Transcript Marketing Communities Internationally

Marketing Alberta Communities
Regional Economic Development
Workshops
March 14 to 18, 2005
Module 1 – Effective Marketing Package
Presented by:
Self Introduction
– Consultant serving Canadian economic development agencies
at all levels of government since 1997.
Specializing in economic analysis, strategic planning and the
creation of targeted marketing programs.
– More than 30 years experience in economic development:
– City of London (94-97)
– Canadian Consulate General – Los Angeles (90-94)
– Niagara Region Development Corporation (82-90)
– Regional Municipality of Halton (79-82)
– City of St. Catharines (74-79)
Past President of EDAC (2003)
Past President of EDCO (1986)
EDAC/University of Waterloo Economic Development Program
House Rules
You will interrupt me
You will ask questions & challenge my
point
Setting the Stage
Trying to Define What We Do
The Development Officer’s Job
The Wizard
This isn’t a Profession
it’s a Black Art.
– An EDO is expected to
stimulate investment
and job creation in the
community with little or
no resources and no
control what-so-ever
over the factors that
actually contribute to a
healthy economy.
The Development Officer’s Job
The Facilitator
We have no real power or authority.
Virtually all the factors affecting the investment
decision are beyond our control.
Exchange rates, interest rates, business cycle, trade
policy, market swings, 911, SARS, BSE, etc.
We don’t control the decision-making process of
our clients - the potential investors.
Unlike many of our American competitors, we can’t
offer financial incentives to influence a decision.
However, we can bring people together with
ideas to make things happen.
The Development Officer’s Job
Slay the Nine-Headed Hydra
In addition the EDO is also expected
to provide leadership in:
– Town Council & Committees
– Department Heads Meetings
– Chamber of Commerce and
Committee Meetings
– Downtown Redevelopment
– Transportation Issues
– Heritage Preservation
– Industry Association Activities
– Stimulating Exports
– Accessing Capital for Local
Companies
– Commercializing New Technology
– Tourism Promotion
– Festival & Event Planning
– et al
My Personal Rant
In trying to become more sophisticated in what we do,
we too often lose sight of the fundamentals in economic
development.
Example - How many economic development plans include
“Innovation”, “Smart Growth” or “Cluster Development”
How many communities are targeting one or more of the following:
– Biotech, Life Sciences, Nutraceuticals, Bio-Mass, Alternative
Energy
– or the dreaded “High Technology”
Stop & think!!! Who’s creating jobs in your community?
What can you do to support them?
Get Back to Basics in Economic Development
What are the Basics?
Know your Community
Ensure your Community Profile, Business Directory and
other databases are up-to-date and comprehensive
– & easily found on the web.
Know your Companies
Visit your companies, learn everything you can about their
products & processes, their operations & growth strategies.
– don’t forget to collect info on the “Parent Company” and
the company’s reporting structure.
Economic Base Theory
Back to Basics
Understanding How Local
Economies Work
Back to Basics
Economic Base Theory
Understanding Local Economies
“Basic Industries” – are those businesses that serve
customers outside the region (exporting) and thereby
attract “new” money to grow the local economy
Examples – manufacturing, agriculture, tourism
“Non-Basic Industries” – are those businesses that
serve local customers and thereby redistribute money
within the local economy
Examples – most retail & personal services businesses
Back to Basics
Economic Base Theory
There can be “Basic” elements in a number of
“Non-Basic” industries.
Example - to the extent that a local business also
attracts customers from outside the region, a portion
of their business becomes “Basic”.
Example – Big Box Retailer, Large Auto Dealership
– A high Location Quotient (LQ > 1.00) in a typically “nonbasic” industry can point to “basic” elements in that industry.
Back to Basics
Economic Base Theory
“A standard interpretation of the economic base model is that exports
and the income they inject into the local economy are all that really matter they cause or enable all other economic activities. Income earned in exportoriented activities circulates through the local economy, putting people to
work in locally oriented economic activities that provide the vast majority of
jobs.
The standard interpretation of the economic base model would
dismiss a restaurant or recreational facility as derivative or secondary, ....
[t]he alternative interpretation would say that such local economic activity
absorbs and holds dollars longer in the local economy, increasing jobs and
income. ...
The economic base model should not be interpreted as meaning that
only exports matter. Rather, export earnings interact with a particular local
economy to determine the overall level of local economic activity. Both
export earnings and the local economic structure matter. The internal logic
of the economic base model has simply been misinterpreted."
Power, Thomas Michael, (1996)
Lost Landscapes and Failed Economies.
Washington DC, Island Press
The “Leaky Bucket” Model
for the Local Economy
Back to Basics
Economic Base Theory
Consider the contribution of each industry
from a “Strategic” viewpoint
“If your goal is expansion of jobs & wealth – you will
want to stimulate your fastest growing sectors” – use
the community’s natural competitive advantages to
further stimulate key industries.
“If your goal is diversification – you will want to fill the
gaps in the economic structure of the community” –
nurture under-represented business sectors to round
out the local economy.
Strategic Plan vs. Work Plan
Strategic Plan provides
your compass heading
– The overall direction of
your economic
development program
Work Plan & Budget
represent map you use to
get there.
– Your route around
obstacles, the speed at
which you intend to travel
and stops along the way.
Components of an Economic
Development Program
Business Attraction
Most visible of all programs however it often accounts for
only 10% of EDO’s time.
Generally consumes most of the operating budget.
For brochures, exhibits, advertising & promotion, etc.
Business Retention & Expansion
Most effective of all programs.
Maxim - Existing businesses will generate as much as 90%
of economic growth in the community
Small Business/Entrepreneurial Development
In our experience there is an insatiable demand for business
counseling and advisory services.
Counseling, Business Planning, Financing for Small
Enterprises, Mentoring
Components of an Economic
Development Program
Tourism Programs
Destination Marketing
– Mass Marketing
examples: advertising, maps & brochures, packaging
tours, sports tourism, meetings & conventions, event
management.
Tourism Development
– Working with investors & entrepreneurs
develop new/expanded accommodations & attractions.
The two programs address different audiences and
use different languages
Components of an Economic
Development Program
Downtown Redevelopment
High priority in many communities although with mixed
results.
Big Box is firmly entrenched in the marketplace
Retail Chains don’t do Main Street
The economics of office buildings are tough in many
smaller communities
Entertainment venues (sports stadium, performing arts,
theatre, restaurants, pubs, night clubs) work well in many
communities.
Special Projects
Different for every community
Examples: incubator projects, angel networks,
commercializing new technology, export programs,
infrastructure projects
Marketing Your Community
Business Attraction
The Role of Foreign Direct
Investment in Canada
Steps to Developing a Marketing Plan
1. Assemble Information for Community Profile
(If you go no further than this, you will have developed the
capacity to respond professionally to inquiries from
prospective investors.)
2. Address Impediments to Growth (Infrastructure)
3. Pick your Target Sectors (where are they located?)
4. Prepare your “Pitch” (Marketing Materials)
5. Plan your Approach (Marketing/Sales Techniques)
6. Assemble Resources & Execute (Budget & Staffing)
7. Measure Results Against Objectives & Adjust
Foreign Investment in Canada
24% of all Canadian corporate assets are
foreign-owned
They generate 31% of all corporate operating revenues
Foreign owned firms tend to be larger
High concentrations of foreign ownership found
in the following industries
Chemical Industry - 68%
Transportation equipment - 54%
Electrical Equipment – 50%
The US is our dominant investor
2/3's of all foreign investment in Canada is American
Total Stock of FDI In Canada
Source: Statistics Canada
Sources of FDI In Canada
Source: Statistics Canada
The Unique Canadian Challenge
Which is more attractive for your
business?
Canada Eh?
Relic & Nick of
The BEACHCOMBERS
The American Way
The Boys & Girls of
BAYWATCH
The Canadian Challenge
Everyone wants into the American market
– Canada is too small – only 1/10th the US market.
– California has a larger population and GDP than Canada. If
it were a country it would knock Canada out of the G8.
Although we’ve got a lot of advantages, we’re often not on
the radar screen of prospective foreign investors.
“It’s not that companies have misconceptions about Canada in many cases they have no conception at all.”
Premier Bernard Lord, New Brunswick
– “If you can’t be big - you’d better be clever”
Create a distinctive offering to stand out from the crowd
Appeal to specific needs of prospective investors
Site Selection Criteria
Relative Ranking will be different for each case.
– Hard Factors
Market Size
Proximity to Customers/Suppliers
Labour Force Availability and Cost
Available Land or Buildings
Business Operating Costs
Transportation Infrastructure
Utilities (sewer, water, electricity, gas) cost and availability
Proximity of Business Services
– Soft Factors
Community Receptivity
Quality of Investor Servicing
Quality of Life
“Real” Site Selection Criteria
Source: Chris Tillett - Coopers & Lybrand, UK
1. Market Access
– Can I reach my customers from this location?
2. Culture
– Am I going to feel comfortable here?
3. Investor Servicing
– How did the community respond to my inquiries?
4. Operating Costs & Incentives
– Will my costs be competitive in this location?
Site Selection Criteria
Access to Labour
– American companies are increasingly drawn north in
search of labour.
– Canada’s unemployment rate hovers between 7% & 8% - in the
US it is ~5.5%. Although facing shortages in certain skills we
have more available labour, plus wages/benefits costs that are
18% -20% less than comparable jobs in the US.
This is the major reason for presenting yourself in a regional
context – highlight the labour force that is available across
the region.
– Retiring “baby boomers” will have a profound effect
on our labour markets.
Canadian Demographic Picture
% of Population by Age Group – 2004
Source: Statistics Canada
9
Baby Boomers
Marching Toward
Retirement
8
7
6
5
4
3
2
0-4
yrs
5-9
yrs
10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80 +
yrs
yrs
yrs
yrs
yrs
yrs
yrs
yrs
yrs
yrs
yrs
yrs
yrs
yrs
yrs
Rating Marketing Methods
Source: Chris Tillett - Coopers & Lybrand, UK
“Face to Face” vs. ‘Institutional’ Marketing
– The bulk of the budget for economic development is
consumed by publishing brochures, videos,
advertising, trade shows, direct mail programs, etc.
Research shows the most effective economic
development are those based on relationship
marketing - “face to face” networking with your
clients
It’s also the least costly of all economic development
activities
Rating Marketing Methods
Source: Chris Tillett - Coopers & Lybrand, UK
Activity
Frequency
Effectiveness
Corporate “Aftercare” Programs
4
5
Business Networks
6
4.8
Chamber Links
4
4.1
Direct Mail to Brokers & Consultants
5
4
“Sales” Calls
3
4
Public Relations
3
4
Attending Conferences
7
3.6
Outward Missions
5
3.6
TV Advertising
2
3.5
9
Membership Foreign Organizations
2
3.5
Trade Shows
8
3.4
Trade Press Advertising
5
3.2
Inward Missions – Fam Tours
4
2.8
General Advertising
6
2.8
Direct Mail to Potential Investors
9
2.8
Directory Listings
4
2.5
Rank
1
2
3
4
4
4
7
7
9
11
12
13
13
13
16
Rating Marketing Methods
Source: Chris Tillett - Coopers & Lybrand, UK
“Corporate Aftercare”
– Most effective of all programs
Objectives
–
–
–
–
–
–
Strengthen the investment
Deepen its roots with new products, new functions
Attract Suppliers
Foster local inter-trade
Early warning of potential rationalization
Ambassador Testimonials
Direct Mail
– Note differences between direct mail programs
targeting “Investors” vs. “Brokers/Consultants”
KPMG Study
The Competitive Alternative
www.competitivealternatives.com/
Operating Costs for
Selected ‘Traditional’ Industries – 2002
Eastern North America
Hartford, CT
Burlington, VT
MONCTON
HALIFAX
Newark, NJ
Boston, MA
Philadelphia, PA
TORONTO
OTTAWA
MONTREAL
KITCHENER/WATERLOO
80
90
Food Processing
100
110
Metal Fabrication
Plastics
120
Operating Costs for
Selected ‘Traditional’ Industries – 2002
Western North America
Houston, TX
Minneapolis, MN
St. Louis, MO
WINNIPEG
CALGARY
SASKATOON
EDMONTON
San Jose, CA
Seattle, WA
VANCOUVER
KELOWNA
80
90
Food Processing
100
Metal Fabrication
110
Plastics
120
Relative Importance of Labour to
‘Location-Sensitive’ Costs
Traditional Industries - KPMG Study 1999
Taxes, 12%
Depreciation,
11.00%
Interest, 6%
Telecom, 1%
Transport, 9%
Labour, 58%
Electricity, 3%
Relative Importance of Labour to
‘Location-Sensitive’ Costs
High Tech Industries - KPMG Study 1999
Taxes, 8%
Lease, 4%
Interest &
Depreciation, 2.00%
Telecom, 2%
Transport, 3%
Electricity, 1%
Labour, 80%
Canadian Advantage
Lower Wages & Benefits Costs
COST of US$100 of LABOUR
CAN
Avg Wage/Salary
Avg Statutory Benefits
Avg Supplementary
Total Wage & Benefits
– Source: KPMG Study 1996
USA
$86.00 $100.00
8.59
13.08
16.60
27.90
$111.19 $140.98
For further information contact us at :
182 Willow Ridge Road, RR #3
Ilderton, ON N0M 2A0
Tel: (519) 666-3668 Fax: (519) 666-3670
Email: [email protected]