketing was reinterpreted. It became a widely used leadership tool und was implemented into strategic management^[4]. Kotler and Levy give a reason for the amelioration of the marketing concept: ”…marketing is a pervasive societal activity that goes considerably beyond the selling of toothpaste, soap and steel”^[5].

Since the role of marketing became more and more important, its fundamental functions were defined more specifically. Marketing was defined as a process consisting of the planning and executing of the conception, pricing, promotion and distribution of ideas, goods and services. It should create an exchange which satisfies individual and organizational objectives^[6]. The classical interpretation of marketing is based on actions of businesses and deals with the planning, coordination and controlling of market orientated activities of those businesses. Essential is the Marketing Mix as a set of controllable, tactical marketing tools for a company’s target markets. The Marketing Mix consists of 4 groups of variables known as the 4 P´s:, namely product, price, place and promotion: Product deals with the totality of goods and services, Price is about the amount of money charged for a product or service, Place covers all activities that make the product or service available and Promotion deals with all activities to communicate the product^[7]. In recent literature and practice, marketing is seen as a dual concept which includes on the one hand classical marketing as an equal management function and on the other hand an overall concept for the management, which adjusts all business activities to the needs of customers^[8]. The customer is clearly in the focus of modern marketing activities.

According to the dual conception, the main characteristics of marketing are^[9]:

1. Philosophy Aspect: A deliberate distribution and customer orientation for all divisions of a company. The needs of current and potential customers are in the focus of all activities
2. Information Aspect: The methodical research of the market as a precondition for customer-oriented behaviour
3. Strategy Aspect: The determination of market oriented business objectives and market strategies
4. Action Aspect: The planned configuration of the market which is based on an object-oriented and coordinated usage of the instruments of the Marketing Mix
5. Segmentation Aspect: Use of the principles of differentiated market cultivation. The market of a company is segmented into functional, personnel, individual and temporal criteria
6. Coordination Aspect: The coordination of all market-oriented activities which have to be implemented into the organisation of a company.

Besides being a functional area of business, marketing can also be seen as part of the value chain. Changes in business surroundings forced marketers to involve themselves in other value related decisions. This approach is known as boundary less Marketing. Because of its importance for the performance in the modern economy, marketing is a widely used discipline^[10].

2.2 City Marketing

To get a detailed overview over the concept of City Marketing, it is necessary to examine its origin, its definition and reasons for the implementation of a City Marketing strategy.

2.2.1 Definition and origin of City Marketing

In the late 80s a discussion arose in Germany whether it is possible to transfer the managerial concept of marketing to a city. It was a first try to project marketing terms like market orientation, Marketing Mix, product policy, advertising, customer etc. to areas where a city acts as a quasi company. In times of low financial resources it was an attempt to make public areas like public utility, fair companies etc. more efficient^[11].

But before an urban perspective for marketing could be established, there had to be a change in how to define the concepts of marketing. With a shift in time since first definitions for the managerial approach were given, a wider fundament for marketing was created because scientists started to enlarge the basic concept. According to Kotler and Levy there was a decisive similarity between economical and non-economical exchange based relationships. The newly introduced non-profit-marketing was a result of the broadening of the marketing definition. This conceptual base was the reason for establishing the new scientific discipline of City Marketing^[12]. In addition to that, there was a huge demand for marketing concepts in the public sector, because the competitive situation among cites accentuated and old concepts of public administration lost their importance^[13]. By creating a new research and marketing discipline, the differences to business marketing went into the focus of scientists and authors. Business Marketing deals with a company’s goals and the needs of its customers, the City Marketing approach deals with a deliberate service orientation in public administration. City marketing involves a lot of players because it is not implemented into hierarchical decision making processes like it is in a company. Furthermore, it is a continuous process of coordination and cooperation between public administrations, citizens and businesses^[14]. Especially in the German literature it is extensively discussed if the business approach can be completely transferred to a city. The reason for this is a city’s specific complexity, where the city is likewise a subject (city as business) and an object (city as product)^[15].

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Figure 1: The complexity of City Marketing

(According to Ebert, 2004)

The figure above shows the complexity of the City Marketing pro- cess. In contrast to Business Marketing, the leadership deals with a more composite environment. Consequently, coordination and control are more complicated. The plurality of decision making and the complexity of the offerings of a city are the reason for a more sophisticated marketing process, where more factors have to be considered and challenges are harder to predict. Furthermore, there are very basic differences between cities and businesses.

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Tabulation 1: Differences between businesses and local authorities

(According to Koch, 2006)

The differences to Business Marketing are mentioned in most of the publications discussing City Marketing, in the attempt to differentiate the concept. Because of the unique features of a city, it is not possible to transfer a City Marketing concept from one city to another like it would be feasible in Business Marketing where it is possible to transfer an advertising concept from one product category to another product category. There are three main reasons for the non-transferability and convertibility of a concept in City Marketing^[16]:

1. Cities with all their features like cityscape, location, streets, buildings etc., are unique
2. Urban life is a dynamic and complex organism
3. There is principally no single target group to be addressed by the marketing concept. The strategy is created for a broader audience.

The differentiation from Business Marketing is an integral part of the definition of City Marketing. Nevertheless, there is a great variety of definitions for the concept in the German literature. There is still no common, exactly defined and conceptually closed reference framework for the term City Marketing. Nevertheless, the Deutsche Städtetag and other authorities tried to give a definition in 1990^[17]. The Deutsche Städtetag saw it as an up to long term based leadership- and action concept, based on a vision^[18]. But there are more specific definitions.

Even if it is a handicap that there is no clear definition of City Marketing, there are three main factors which are mentioned in most literature about the concept^[19]:

1. City Marketing as a selling und advertising strategy: City Marketing is seen as function to advertise a city, to create an image
2. City Marketing as a process: It is seen as an exchange process between players in a city or method to achieve objectives in a community by taking all interests into consideration
3. City Marketing as a philosophy and a guide.

Although there is a great discordance between these definitions, it is possible to give a definition which includes the transfer of the business marketing concept, the three most mentioned factors from literature and functional and methodical aspects:

City Marketing contains all activities to raise the attractiveness of a community for different target groups. To fulfil the requirements of City Marketing, these activities have to be based on a strategic competitive concept, which takes the local features into consideration to position the city in the competition between communities. Furthermore, City Marketing has to be a permanent institution to guarantee institutionalised cooperation between the public and private sector^[20].

The coordination between the public and private sector is crucial in this definition.

A further basic part of City Marketing is the concept of integration. The instruments of marketing are used to define an integrated approach for a city^[21]. Integration means creating a concept for the entire city. All measures should be set in context for the whole city area and the characteristics and features of a city.

2.2.1.1 City Marketing vs. Urban Development and differentiation to other measures by local authorities

City Marketing is often confused with Urban Development, Urban Planning or other measures of local authorities.

Urban Development and Urban Planning are tools of the public administration and local authorities dealing with features of the city in a more architectonical and technical sense. It deals with social, technical and physical development of municipalities. There are some overlaps between City Marketing and Urban Development. Those interfaces can be municipal planning which deals with planning the features of a shopping mile or planning of single objects like fountains in public places. In both cases, City Marketing concentrates more on the subjective opinions of target groups and not on the spatial planning^[22]

. A successful Urban Development is the precondition for the success of economy and trade in a city. The Urban Development has to ensure that there is enough space for the economy and that the urbanite measures support the retail sector^[23]

. In comparison to Urban Development and Urban Planning or alliances for promotion of trade and industry, it goes one step further because private players are involved in the decision-making process and the realization of measures. Sometimes City Marketing is seen as the answer to failed Urban Development attempts. Consequently, City Marketing is seen as an innovation in the urban planning segment. Before it was established, Urban Development authorities were responsible for the constitution of a city. There was no theoretical framework or scientific discussion about Urban Development which just dealt with the layout for an urban area. With the implementation of City Marketing in the 80s, the cities introduced a communication orientation, which lead to the leadership orientation of the 90s^[24]

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^[1] Cf. Meffert, Heribert: Marketing – Grundlagen Marktorientierter Unternehmensführung (9th Edition), Wiesbaden 2002, P. 3.

^[2] Cf. Neu, Matthias: Marketinggrundlagen: Marketingmanagement und Marketinginstrumente, Würzburg 1998, P. 16.

^[3] Cf. Sheth, Jagddish N. / Partvatiyar, Atul: The evolution of relationship marketing, in: International Business Review, Vol. 4, No. 4, 1995, P. 397–418.

^[4] Cf. Birk, Florian / Leppa, Gerald: Stadtmarketing - Wirkungsorientiertes Management als Antwort auf den Wettbewerb von Städten und Standorten, München 2002, P. 10.

^[5] Cf. Kotler, P. / Levy, S. J.: Broadening the concept of Marketing, in: Journal of Marketing, Vol. 33, 1969, P. 10.

^[6] Cf. Mensing, Mario / Rahn, Thomas: Einführung in das Stadtmarketing; in: Michael Zerres / Ingrid Zerres (Ed.): Kooperatives Stadtmarketing, Stuttgart 2000, P. 24.

^[7] Cf. Kotler, Philip / Armstrong, Gary / Saunders, John / Wong, Veronica: Principles of Marketing – Third European Edition, Harlow 2002, P. 97.

^[8] Cf. Mauer, Urban: Erfolgsfaktoren des Stadtmarketing, Frankfurt am Main 2002, P. 17.

^[9] Cf. Meffert, Heribert: Marketing – Grundlagen Marktorientierter Unternehmensführung (9th Edition), Wiesbaden 2002, P. 8.

^[10] Cf. Keegan, Warren J. / Green, Mark C.: Global Marketing (4th Edition), New Jersey 2005, P. 3.

^[11] Cf. Mensing, Mario / Rahn, Thomas: Einführung in das Stadtmarketing; in: Michael Zerres / Ingrid Zerres (Ed.): Kooperatives Stadtmarketing, Stuttgart 2000, P. 24.

^[12] Cf. Ebert, Christian: Identitätsorientiertes Stadtmarketing, Frankfurt am Main 2004, P. 4.

^[13] Cf. Werthmöller, Ewald: Räumliche Identität als Aufgabenfeld des Städte- und Regionenmarketing, Frankfurt am Main 1995, P. 2.

^[14] Cf. Heiman, Hubert: City Management – Eine neue Strategie für Stadtzentren am Beispiel der Innenstadt Solingen, in: ILS-Schriften (Ed.): Stadtmarketing in der Diskussion, Duisburg 1991, P. 28.

^[15] Cf. Ebert, Christian: Identitätsorientiertes Stadtmarketing, Frankfurt am Main 2004, P. 7.

^[16] Cf. Schenk, Hans-Otto: Stadtmarketing und Citymanagement - Gedanken zu Problemzonen und Problemlösungen, Duisburg 1998, P.12.

^[17] Cf. Birk, Florian / Leppa, Gerald: Stadtmarketing: Wirkungsorientiertes Management als Antwort auf den Wettbewerb von Städten und Standorten, München 2002, P. 3.

^[18] Cf. Presseauschuss des Deutschen Städtetages: Stadtmarketing – Hinweise zu einer Herausforderung; in: Der Städtetag, Vol. 3, 1990, P. 230–234.

^[19] Cf. Kemming, Herbert: Zur Gestaltung von Stadtmarketing – Orientierung für die Praxis, in: ILS-Schriften: Stadtmarketing in der Diskussion, Duisburg 1991, P. 7.

^[20] Cf. Mauer, Urban: Erfolgsfaktoren des Stadtmarketing, Frankfurt am Main 2002, P. 19.

^[21] Cf. Koch, Tino: Stadtmarketing – Praxishandbuch für Kommunales Management, Saarbrücken 2006, P. 27.

^[22] Cf. Junker, Rolf: Stadtmarketing und Stadtplanung – Kooperation statt Konkurrenz?, in: Bundesvereinigung City- und Stadtmarketing Deutschland e.V. (Ed.): Stadtmarketing – Stand und Perspektiven eines kooperativen Stadtmanagements, Aachen 2002, P. 57.

^[23] Cf. Bundesministerium für Raumordnung, Bauwesen und Städtebau: Nachhaltige Stadtentwicklung – Anforderungen an Städtebau, Wirtschaft und Handel, Dortmund 1997, P. 1.

^[24] Cf. Ebert, Christian: Identitätsorientiertes Stadtmarketing, Frankfurt am Main 2004, P. 7.