Applying branding principles to the marketing of destinations:
Dr Nicos Rossides, Group CEO
It is widely acknowledged in marketing literature that brands can command enormous value and, consequently, they need to be managed as a strategic asset. Some have viewed brands as simply an expectation of a promise or experience and whilst this may very well be true, the implications for marketers are profound - their business’ survival and ultimate success or failure depends on brand health. Consider an iconic brand such as Coca-Cola and the enormous market power it commands through its enduring consumer ‘pull’.
What is less commonly understood is how this power should be measured and, by extension, how it should be professionally managed.
According to marketing guru Philip Kotler, brand building and management are essential skills in the marketing of any product, service, organisation, person, place, or cause. A brand is not just the name put on an offering; it is the driving force that shapes the marketing mix, providing a platform for an organisation’s strategies and tactics.
Indeed, building a strong brand position and managing it requires:
- Determining of brand positioning and value proposition;
- Planning and implementing of brand building programmes;
- Strengthening of consumer-brand relationships and measuring brand performance.
However, whilst the concept of branding has been used extensively in the context of products and services with more than a century of thinking behind it, it is a relatively new concept when applied to destination or places (countries, regions, cities etc.).
What is a brand?
Branding as a word originates from Medieval England where it referred to the practice of marking goods, livestock and other products with a hot iron as a means of establishing proof of ownership. As a common business practice, branding took off when manufacturing got into full swing in the 19th century and has subsequently evolved into the symbolic embodiment of all the information connected to a product service or organisation.
Kotler et al (Principles of Marketing, 2005) defines it as ‘a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competitors’.
In this context, the work of Noam Chomsky, and one of his subsequent disciples, Stephen Pinker, on evolutionary psychology can be seen as particularly pertinent. Chomsky asserts that language is not a cultural artefact but a distinct piece of the biological make-up of the brain. Words are divided into “naming” and “doing” words. People organise their sense of reality by tagging bits of experience with “names”, and by describing what the “names” might do. Therefore, branding was intended, whether consciously or not, to exploit this natural tendency. Manufacturers who were confident that proof of origin would help to create sales knew that branding would help – both as a guarantee and as an aid to memory. Those who were less confident knew that one way to generate sales was to counterfeit well-known brands (Jannie Hofmeyr).
Where we get into somewhat more murky territory is when we try to define (let alone operationalise) the notion of brand equity. In Aaker’s seminal book ‘Managing Brand Equity’, he talks about the value of a brand as a strategic asset and a company's primary source of competitive advantage. He defines brand equity as "a set of brand assets and liabilities linked to a brand, its name, and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firm's customers". These assets and liabilities, according to Aaker (1991), have five dimensions - brand loyalty, brand awareness, perceived quality, brand associations, and other proprietary brand assets.
If a brand fails to develop or maintain differentiation, consumers have no basis for choosing it over others. The product's price will then be the determining factor in the purchase decision. In the absence ofAbsent differentiation, says Aaker, the core of any brand - a loyal customer base - cannot be created or sustained. Brands must differentiate through features, service, programme, or ingredients in a way that is meaningful to customers.
What Aaker and others in the marketing community are mostly referring to is a research orientated conceptualisation of brand equity - for measuring a brand's strength and ability to compete in its marketplace. Other approaches have concentrated more on the financial aspect of the valuation – i.e. brand valuations in the context of brand sale or acquisition. From this perspective, brand equity is that incremental value that accrues to a product when it is branded – the premium, or value-add from the brand financially in comparison to equivalent products. This can be carried out either in terms of gross margin, or in wider measures such as EVA (Economic Value Added).
Brand commitment expert, Jannie Hofmeyr, talks about brands as a ‘cognitive set of hooks’ that the mind uses to organise our experiences with products or services. These experiences can result from the use of the brand or exposure to brand related messages and stimuli (whether part of structured marketing efforts or more informal means – word of mouth, etc).
Deciphering what is on the mind is not at all straightforward as it involves delving into the web of images, memories, emotional triggers that brands evoke. In the commerical mileu (for brands to be preferred and bought by consumers) this is then mediated by the level of interest one has for the category (involvement) and the brand’s market clout (distribution, promotions, etc).
Kent Wertime (Building Brands & Believers: How to Connect with Consumers Using Archetypes) argues that while products are becoming more alike, brands can avoid 'commoditisation' by drawing on the rich language of archetypes to tap into more unconscious and emotional levels that influence consumer perception and preference.
The Benefits of Brand Equity
A number of tangible and intangible benefits can be identified as a result of brand equity. Strong brands drive price premiums, encourage greater customer loyalty, and foster higher employee commitment to the companies that own them, as well as attracting higher skilled employees. A strong brand can out-perform the market when economic times are good, and can protect a company when prevailing economic conditions are less beneficial or when there have been marketing mistakes. A company with strong brands also has increased visibility on stock markets.
Increasingly, owners of successful brands have to look beyond their narrow focus on customers and their own bottom-line, and consider the impact of their brands on society at large. There is a large element of self-interest in this, as brands with clear and strong values can leap product categories and compete in markets outside their core competence e.g. Virgin moving from music to airlines.
The indications are that if a brand is likely to be successful and valuable in future, it will need to think and behave like a leader: at the basic level of product and service delivery and quality; and at the emotional level of creativity, values and social contribution. Branding is a powerful tool; but if it is not based on solid foundations, it will not succeed in the long-term.
Why the Need for Destination Marketing?
The underlying concept of Destination Marketing, which was pioneered as an area of study by authors such as Philip Kotler, Donald Haider and Irving Rein, is that all places – cities, regions, countries – are subject to challenges as a result of global, political and economic changes, as well as normal processes of evolution and decay. Faced with scarce resources, and a growing number of competitors, destinations have to rely increasingly on their own local resources if they are to survive and prosper. Despite the powerful internal and external forces that challenge them, however, destinations have the collective resources and people to improve their relative competitive positions.
Many places have fallen on hard times as a result of economic and social changes. External factors such as exhaustion of natural resources, competition from cheaper markets, technological change, global restructuring, environmental and social pressures, can all lead to industrial decline. Internal factors also come into play often as a result of these external elements, such as major companies leaving, and economic recession. This has a detrimental impact on employment which results in a stagnating or declining community tax base, leading to conditions of infrastructure breakdown and reductions in services. The place loses its ability to attract new businesses, residents and tourists, and the downward spiral continues. Communities where this have occurred include, for example, the Rust Belt in the US, the South Wales mining community, the coal producing areas of France and Belgium.
Destinations in trouble often resort to palliatives such as national or local government grants, bidding for smokestack industries, building convention centres and exotic attractions. The evidence suggests, however, that “place wars” such as battles for Japanese factories, government projects, Olympic Games, baseball team franchises, convention business and other economic prizes are often misguided and end in wasted money and effort, if the necessary investment is not made in improving the industrial and infrastructure base and marketing the area effectively.
Kotler et al argue that the hidden key to combatting these challenges is for destinations to learn how to compete, and to learn how to think more like businesses, developing products, markets and customers. A strategic market planning perspective provides destinations with the marketing tools and opportunities to respond to challenges, coupled with fundamental policies such as rebuilding the infrastructure, creating a skilled labour force, stimulating local business entrepreneurship and expansion, developing companies and industries, creating local attractions, and building a service-friendly culture.
Strategic marketing of places requires a deep understanding of how “place buyers” – tourists, new residents, factories, corporate headquarters, investors – make their location decisions. Once they have this understanding, “place sellers” can compete aggressively for “place buyers”.
As with any other product or service, the effective promotion of a destination requires a strategic marketing analysis. This should start with identifying what needs and whose needs the destination can meet and satisfy. What preference groups (investors,for example) or market niches (e.g. skiers) should be targeted to optimise economic outcomes? A Segmentation, Targeting and Positioning (STP) model can be created which will help determine priorities and target audience.
Segmentation requires potential customers to be identified – such as foreign direct investors, expatriates, or the diaspora. Clients can then be targeted selecting those who can be served most effectively, will receive the most value or can be charged the most for services offered. Positioning then demands effectively communicating the main benefits offered to the main target group.
A destination needs to be positioned in relation to its competitors, emphasising its natural and human endowments and its relative advantages. The process of positioning should aim to identify the destination with an image, perception, concept or characteristic which captures its essence and broadens its appeal to its targeted clients. However, as with any other form of branding, it is important to ensure that positioning messages are attuned with realities on the ground. Anything that is subsequently perceived to be a lie or an exaggeration will rebound and have a negative impact on a destination’s subsequent image.
Marketing is about optimal allocation of resources in view of objectives and opportunities. There are four principles underpinning a successful marketing campaign which can be applied as well to destinations as other products and services.
- Product – The “products” for a destination are issues such as infrastructure, natural endowments, geographic vantage point, climate;
- Price – Can the destination demonstrate a relative or absolute advantage in terms of cost or return on investment compared to competing places?
- Place – Demonstrate how the destination faciliates investment through programmes such as the unhindered exchange of goods, services and capital (tax holidays, free trading zones, double taxation agreements, helpful laws and regulations etc.); and
- Promotion – The advertising and dissemination of news and information about the destination, public relations and lobbying activities, media campaigns etc.
Destination marketing comprises a number of strategies that communities and regions can use to embrace their competitive positions: attracting tourist and business visitors; attracting businesses from elsewhere; retaining and expanding existing businesses; promoting small business expansion and encouraging new business start-ups; expanding exports and outside investments; and expanding the population or changing the mix of residents.
The Chinese-American geographer, Yi-Fu Tuan, retired Professor Emeritus at the University of Wisconsin, invented the concept of Topophilia, which is very relevant to the concept of branding when applied to destinations and places. Topofilia is defined as the affective bond with one’s environment – a person’s mental, emotional and cognitive ties to a place. It concerns itself with environmental perceptions and values at different levels: the species, the group and the individual.
Yi-Fu Tuan holds culture and environment, and topophilia and environment as distinct in order to show how they mutually contribute to the formation of values. Topophilia examines the search for environment in the city, suburb, countryside and wilderness from a dilatectical perspective, distinguishing different types of environmental experience, and describing their character.
The concept of Topophilia can be linked to destination marketing because such marketing succeeds when stakeholders such as citizens, workers and business firms derive satisfaction from their community, and when visitors, tourists, new businesses and investors find their expectations met. This cements their affective bond with their environment.
Destinations as Brands
There is increasing interest and demand for destinations – countries, regions, cities – to develop and market themselves as brands. These destinations, often through the form of a Tourist Board or a similar, quasi-governmental organisation, seek to differentiate themselves from the competition – other destinations – through their unique selling points, appealing to both national and international audiences. Destinations have to adopt techniques based on challenger branding principles, enabling them to stand out from the crowd, with marketing aimed at various audiences – individuals, tourists, business. While different triggers are used for different audiences, the value of the brand should be consistent with the same messages.
Increasingly, destinations are being forced to adopt a market perspective towards their product and consumers, and need to effectively communicate and promote their competitive advantages. This requires the development of a full marketing plan and roll-out programme to sell the destination to whatever audience it may be seeking to attract e.g. investors, tourists, potential citizens.
From its initial roots as a sign of ownership, branding has evolved and developed to the point where it can be used as a significant measure of distinction, with the ability to command price premiums, engage consumer loyalty – both at the rational and emotional level – and create a strong attatchment in the mind's of consumers.
In recent years the concept has begun to be extended to destinations or places – countries, regions, cities. This reflects the fact that destinations are increasingly at risk to the challenges posed by global, political and technological changes, and are finding themselves competing against a plethora of alternatives, some of which are priced very aggressively. To face these challenges, destinations need to establish a strategic vision and establish a market-orientated strategic planning process, adopting a market perspective toward their product and consumers. Destination branding helps define a place and create a unique identity with clear and strong values, appealing to both our rational and emotional motivations. However, as with any other brand, destinations need to be backed up by product, service delivery and quality, plus an appeal to that sometimes elusive emotional side of the human psyche. If the infrastruture, economic base, level of service and attitudes are not there on the ground, the brand promise will quickly be undermined and wither.
As globalisation gathers pace in the 21st century, no destination is assured of immunity from external and internal pressures. Destination branding, supported by appropriate support programmes and investment can help a place respond to these challenges, distinguish itself from the competition, and guarantee a better chance for survival and long-term prosperity.
Philip Kotler, Gary Armstrong, “The Principles of Marketing”, Prentice Hall, 2006.
Philip Kotler, Donald H. Haider and Irving Rein, “Marketing Places – Attracting Investment, Industry and Tourism to Cities, States and Nations”, The Free Press, New York, 1993.
Noam Chomsky, “New Horizons in the Study of Language and Mind”, Cambridge University Press, 2000.
Steven Pinker, “Words and Rules: The Ingredients of Language”, HarperCollins, 1999.
David A. Aaker, “Managing Brand Equity: Capitalizing on the Value of a Brand Name”, The Free Press, Simon & Schuster Inc, 1991.
Kent Wertime, “Building Brands & Believers: How to Connect with Consumers using Archetypes”, John Wiley & Sons (Asia) Pte Ltd, 2003.
The Economist, “Brands and Branding”, edited by Rita Clifton and John Simmons, with Sameena Ahmad et al, The Economist in association with Profile Books, February 2004.
Jannie Hofmeyr, “Leveraging Brand Equity: Closing the Gap between Consumer Equity and Financial Equity”, Transkei 1993, (Hofmeyr J, Van der Walt L).
Yi-Fu Tuan, “Topophilia – A Study of Environmental Perceptions, Attitudes and Values”, Prentice-Hall Inc, Englewood Cliffs, NJ, 1974
Nigel Morgan, Annette Pritchard, Roger Pride, “Destination Branding; Creating the Unique Destination”, Butterworth-Heinemann, Oxford 2001.