Competitiveness: Vienna-Bratislava WS/SS 2005/06
Thomas Auböck, Simon Hartl
Strategic Concepts and Instruments to enhance a City’s Competitiveness
1 Introduction and Context
1.1 What are the main challenges cities have to face in regard to interurban competition?
During the last decades political, economic and institutional changes led to an increasing interurban competition on the global, European and national level. As national borders lost most of their significance in economic terms due to restructuring processes on the supranational level (e.g. creation of a common market within the European Union) cities are under constraint to position themselves within a global network of metropolitan areas. Furthermore, changes within the internal organisation of companies and an increasing mobility of factors due to the rapid development of transport systems and communication technologies led to more flexibility in the choice of location of various actors.
Cities therefore compete to a high degree for multinational investors (mainly service enterprises), subsidies and investments of supranational institutions, international events and fairs, skilled labour force and residents as well as tourists.
In accordance with these trends more and more cities make use of marketing measures and integrative management concepts to enhance their competitiveness on a regional and global scale. One of their major tasks is to develop a distinct identity (“unique selling position”) and to enforce competitive urban functions which are demanded by the relevant target groups. The term competitiveness is therefore not only defined by economic terms. It is also affected by non-economic factors like the quality of life, the political framework, individual security, social cohesion and public participation.
1.2 How can strategic concepts and city marketing enhance the competitiveness of cities?
The competitiveness of cities can be influenced and developed by various measures (deliberately) and activities (unintended) which set the frame for socioeconomic developments. It is very important to distinguish between those concepts and instruments that can be developed within the competency of the municipality and those that are defined by decisions on a superordinate level (e.g. European Union, Federal Government). The latter lie beyond the scope of this report but nevertheless have an important impact on actions at the local level.
In general terms, strategic concepts are elaborated by relevant stakeholders on the local level. Their main purpose is to develop certain sectors of a cities economy and to position a city within interurban competition. Strategic concepts are therefore taking into account exogenous and endogenous factors at the same time. They are characterized by a process-oriented and participative approach towards urban development. The development of a “Common Vision” of all relevant stakeholders (involvement of private actors) is the major task of this process.
City Marketing is a management tool which is used to coordinate various strategic efforts and projects of public and private actors within an integrative, proactive and transparent process and to promote public services and communal qualities to relevant target groups.
1.3 What are the main challenges local governments and administrative bodies have to face?
Over the last decades traditional local government organisation has been characterized by an increasing loss of legitimacy and by a lack of effectiveness and efficiency in dealing with the challenges of complex economic and social problems. Globalisation and increasing interurban competition additionally favoured a reorganisation of the political-administrative system as a whole and newly established networks and alliances as well as the involvement of private and semi-private actors within the decision-making process in particular.
According to the relevant literature, this process of restructuring local government structures is characterized as the shift from city government to city governance. Attempts to combine formal and informal processes of decision-making and the commitment to different forms of co-operations (horizontal-vertical, public-public and public-private) are the main attributes of this restructuring process. It seems that interurban competition is not solely a competition of business locations or tourist destinations; it is also a competition of governance models and flexible administrative structures.
Integrative City Marketing seems to be an adequate concept to implement these new approaches towards urban governance and to overcome the lack of flexibility within traditional government structures.
2 Task Definition and Scope
This report deals with strategic concepts and instruments to enhance the competitiveness of cities within an international network. It focuses on those strategies which can be developed within the competency of local governments. One of the major tasks is to analyse their function in a holistic but nevertheless to a great extent economic sense and to assess the effectiveness of particular strategic concepts, particularly in the city of Vienna.
The third chapter of this report focuses on a management concept that we called “Integrative City Marketing”. The name was derived from the German term “Umfassendes Stadtmarketing” described in Busso Grabow’s and Beate Hollbach-Grömig’s “Stadtmarketing–eine kritische Zwischenbilanz” (Grabow, B. 1998). The editors of this report agreed on this term because it seemed to be most suitable to describe the features the concept stands for. Nevertheless, we are aware of the fact that the translation might sound a bit unfamiliar to English native speakers. The term “Co-operative Urban Development Planning”, which can also be found in relevant English literature, describes a very similar conceptual framework which however is lacking some essential attributes.
Chapter 3.3.3 provides an overview of all the strategic fields of actions and instruments that are linked to the concept of “Integrative City Marketing” whereas Chapter 4 contains a detailed description. We decided to focus on those elements that are closely connected with urban development planning. Legal frameworks and local tax systems for instance have an important impact on a city’s efforts to attract inward investment but will not be covered by this report.
Chapter 5 will take a look at the particular situation in Vienna based on the definitions in the previous sections.
A critical review of all covered concepts and instruments and a conclusion will complete this report.
3 Basic Attributes and Implementation of Integrative Marketing Concepts
3.1 Economic principles of marketing concepts
The term “marketing”, in its traditional economic sense, describes management concepts, developed by private companies in order to harmonize sales methods with basic entrepreneurial objectives like profit maximization and efforts to position a company within a particular economic sector (Busso, G. und Hollbach-Grömig, B. 1998).
At first marketing concepts were implemented in the US at the beginning of the 20th century. They were mainly the result of a far reaching change of market conditions caused by a shift from a market regime which strongly favoured suppliers in regard to price formation and product design, due to a fundamental lack of goods and services, towards a market which was mainly dominated by the interests and demands of costumers. As a consequence of these developments companies from then on had to align all their decisions and activities with the requirements imposed by the market. Marketing concepts are characterized by an integrative approach to comply with this requirements in all phases of the production process (company organisation, product design, advertising, sales activities).
At first marketing activities were applied exclusively within the consumer goods sector. However, in the last decades marketing concepts increasingly gained importance in connexion with capital goods, services, public enterprises, institutions and cities. Marketing theory developed from an economically orientated concept, which was mainly dominated by entrepreneurial objectives, to an integrative tool for coordinating and controlling complex processes (Meissner, H.G. 1995).
The American Marketing Association“ (AMA) in 1968 already defined „marketing“ as a “process of planning and executing the pricing, promotion, and distribution of goods, ideas, and services to create exchanges that satisfy individual and organizational goals”.
3.2 City marketing concepts
Until the late 1970s urban planning was mainly dominated by an expansive and technical approach towards urban development. In general, the interests of individuals, companies and local residents played a minor role within the planning process.
On the contrary, in the 1980s a lack of financial resources, an increasing competition on the regional, national and international level as well as an increasing significance of economic matters in general led to the introduction of economy based concepts within public administration systems, in order to enable communes to coordinate strategic activities and identify specific fields of action.
Generally speaking, city marketing is regarded as a modern management tool for urban development planning whose main objective is to harmonize the heterogeneous needs and interests of diverse actors (e.g. foreign investors, local residents, tourists) with the basic objectives of municipal authorities and administrative bodies within the framework of a strategic development process.
Unfortunately, there is no internationally recognized, precise definition of the term city marketing. Elements and activities of city marketing concepts seem to vary, depending on the literature which is being taken into account.
The authors of this report tried to find a new definition of the term “city marketing” in Chapter 3.3. The elaboration of a synthesis of all definitions which could be found in the relevant literature and the integration of a broader approach towards marketing seemed to be most suitable to fulfil this task.
3.3 Integrative city marketing
Concerning the spatial scope, integrative city marketing concepts are developed for metropolitan areas, a term which explicitly refers to a functional area and not exclusively to the area within the administrative boundaries of a city. These functional interdependencies between a city and its hinterland also play an important role when specific fields of actions are defined. With regard to the content, city marketing can deal with a wide range of strategic fields and tasks.
The majority of academic experts and consulters agree that a direct transfer of marketing programmes for private companies into the public sector (“The entrepreneurial city”) is not a concept which is worth striving for due to the distinct requirements and objectives of private companies and cities.
3.3.1 The objectives of integrative city marketing
The term integrative city marketing is not exclusively referring to advertising activities, location marketing strategies and public relations. It describes an integrative and at the same time proactive city management method, which aims at developing a common vision of all relevant public and private decision makers within an institutionalised and transparent process (Zerweck, D. 1997 und Honert, S. 1991).
One of the crucial tasks within this process is the definition of target groups and specific objectives in order to set a frame for all future activities, e.g. the definition of specific fields of action and the choice of suitable instruments.
Overall objectives include the improvement of public administration and services for local companies, residents and foreign investors and institutions, the positioning of a city against other competitors, efforts to attract additional residents, enterprises, skilled labour force and tourists as well as an efficient use and allocation of public resources. The development of public-private networks and new methods of urban governance also play an important role within the process.
All decisions and activities should be based on the requirements of target groups inside and outside the administrative boundaries, on the actions of potential competitors and a city’s own setting of objectives (Kuron, I. 1997).
It is essential that integrative city marketing programmes are inward oriented and outward oriented at the same time. The development of endogenous potentials and assets and the integration of a city’s cultural, social and human capital are therefore one of the major tasks in order to reduce the dependence on external decisions and resources (Hartl, S., Ringler, C. 2005).
In regard to positioning on the national and international level, a city’s image plays a major role. An image is based on common perceptions and opinions towards a specific city, which are mainly influenced by historical and, to a lesser extent, present events as well as by objective and subjective or even biased and emotional perceptions, ideas, feelings and experiences. Although an image becomes more stable over time it can nevertheless be influenced by strategic positioning and marketing efforts.
3.3.2 City marketing procedures
City marketing activities in most cases are started by an initiative of the the local government. However, sometimes the process is also initiated by private actors or NGOs. In general the procedure of developing a city marketing programme can be structured in 3 main stages: a conceptual phase, a phase of developing a vision strategy and project definition and a phase of implementation.
Conceptual Phase
The process starts with an extensive screening of the socio-economic situation and the infrastructural framework and an evaluation of current trends and baselines on the regional and international level. Based on this data and on comparative research work (analysis of potential competitors) a SWOT analysis (Strengths-Weaknesses-Opportunities-Threats) is carried out in order to define the competitive position and a first profile of the city (portfolio).
Vision strategy and project definition
This stage comprises the development of a vision strategy (overall objectives) and the development of strategic programmes to increase a city’s competitiveness.
The objectives of city marketing programmes in general are structured hierarchically and by specific fields of action. Basically 3 different groups of objectives can be observed:
§ Financial Objectives (e.g. Attracting inward investment and tourists)
§ Spatial Objectives (e.g. Investments in infrastructure and accessibility of services)
§ Psychographic Objectives (e.g. Positioning, modernization of public administration)
(Zerweck, D. 1997)
The process of developing strategies consists of 2 different stages: the elaboration of proactive, strategic concepts for specific fields of action and the acquisition and coordination of required resources and skills. Market research and costumer orientation are indispensable at this crucial stage of the process.
Implementation
The identification of relevant actors, responsible for the implementation of programmes and the realization of projects, and the development of organisation charts and time schedules are the most important success factors in regard to the implementation of the concept. A proactive marketing programme also includes a precise plan of procedures for every single marketing tool (marketing mix) which considers interdependencies and chronological sequences. Due to the iterative and continuous character of city marketing concepts, experts agree that monitoring and permanent performance control are important to check whether the objectives developed at an earlier stage could be fulfilled or not.