Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region [1 ed.] 9783954895502, 9783954890507

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Christiane Mohr

Selling the Business Location

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Place Marketing in the context of the Rhine-Main Region

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Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

Christiane Mohr Selling the Business Location: Place Marketing in the context of the Rhine-Main Region ISBN: 978-3-95489-550-2 Fabrication: Anchor Academic Publishing, an Imprint of Diplomica® Verlag GmbH, Hamburg, 2013

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Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

Abstract In the past decade place marketing, country marketing and city marketing have enjoyed an increase in recognition, especially as countries and locations have been spending more money to encourage firms to locate their offices and plant locations in the place marketer's area. This is reflected in a growing number of associations, literature, media coverage and educational courses offered.

The aim of the present thesis is to evaluate current literature in order to understand the importance of place marketing in general and marketing of the Rhine Main Region, as Germany´s most cosmopolitan region, in particular. For an international context Hong Kong and Los Angeles are used as exemplary competitors. Los Angeles being one of the United States most powerful cities and Hong Kong representing the gateway to China. However, the focus of my investigation is on a B2B perspective in the marketing of the Rhine Main Region.

In literature and in practice, place marketing strategies vary from very simple to very sophisticated. Through examination of the aforementioned business locations I find out that there are huge differences in the approach and execution.

After the creation of a theoretical framework, in which I examine place marketing from the perspective of the marketer and that of the business customer, I put the whole set into practice with help of the Rhine Main Region, Los Angeles and Hong Kong. In my final conclusion I assess the place marketing activities of the aforementioned competi-

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tors and try to rank them according to their current performance.

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

Copyright © 2013. Diplomica Verlag. All rights reserved. Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

Contents List of Figures

I

List of Tables

II

List of Abbreviations 1

2

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3

4

III

Introduction

1

1.1

Place Marketing Phenomenon

1

1.2

Definitions and Terminology 1.2.1 Region vs. Place 1.2.2 Place Marketing

2 2 3

1.3

From Marketing to Place Marketing

3

1.4

Aims and Objectives

5

Selling the Business Location

6

2.1

Objectives

6

2.2

Elements in a Place Marketing Process

6

2.3

Levels of Place Marketing

7

2.4

Who are the Main Targets of Place Marketers?

9

2.5

Major Actors in Place Marketing

10

2.6

The Place Marketing Process

11

2.7

Designing the Place’s Image 2.7.1 Image Marketing 2.7.2 Branding 2.7.3 Distributing the Place’s Image and Messages

14 14 16 17

2.8

Services in Attracting, Retaining and Expanding Businesses

19

2.9

Essentials to Successful Place Marketing

20

2.10

Problems

21

How Investors make their Choices

22

3.1

General Framework

22

3.2

Steps and Factors Influencing the Buying Process

22

3.3

Soft vs. Hard Facts

24

3.4

Influence of Place-Rating Information

25

3.5

Importance of Cluster

26

Place Marketing in the Rhine Main Region

28

4.1

Facts and Figures

28

4.2

Sectors of Industry

29

4.3

SWOT Analysis on the Frankfurt Rhine Main Region

29

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

5

6

4.4

Locational Advantages

32

4.5

Attracting, Retaining and Expanding Businesses

35

4.6

Designing the Image

35

4.7

Distributing the Place’s Image and Messages

36

4.8

Opportunities and Problems

36

The Rhine Main Region in an International Context

38

5.1

Hong Kong

38

5.2

Los Angeles

40

5.3

Country Comparison

41

Conclusion

List of References

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Appendix

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

47 IV XIV

List of Figures Figure 1-1: Consumer vs. Place Marketing

4

Figure 2-1: Elements in a Place Marketing Process

7

Figure 2-2: Levels of Place Marketing

8

Figure 2-3: Phases of Marketing

11

Figure 2-4: The 4 P’s in Place Marketing

13

Figure 2-5: Brand Identity, Brand Positioning and Brand Image

17

Figure 2-6: Success Factors in Place Marketing

20

Figure 3-1: Successive Sets Involved in Buyer Decision Making

23

Figure 3-2: Temporal Course of Locational Decision Making

25

Figure 3-3: Sources of Locational Competitive Advantage

27

Figure 4-1: Map of Rhine Main Region

28

Figure 4-2: Hesse Slogan

37

Figure 4-3: FrankfurtRheinMain GmbH Slogan

37

Figure X-1: City Growth/Decay Dynamics

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Figure X-2: 2009 Tax Misery & Reform Index

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

XV XXII

I

List of Tables Table 2-1: The Four Main Target Markets Table 2-2: Major Actors in Place Marketing

10

Table 3-1: Five Stages in Choosing a Place

23

Table 3-2: Essential Factors for Locating a Business

24

Table 4-1: The Frankfurt Rhine Main Region in Figures

28

Table 5-1: 10 Reasons to Invest in Hong Kong

38

Table 5-2: Reasons to Do Business in Los Angeles

40

Table 5-3: The Global Competitiveness Index 2009–2010 Rankings (Overview)

42

Table 5-4: The Global Competitiveness Index in Detail

43

Table 5-5: 2010 Index of Economic Freedom

44

Table 5-6: Opacity Index 2009

45

Table 5-7: Economy Rankings 2008-2009

45

Table X-1: Differences in Marketing Companies and Regions

XIV

Table X-2: Stages of the Strategic Market Planning Process

XIV

Table X-3: List of Agencies and Services

XVI

Table X-4: Starting a Business in Germany

XIX

Table X-5: Starting a Business in Hong Kong (China) Table X-6: Starting a Business in the United States

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9

II

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

XX XXI

List of Abbreviations 4 P’s – Product, Price, Place, Promotion B2B – Business-to-business FRM – Frankfurt Rhine Main InvestHK – Invest Hong Kong L.A. – Los Angeles OSS – One-Stop Shop SAR – Special Administrative Region SWOT – Strength – Weakness – Opportunity – Threat U.S. – United States

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USP – Unique Selling Proposition

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III

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1 Introduction 1.1 Place Marketing Phenomenon If you enter the phrase “marketing of regions” in Google, you get about 575,000 hits (last checked March 19, 2010). Although a great amount of those are unusable, there are still thousands of hits that direct you to the websites of cities and regions all over the world and provide an amazing amount of information on their marketing efforts. This shows how important regional marketing has become in today's economy. There is hardly one town or region without a special slogan or logo advertising its attractions (Mayer 1999, p. 1). What used to be a mainly tourism related field of studies has now shifted to business and marketing. Recent research reveals that the number of studies within the discipline of branding and business are double those in tourism (Hanna and Rowley 2008, p. 67). But what is the reason for this new interest in place marketing? Place marketing as such is not a new phenomenon, and like many marketing ideas has its origins in the U.S. From almost the first stages of the colonization of the North American continent, there were conscious measures taken to attract settlers (Ward 1998, p. 10). Nowadays international business places increasingly compete with each other for different reasons (Mayer 1999, p. 2). One reason is rooted in increasing global competition and competition between business locations, as well as dismantling trade barriers, sinking carriage costs, flexible forms of organization and the exchangeability between locations, which have given distance a whole new meaning (Gubler and Möller 2006, p. 25). Transportation and communication have grown speedier, easier and cheaper so that distance no longer is relevant (Avraham and Ketter 2008, p. 3). The same applies to the factors people, goods and capital, which have become mobile and therefore can easily be moved to different places (Gubler and Möller 2006, p. 18). Another reason for this new interest in place marketing is that the competitive ad-

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vantages places pursue change over time and due to circumstances such as jobs, plants, investment, tourists, specific industries, and better quality of life (Haider 1992, p. 127). New place attributes and fresh definitions of the accessibility of places have thrust cities and regions into new relationships with their external and internal markets which present both threats and opportunities (Ashworth and Voogd 1994, p. 40).

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

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“In a world economy, every place competes against every other place (city, country, region, state, and nation)”. (Haider 1992, p. 127)

Especially economic weak regions face an enormous pressure to take promotional measures to attract people and investment (Mayer 1999, p. 2). Therefore business locations must develop strategies and bundle their competencies to continuously attract taxpayers and ensure long-term workplaces (Gubler and Möller 2006, p. 25). The criteria for successful places are now characteristics such as environmental quality or, more broadly, the way in which cities are valued as places in which to live, work, enjoy leisure or invest (Ashworth and Voogd 1994, p. 40). “In this competition, marketing is emerging as the driving force in how places position themselves in the marketplace as sellers of products to serve customer's (buyers') needs and wants" (Haider 1992, p. 127).

1.2 Definitions and Terminology 1.2.1 Region vs. Place A review of the current literature on this topic clearly points out that there is no coherent definition of the term ‘region’. The range of usage goes from European region, metropolitan region to city region (Melzer 2007, p. 19). Besides, the words place and region are constantly equated. As Hanna and Rowley put it, “there seems to be a recognizable gap in the literature regarding the application of the term ‘place’ and its associated vocabulary: location, country, nation, city and region” (Hanna and Rowley 2008, p. 61). Kotler agrees and contributes an even broader definition: “A place is a nation-state, a geopolitical physical space; a region or state; a cultural, historical or ethic bounded location; a central city and its surrounding populations; a market with various definable attributes; an industry´s home base and a clustering of like-industries and their supplier; a

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psychological attribute of relations between people internally and their external view of those outside” (Kotler et al. 2002, p. 4). In branding and business ‘place’ and ‘location’ are the most dominant terms used, whereas there seems to be consensus that ‘destinations’ indicate tourism only (Hanna and Rowley 2008, pp. 61,69). According to the literature I researched, the terms ‘region’ and ‘place’ are used interchangeably in this thesis.

2

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

1.2.2 Place Marketing Many definitions of place marketing can be found, as the subject has generated a massive literature lately (Barke 1999, p. 486). However, most of them share the idea that localities must try to make themselves more attractive than others to key economic decision makers in order to stimulate local economic development (Carter and Turnock 2005, p. 104). According to Kotler “place marketing means designing a place to satisfy the needs of its target markets. It succeeds when citizens and businesses are pleased with their communities, and meet the expectations of visitors and investors” (Kotler et al. 1993, p. 99). Ashworth and Voogd represent a similar point of view: “Place marketing can be defined as a process whereby local activities are related as closely as possible to the demands of targeted customers. The intention is to maximize the efficient social and economic functioning of the area concerned, in accordance with whatever wider goals have been established” (Ashworth and Voogd 1994, p. 41). “Place marketing is a mix of: changes in the form and function of localities (the ‘place product’); the use of financial incentives; the promotion of a new image of place; and changes in the way that places are governed” (Carter and Turnock 2005, p. 104).

1.3 From Marketing to Place Marketing Due to increasing competition and globalization and the battle for inward investment, visitors and jobs, countries, regions and cities began applying to their ‘product’ certain marketing techniques previously developed for consumer goods (Caldwell and Freire 2004, p. 50). “Place marketing has become a commonplace activity of cities, regions and countries. However, very few marketing specialists have given much thought to its application to places, treated as products, and, if they do, they too easily assume that places are just spatially extended products that require little special attention as a conse-

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quence of their spatiality” (Kavaratzis and Ashworth 2005, p. 507). Ashworth and Voogd argue against such behavior. To them a city, region or country is essentially different from the simple archetypal commercial market transaction where a product or service is exchanged for a price since it does not usually involve either the exchange between seller and buyer of ownership over physical entity, nor even purchase or hire of any exclusive rights over urban services (Ashworth and Voogd 1990, p. 65).

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The specialty of place marketing lies in the complexity of the object. Places are territorial but also social entities. Places are homes, workplaces, resorts or business locations. Based on these social aspects, a place is less alterable than a consumer good (Gubler and Möller 2006, p. 33). Unlike purely business or commercial product marketing, in place marketing the competencies are not combined in one person, but several policymakers. Decisions require the active support of public and private agencies, interest groups, and citizens. See figure 1-1 (Kotler et al. 1993, p. 20).

Figure 1-1: Consumer vs. Place Marketing (adapted from Gubler and Möller 2006, p. 34)

Consumer Marketing

Place Marketing

x x x x x x

x x x x x

Product Packing Price Services Distribution Communication

One Stop Competencies

Political framework Economic framework Cultural framework Social framework Public institutions

Distinctive Competencies (Government, authorities, associations, organizations, research institutes, investors, companies, population, etc.)

Another immediate problem in the range of place marketing is that it is not readily apparent what the product actually is, nor how the consumption of place occurs. “Though marketing practices make places into commodities they are in reality complex packages of goods, services and experiences that are consumed in many different ways” (Gold Copyright © 2013. Diplomica Verlag. All rights reserved.

and Ward 1994, p. 9). Also, the measurement of effectiveness outcomes may be that much more difficult. While the success through a targeted marketing strategy may be quantifiable the effects of an image-raising campaign on firm and job attraction is less easily specified (Paddison 1993, p. 341). Typically only a small amount of returns on marketing effort – the ‘sales’ – accrue directly to the promotional agency (Gold and Ward 1994, p. 9).

4

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For an overview of the differences in marketing companies and regions, please also see appendix Table X-1: Differences in Marketing Companies and Regions.

1.4 Aims and Objectives This thesis intends to investigate the current literature in order to understand the importance of place marketing in general and marketing of the Rhine Main Region, as Germany´s most cosmopolitan region, in particular. To point out the competitiveness of the Rhine Main Region in an international context, I use Los Angeles and Hong Kong as exemplary competitors. Los Angeles being one of the U.S. most powerful cities and Hong Kong representing the gateway to China. However, the focus of my investigation is on the Rhine Main Region. Due to the length limitation in this thesis and the fact that the attraction of new factories and business investments is one of the most interesting facets of place marketing (as these are expected to create new jobs and economic growth, with an overall benefit on the country’s economy), I concentrate on B2B marketing and leave out the tourism sector (Kotler and Gertner 2002, p. 257). Chapter 2 and 3 form the theoretical foundation of this thesis. In chapter 2 I deal with the basics of place marketing and develop a theoretical framework for the central success factors of place marketing practices. Chapter 3 focuses on the investor’s perspective. It includes information on the decision making process and the influence of ratings. In chapter 4 I put the whole set into practice with help of the Rhine Main Region. Chapter 5 uses Los Angeles and Hong Kong as international competitors of the Rhine Main Region from the western and eastern hemisphere. Chapter 6 serves as a conclusion and

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assessment of the place marketing activities of the aforementioned competitors

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2 Selling the Business Location 2.1 Objectives “There are more than 300 cities in the world with over a million inhabitants, and all those cities want to be the most attractive. In Europe there are more than 500 regions and 100,000 different kinds of communities competing individually for the same jobs, investments, and talented experts” (Moilanen and Rainisto 2009, p. 3). This is why regional marketing has become more important in today's economy (Mayer 1999, p. 1). Zentes (1996, p. 203) differentiates between internal and external objectives in marketing regions. The internal objective is to achieve the identification of people with the region, the external objective is to promote the regional image and attain an increase in attractiveness. It is important to create a regional identity to be able to believably use external marketing (Melzer 2007, p. 22). Since location decisions are always voluntary, communal business development agencies cannot plan new business setups, but only create an attractive image for potential investors (Pieper 1994, p. 215).

Meyer defines the objectives of place marketing a bit different. From his point of view place marketing should be used to combine forces and integrate different interests and opinions of the region into one concept (e.g. protection of the environment vs. interest in new investor with environmentally harmful products). Besides, it should push activities, measures and ideas in the region and implement suggestions of the target group. Coordinating actions to avoid redundancies and providing and processing information regarding target group, competitors and region are also part of the idea (Meyer 1999, pp. 28-29).

2.2 Elements in a Place Marketing Process

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“The main elements contained in any marketing process can be summarized as in figure 2-1. Hereby populations and resources are ultimately brought together so that the needs of the former are satisfied by the products derived from the latter. The conjunction is achieved within the market by means of various sorts of marketing measures” (Ashworth and Voogd 1990, p. 29).

6

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

Figure 2-1: Elements in a Place Marketing Process (adapted from Ashworth and Voogd 1994, p. 43)

MARKETING STRATEGIES Ņ Marketing measures

Promotional e.g. image creations

PRODUCER

MARKET

CONSUMER

POPULATIONS Needs/wishes/demands Ņ Segmentation/targeting Ņ CUSTOMER Ņ Choice strategies

Spatial/functional e.g. design structures

Organisational e.g. internal practices

Product/organisation strategies Ń PRODUCT Ń Commodification RESSOURCES

2.3 Levels of Place Marketing The different levels of place marketing are best described by Kotler, see figure 2-2. According to his definition, the process is made up of planning group, marketing factors and target markets. The planning group comprises citizens, business people, and local and regional government officials. The planning group is responsible for the planning and control process of place marketing. It defines and diagnoses the community’s con-

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dition, its major problems, and their causes; develops a vision of the long-term solution to the community’s problems based on a realistic assessment of the community’s values, resources, and opportunities and develops a long-term plan of action involving several intermediate stages of investment and transformation (Kotler et al. 1993, p. 18). It is essential that government and planning group work hand in hand. The success of a region depends on the interaction of politics and planning group (Gubler and Möller, 2006, p. 28).

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The four marketing factors of a place, people, image and quality of life, attractions and infrastructure are key elements in the long term planning developed by the planning group. The Place must generate support from its people (citizens, leaders and current institutions), communicate its improved features and life quality through a vigorous image and communication program, ensure that basic services are provided (infrastructure) and provide new attractions to improve quality of life, attract new businesses, or people. These four marketing factors affect the place’s success in attracting and satisfying its five potential target markets: goods and services producers, corporate headquarters and regional offices, outside investment and export markets, tourism and hospitality business and new residents (Kotler et al. 1993, pp. 19-20).

Figure 2-2: Levels of Place Marketing (adapted from Kotler et al. 1993, p. 19)

Target Market Citizens

Marketing Factors Infrastructure Tourists and conventioneers

Investors

Planning Group Citizens

Place marketing plan: Diagnosis, vision, action

Attractions

Business community

New residents

People

Local/regional government

Manufacturers Image and quality of life

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Corporate Headquarters

8

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

2.4 Who are the Main Targets of Place Marketers? Places have many target audiences, such as present and future residents, investors, both home and from abroad, skilled workers, students, retirees tourists, both home and from abroad as well as local daytrippers, media and opinion formers, travel companies/travel agents/airlines/transport companies, service industries, foreign governments and foreign investment/economic development bodies and export purchasers (Gilmore 2002, p. 288). An overview is displayed in table 2-1. However, the focus of this study is on institutional investors in a B2B marketing process as the main objective in place marketing is to get foreign companies to invest in the region. Companies represent one of the most important target groups in place marketing. Especially internationally active companies should have priority in the marketing process as they are more likely to move their business location (Schnurrenberger 2000, p. 57).

Table 2-1: The Four Main Target Markets (adapted from Kotler et al. 1993, p. 24)

1. Visitors a. Business visitors (attending a business meeting or convention, checking out a site, coming to buy or sell something) b. Nonbusiness visitors (tourists and travellers)

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2. Residents and workers a. Professionals (scientists, physicians, etc.) b. Skilled workers c. Wealthy individuals d. Investors e. Entrepreneurs f. Unskilled workers 3. Business and Industry a. Healthy industry b. “Clean” industry (assembly, high-tech, service companies, etc.) c. Entrepreneurs 4. Export Markets a. Other localities within the domestic markets b. International markets

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2.5 Major Actors in Place Marketing .

The place marketing activities in the aforementioned target markets are carried out by legions of individuals and organizations. They are found at the local level, regional level, national level, and international level. See table 2-2 (Kotler et al. 1993, p. 34). Table 2-2: Major Actors in Place Marketing (adapted from Kotler et al. 1993, p. 34)

Local Actors Public sector actor 1. Mayor and/or city manager 2. Urban planning department 3. Business development department 4. Tourist bureau 5. Convention bureau 6. Public information bureau 7. Infrastructure managers (transportation, education, sanitation) Private Sector Actors 1. Real estate developers and agents 2. Financial institutions (commercial banks, mortgage banks, pension funds, etc.) 3. Electricity and gas utilities 4. Chamber of commerce and other local business organizations 5. Hospitality and retail industries (hotels, restaurants, department stores, other retailers) 6. Tour packagers and travel agencies 7. Unions 8. Taxi companies 9. Architects

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Regional Actors 1. Regional economic development agencies 2. Regional tourist boards 3. County and state government officials National Actors 1. Political head of government 2. Various ministries 3. National unions International Actors 1. Embassies and consulates 2. International chambers of commerce

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Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

2.6 The Place Marketing Process The design of the place marketing process is not much different from conventional marketing. The marketer should start with an analysis of the situation, decide on the goals and objectives, to then implement the choices and control them. The simplified illustration of this process is displayed in figure 2-3. Figure 2-3: Phases of Marketing (adapted from Gubler and Möller 2006, p. 33)

Situation Analysis

Goal Setting

Control

Implementation

Start-up and Organization Moilanen and Rainisto state that is essential to include a start-up phase before the actual place marketing process begins. The aim is to get organized, secure the commitment of the highest management (political and business life) and create visibility for the process (2009, p. 148). Situation Analysis/Research Stage The objective of this stage is to collect basic information for decision-making. The tool for doing this is called place audit (Kotler et al. 1993, p. 81). Auditing helps obtain an impression of the various qualities of the place in relation to its market and results in a

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better insight into the possible targets, measures and goals (Ashworth and Voogd 1990, p. 32). Important questions in this context are: What are the place’s economic and demographic characteristics? How is the place conceived in the home country and in foreign target audiences? Who are the main competitors? What are the place’s strengths and weaknesses and opportunities and threats? (Moilanen and Rainisto 2009, p. 149). Another very effective tool to assess how well a site is performing and to create recommendations is a SWOT analysis. In either case the strategic analysis of the place should

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contain the mission and visions, the core clusters together with the place identity and the focused segments and their positioning are then designed (Moilanen and Rainisto 2009, p. 23). However, it is important to realize that a place does not have to correct all its weaknesses nor push all its strengths. Some attributes are simply unimportant (Kotler et al. 1993, p. 86). The analysis and interpretation of the results builds the foundation of the following steps.

Visions and Goals The objective of this stage is to draw conclusions from research results, choose elements for brand identity and decide what the community (region) should become (Moilanen and Rainisto 2009, p. 149). Concrete targets and measures are necessary because the place will only achieve what it follows and measures (ibid., p. 23).

Strategic Market Planning "Once places have a sense of where they want to go, or what they want to become (goals), strategy helps answer how they get there" (Haider 1992, p. 128). The strategic planning process supports a place decide which industries, services, and markets should be encouraged; which should be maintained; and which should be deemphasized or even abandoned (Kotler et al. 1993, p. 80). Strategic place marketing concerns the enhancement of a country’s position in the global market-place. Interesting aspects that may affect marketability can be the size of the domestic market, access to regional trade areas, education of the population, tax incentives, skilled labor, cost of labor, security and other factors (Kotler and Gertner, p. 253). One important step in designing a country’s marketing strategy is assessing the brand’s image and how it compares to its competitors’ images (ibid., p. 254). However, I will go into further detail about branding in chapter 2.7.2.

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Implementation In order to successfully apply a marketing strategy to a product, the four essential categories of marketing must be looked at: Price, Product, Place, Promotion (the 4 P’s), as displayed in figure 2-4 (Gubler and Möller 2006, p. 95). In place marketing price corresponds to the cost to the investor of locating and operating within the investment site. For governments, this usually means tax incentives, grants, tariff protection, and similar

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price mechanisms. If the marketer is a country, region or city, the product incorporates the intrinsic advantages and disadvantages of the investment site. The activities that disseminate information about, or attempt to create an image of the investment site and provide investment services for the prospective investor relate to fourth ‘P’ promotion (Wells and Wint 2000, p. 4). More precisely place promotion can be defined as the conscious use of publicity and marketing to communicate selective images of specific geographical localities or areas to a target audience (Gold and Ward 1994, p. 2). To promote investment, Morisset and Andrews-Johnson suggest the following functions: image building (by advertising in general financial media or participating in investment exhibitions), investor generation (engaging in direct mail or telemarketing campaigns, conducting industry- or sector-specific information seminars), investor services (providing investment counseling services and postinvestment services) and policy advocacy (participating in policy task forces, developing lobbying activities) (Morisset and Andrews-Johnson 2004, p. 33). Under ideal circumstances the promotional activities targeted to attract new businesses, are not recognized as such, but seem to be perfectly aimed at the self-interest of the potential investor (Pieper 1994, p. 218). Figure 2-4: The 4 P’s in Place Marketing

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(adapted from Gubler and Möller 2006, p. 95)

Services (Product)

Pricing (Price)

Organisation Network (Place)

Promotion (Promotion)

x x x x

x x x x x

x x

x x x x

x x x

Infrastructure Laws Subsidies Markets & Industrie Sectors Quality of Life Services Etc.

Taxes Property Estate Services Cost of Living

x x

Coordination Personnel Aspects Functional Space Concentration of Compentencies

x

Media Embassies Platforms Personal Contact Adressing target group

Marketing Mix

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Evaluation The effectiveness of the marketing actions must be checked by broad controlling measures (Dallmann 2005, p. 22). “Place marketing succeeds when stakeholders such as citizens, workers, and business firms derive satisfaction from their community, and when visitors, new businesses, and investors find their expectations met” (Kotler et al. 1993, p. 18). Attracting new firms alone is not enough. It is also important to retain existing businesses (ibid., p. 247). It can be recapitulated that only places using leadership to manage the place’s resources in the complex place marketing process will be winners. Passively behaving locations will lose their competitive edge (Moilanen and Rainisto 2009, p. 25). For a more compact overview of the marketing process, please see appendix Table X-2: Stages of the Strategic Market Planning Process.

2.7 Designing the Place’s Image 2.7.1 Image Marketing “Whether positive or negative, focused or diffuse, held widely or by only a few, developed deliberately or by default, and formed from education, the media, travel, immigration, product purchases, business experiences or any combination of sources, every place has an image” (Papadopoulos and Heslop 2002, p. 295). In this context Kotler defines an image as “a whole set of beliefs about a place” (Kotler et al. 1993, p. 141). Due to the complexity of images, they aren’t easy to develop or change. “They require research into how residents and outsiders currently see the place; they require identifying true and untrue elements, as well as strong and weak elements and they require a substantial budget for the image’s dissemination” (ibid., p. 37). A place’s image can be measured by a target audience along a familiarity scale: know well, a fair amount, know a little, heard of, or know nothing. However, it is important to Copyright © 2013. Diplomica Verlag. All rights reserved.

realize that since people's attitudes and actions toward a place are highly conditioned by their beliefs about it, a place's image varies within different target groups (Haider 1992, p. 130). Different people can hold quite different images of the same place (Kotler et al. 1993, p. 141). “From Greek mythology to French panache and Russian roulette, from German engineering and Japanese technology to British rock and Brazilian soccer, and from Brussels lace to Hollywood movies, references to countries and places are every-

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where around us in our daily life, social interaction and work” (Papadopoulos and Heslop 2002, p. 295). “How does an image differ from a stereotype? A stereotype suggests a widely held image that is highly distorted and simplistic and that carries a favorable or unfavorable attitude toward the place. An image on the other hand, is a more personal perception of a place that can vary from person to person” (Kotler et al. 1993, p.141).

Cost and effectiveness of the image strategy depend on the place’s current image and real attributes. Places may find themselves in one of the six image situations: positive image, weak image, negative image, mixed image, contradictory image or overly attractive image (ibid., p. 35). Tools to implement an effective image of a place can be slogans, themes, and positions, visual symbols (Big Ben – London, etc.) or events and deeds (Russia exports its ballet to create image) (ibid., p. 151).

For an image to be effective, it must meet the following criteria: x x x x x

It must be valid It must be believable It must be simple It must have appeal It must be distinctive (Kotler et al. 1993, p. 149-150)

It is important to realize that an overly attractive image of a place is not always beneficial but may be counterproductive. Figure X-1: City Growth/Decay Dynamics of the appendix displays this problem. Once a negative image has been connected to a place or region, it can be corrected in several ways. One possibility is to make a positive out of a negative image. If a region is mostly known for its bad weather, why not promote it as a winter wonderland. Other

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approaches could be the use of marketing icons or to simply remove the negative aspect (ibid., pp. 158-160). In either case it can be concluded, that the concept of place image does not lend itself to the sharp clarity of definition that is possible with the brand image of a product except in respect to specific product categories associated with the place (O’Shaughnessy and O’Shaughnessy 2000, p. 60).

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2.7.2 Branding “A brand embodies a whole set of physical and socio-psychological attributes and beliefs which are associated with the product” (Simoes and Dibb 2001, p. 217). “A brand is created and shaped in the consumer’s mind” (Moilanen and Rainisto 2009, p. 7). With these definitions in mind, the complexity of the matter is apparent. Places are increasingly facing global competition in both their external and domestic markets, resulting in a growing in frequency in the application of branding techniques to places (Hanna and Rowley 2008, p. 61). Just as in image marketing, building and sustaining a place brand is demanding and differs significantly from controlling a traditional brand. It is common that a place brand is neither developed nor coordinated in one single direction but that there are many fields affected (e.g. tourism, technology, investment, or business) (Moilanen and Rainisto 2009, p. 1). What makes the matter even more difficult is the fact that even though the practice of branding geographic locations such as countries, regions, cities and towns is increasing, there is still a paucity of valuable published research on the topic (Hankinson 2001, p. 127). Zerrillo and Thomas suggest an eight-stage model for building place brands. Stage 1: Sector Importance Identification, Stage 2: Markets Served Assessment, Stage 3: Purchase Decision Impact, Stage 4: Current Position Assessment, Stage 5: Future Position Analysis, Stage 6: Cost – Benefit Assessment, Stage 7: Program Implementation, Stage 8: Impact Measurement (Zerrillo and Thomas 2007, pp. 91-93). Kurzhals represents a different approach. In his opinion a city or region is not invented and turned into a brand, but evolves historically. The idea is to use existent themes and offers and select them into high potential and low potential aspects and communicate them according to the needs of the target group (Kurzhals 2007, p. 30). Kavaratzis and Ashworth state that place branding centers on people’s perceptions and images and puts them at the heart of orchestrated activities, designed to shape the place and its future. To them managing the place brand becomes an attempt to influence and

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treat those mental maps in a way that is deemed favorable to the present circumstances and future needs of the place (Kavaratzis and Ashworth 2005, p. 507). Moilanen and Rainisto suggest three essential concepts in relation to brands: Central in their place branding concept is building the identity of the place.

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There are three essential concepts that are related to brands: -

identity (defined by the sender, how do I want my brand to be experienced) image (developed in receivers mind, how brand is being experienced in reality) communication (of chosen message) (Moilanen and Rainisto 2009, p. 7)

The identity is defined by the sender who can decide how he wants the brand to be experienced. The image on the other hand is developed in the receivers mind and shows how the brand is being experienced in reality. The third element in their concept is the communication of the message. The sender must decide on how he wants to communicate the message (Moilanen and Rainisto 2009, p. 25). Brand identity, brand positioning and brand image are related as in figure 2-5:

Figure 2-5: Brand Identity, Brand Positioning and Brand Image (adapted from Kavaratzis and Ashworth 2005, p. 508)

Brand Identity How the owners want to brand to be perceived.

Brand Positioning That part of the value proposition communicated to a target group that demonstrates competitive advantage

Brand Image How the brand is perceived.

Branding as such is at best complex and at worst impossible (Hankinson 2001, p. 127). However, developing a place brand can be seen as an investment that has a very high Copyright © 2013. Diplomica Verlag. All rights reserved.

return on investment (ROI) if it succeeds (Moilanen and Rainisto 2009, p. 163). An example of a famous well developed brand is Paris (ibid., p. 7).

2.7.3 Distributing the Place’s Image and Messages To distribute a place’s image it is important to first define the target audience. After that one must check which broad influence tools are available. The major influence tools are

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advertising, direct marketing, sales promotion, public relations, and personal selling. The next step in the distribution process is the selection of the right advertising media channel and vehicle. Television, radio, magazines, newspapers, billboards, direct mail, telephone, brochures and internet are at choice. It is important to then choose the right

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vehicle for the target (Kotler et al. 1993, pp. 162-193).

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2.8 Services in Attracting, Retaining and Expanding Businesses According to Morisset and Andrews-Jones, there are three kinds of assistance to investors: x

Preinvestment activities (idea is to provide basic information)

x

Assisting investors during project implementation (for example, assistance with business or tax registration, sectoral licensing, land, construction, and utilities (offered by agencies that act as “one-stop shops”)

x

Postinvestment services (including periodic meetings with existing investors in an effort to gather information on issues they face and help them resolve problems) (Morisset and Andrews-Johnson 2004, p. 39).

These presumptions are supported by Wells and Wint whose survey indicates, that investment counseling, expediting the processing of applications and permits, and providing postinvestment services are regarded as integral components of the investment promotion function by investment promotion agencies (Wells and Wint 2000, p. 25).

In this context the concept of a One-Stop Shop (OSS) is very appealing. The basic idea is that an investor would only have to be in contact with a single entity to obtain all the necessary paperwork in one streamlined and coordinated process. This service would be very helpful to investors and simplify the process enormously. Yet these OSSs are still exceptions rather than the rule around the world. Practically all governments that have tried to implement OSSs have encountered considerable resistance by the various government agencies responsible for the administrative procedures. Most important, other ministries and agencies fear that the creation of such an OSS would result in curtailing their authority and mandate. Thus, they quickly lead to intensive turf battles within the

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government bureaucracy. Without the necessary political support, OSSs have proved to be more a “one more stop” because investors have to interact with one more entity in the process of implementing their projects (Morisset and Andrews-Johnson 2004, p. 41).

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2.9 Essentials to Successful Place Marketing A theoretical framework helps to focus the analysis. Rainisto was one of the first to present a concept of the most critical elements of place marketing, see figure 2-6. His theoretical framework has three “dimensions” of success factors. The factors in the prism represent the core building stones/fundamental structures in place marketing (planning group, vision and strategic analysis, place identity and place image, public-private partnerships and leadership). The factors on the side of the framework ‘prism’ help face the challenges in the network and in the macroenvironment (political unity, global marketplace, local development and process coincidences). The third dimension of the framework consists of the “how and ability” factors (strategic exploitation, organizing capacity, presence of substance, measurement and follow up) which bring additional strain to the challenges of place marketing. All of the framework’s success factors are linked together in an interactive way to support the success of a place marketing process (Moilanen and Rainisto 2009, p. 23).

Figure 2-6: Success Factors in Place Marketing (adapted from Rainisto 2003, p. 227; Moilanen and Rainisto 2009, p. 22)

Practices

Events in place marketing practices Events in the network Events in the macroenvironment

Strategic exploitation

Organising capacity

Success Factors

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Planning group Vision & Strategic analysis Place identity & Place image Public-private partnerships Leadership

Presence of substance

Measurement & follow-up

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2.10 Problems According to Moilanen and Rainisto the most critical part of the place brand process is guaranteeing sufficient and continuous financing (Moilanen and Rainisto 2009, p. 159). Another problem is that locations just like companies are exposed to constant change that can endanger their positive development. Such changes concern both internal aspects such as company flight or demographic change and external influences like phases of recession (Gubler and Möller 2006, p. 17). Contrary to physical products, the place as a product is altered for example by seasonal changes that transform the actual product (summer – winter) (Moilanen and Rainisto 2009, p. 21). Besides, due to difficulties in control, many places find themselves in a situation where various organizations are marketing the same place but with different or sometimes even opposite arguments (ibid. 2009, p. 19). This can have negative consequences, as

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too many cooks spoil the broth.

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3 How Investors make their Choices 3.1 General Framework According to Kotler et al. place buying equals place selling in its complexity. To be in a better position to compete for the buyer’s choice it is essential that the place seller more fully understands the place buying process (1993, p. 46). If the country as well as region marketers fail to comprehend how companies make their site selection, they are likely to lose the potential investor during the decision-making process. As stated by Pieper, it is important to see that investors looking for a new business location, are not only interested in the direct location, but incorporate an area within a radius of about 30 km in their decision making process (1994, p. 205).

This chapter addresses the following questions: 1. What are the main steps and factors influencing the place buying process? 2. What is weighted stronger: soft or hard facts? 3. What influence does place-rating information have on the decision making process? 4. What is the importance of Cluster?

3.2 Steps and Factors Influencing the Buying Process Kotler et al. have identified five stages buyers tend to pass through in choosing a place, as summarized in table 3-1. The most common step interested investors or expanding companies start with after recognizing the problem, is choosing a region in which to invest (e.g. Latin America) and collecting information about the potential candidates. In this phase, each country (region) must be able to provide accurate and reliable information according to the company’s or investor’s needs. Better, it should anticipate informational needs. The country (region) should understand the locational characteristics

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companies are seeking as they relate to labor, tax climate, amenities, higher education, schools, regulation, energy, communication and business (Kotler and Gertner 2002, p. 257).

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Table 3-1: Five Stages in Choosing a Place (Kotler et al. 1993, p. 46)

1. 2. 3. 4. 5.

Problem Recognition Information Search Evaluating Alternatives Purchase Decision Postpurchase Behavior

The amount of information collected has great influence on the evaluation process, as it narrows the buyer’s choice set. The box at the far left of figure 3-1 shows the total set of alternatives that are potentially available to the buyer. However, the buyer is only aware of a subset of these alternatives – the awareness set. Merely few of these alternatives satisfy the buyers buying criteria and make up the consideration set. As more information is gathered about these places, only a few remain as strong contenders and make up the choice set. The final decision is then based on the buyer’s evaluation criteria (Kotler et al. 1993, p. 49).

Figure 3-1: Successive Sets Involved in Buyer Decision Making (adapted from Kotler et al. 1993, p. 51) Total Set Alternative 1 Alternative 2 Alternative 3 Alternative 4 Alternative 5 Alternative 6 Alternative 7 Alternative 8 *

AwarenessSet Alternative 1 Alternative 2 Alternative 3 Alternative 5 Alternative 6 Alternative 7 Alternative 12

Consideration Set Alternative 1 Alternative 3 Alternative 6 Alternative 7 Alternative 20 Alternative 33

Choice Set Alternative 1 Alternative 6 Alternative 33

Decision

?

Decision Making

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Once the alternatives have been narrowed down, the buyer must organize the information and arrive at a final choice. Even though this decision making process is very complex, certain basic concepts exist that can help us understand the buyer evaluation process better. First the buyer sees a given place as a bundle of particular attributes. A factory site e.g. is valued by its land costs, labor skills, energy costs and taxes. Second, buyers decide which attributes are salient and important to then decide where each place stands on each attribute. Third, buyers develop a utility function for each attribute. Fi-

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nally, the buyer arrives at an attitude toward place alternatives through some evaluation procedure (ibid., p. 51). The purchase decision is then formed on the basis of expected benefits and costs and is heavily influenced by the perceived risk and attitudes of others. After purchasing and experiencing the chosen place, the buyer experiences some level of satisfaction or dissatisfaction (postpurchase behavior) (ibid., pp. 46-58).

The top four key factors in deciding where to locate are, easy access to markets, customers or clients as the most important factor, availability of quality staff, quality of telecommunications, and transport, see table 3-2 (Cushman & Wakefield 2009, p. 4).

Table 3-2: Essential Factors for Locating a Business (adapted from Cushman & Wakefield 2009, p. 7)

Factor Easy access to markets, customers or clients Availability of qualified staff The quality of telecommunications Transport links with other cities and internationally Cost of staff Value for money of office space The climate governments create for business through tax policies or financial incentives Availability of office space Languages spoken Ease of travelling around within the city The quality of life for employees Freedom from pollution

2009 % 60 57 54 51 35 34 26

2008 % 59 60 54 53 40 26 27

25 24 23 21 17

24 27 25 21 18

‘Absolutely essential’ responses only are included here. Base: 500

3.3 Soft vs. Hard Facts Location factors can be divided into hard and soft facts. Hard facts can be assessed ob-

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jectively and manipulated directly. Examples of hard facts are: taxes, cost of living and education. Soft facts however are rated subjectively and changes are only possible in a long run context. Examples are: cultural offerings, quality of life, landscape and safety (Gubler and Möller 2006, p. 62). It is important to see that even though investors are interested in hard facts in a first step, the final decision is mostly based on soft facts. (See figure 3-2).

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Figure 3-2: Temporal Course of Locational Decision Making

Hard facts

Soft facts

(adapted from Gubler and Möller 2006, p. 62)

time

3.4 Influence of Place-Rating Information There are countless ratings and rankings available in the field of place marketing. The results can be very different depending on the location factors that have been assessed. Therefore not one of these surveys can really display the qualities of a location (Gubler and Möller 2006, p. 64). However, place rating systems can be a helpful guidance for place buyers to make their decisions and place marketers can use soft characteristics, as well as hard facts to paint their cities in the most favorable light (Kotler et al. 1993, pp. 62, 65). At best this system can help a place estimate its competitive position (Kurzhals 2007, p. 27). No matter if the ranking turns out to be positive or negative, it is only a snap shot. What counts is the image that can be built up in the target markets mind in the long run. And this is not only quantitative, but qualitative (ibid., p. 28). Despite the problems with rankings, they offer a quick and convenient picture and require little effort to use. Nevertheless, place buyers would be foolish if they placed too high a reliance on the ratings (Kotler et al. 1993, pp. 67, 69).

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Ironically, strong positive ratings sometimes produce negative outcomes, as in case of Seattle, Santa Fe, and San Diego. After surveys rated them as wonderful places to live, thousands of people were attracted to them which resulted in disproportional relocation. As a result the cities had to try to control congestion and development and even to discourage more newcomers (ibid.. 1993, p. 69).

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3.5 Importance of Cluster According to Porter, today’s economic map of the world is dominated by clusters - critical masses in one place - of unusual competitive success in particular fields. “Clusters are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more economically advanced nations. Silicon Valley and Hollywood may be the world’s best known clusters” (Porter 1998, p. 78).

“Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (for example, universities, standards agencies, and trade associations) in particular fields that compete but also cooperate.” (Porter 2008, pp. 213-214)

„Clusters affect competition in three broad ways: first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation, which underpins future productivity growth; and third, by stimulating the formation of new businesses, which expands and strengthens the cluster itself” (Porter 2008, p. 229). Figure 3-3 shows the effect of location on competition. A few elements deserve highlighting because they are important to understanding the role of clusters in competition. Factor inputs include tangible assets, which must improve in efficiency, quality, and ultimately specialization to particular cluster areas to increase productivity (ibid., p. 227). The context for firm strategy and rivalry refers to the local conditions that affect how companies are created, organized, and managed and the intensity of local rivalry. Local competition stimulates innovation and efficiency (Porter 1990, p. 77). “Competition must shift from imitation to innovation and from low investment to high investment. Clusters, as will be evident, play an integral role in these transitions” (Porter 2008, p.

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228). Demand Conditions at home have to do with the nature of home-market demand for the industry’s product or service. A more demanding local market leads to regional advantage. Clusters of linked industries play a central role in setting demand conditions. The existence, extent and competitive strength of supplier industries and other related industries in the region that are internationally competitive are represented by related and supporting industries (Porter 1990, p. 77).

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Figure 3-3: Sources of Locational Competitive Advantage (adapted from Porter 2008, p. 227)

Context for Firm Strategy and Rivalry

Chance

Factor (Input) Conditions x

x x

Factor (input) quantity and cost - Natural ressources - Human ressources - Capital ressources - Physical infrastructure - Administrative infrastructure - Information infrastructure - Scientific and technological infrastructure  Factor quality Factor specialization

x

x

Government

A local context that encourages appropriate forms of investment and sustained upgrading Vigorous competition among locally-based rivals

Demand Conditions

x

Related and Supporting Industries x x

x x

Sophisticated and demanding local customer(s) Customer needs that anticipate those elsewhere Unusual local demand in specialized segments that can be served globally

Presence of capable, locallybased suppliers Presence of competitive related industries

Unexpected events are described with the factor Chance in this model (Gubler and Möller 2006, p. 21). Besides, the government’s choice of policies can influence each of the four determinants. The government can encourage - or even push - companies to raise their performance, for example by enforcing strict product, safety, and environmental standards; promote domestic rivalry by sharply limiting direct cooperation among industry rivals or enforce strong domestic antitrust policies (Porter 1990, pp. 86-87). “Cluster development initiatives should embrace the pursuit of competitive advantage and specialization rather than simply imitate successful clusters in other locations. This requires building on local sources of uniqueness” (Porter 1998, p. 89).

"So whereas it used to be that the scale of the firm was important, now it is increasingly

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the scale of cluster - the network, the infrastructure - that is important" (Porter 1999, p. 273).

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4 Place Marketing in the Rhine Main Region 4.1 Facts and Figures "The Frankfurt Rhine Main metropolitan region is defined as the area extending from Kreis (district) Gießen to Kreis Bergstraße (from north to south) and from Kreis MainzBingen to Kreis Aschaffenburg (from west to east). With its polycentric structure the region covers parts of three Bundesländer (German federal states): Hessen (Hesse), Rheinland-Pfalz (Rhineland-Palatinate) and Bayern (Bavaria). The region includes seven kreisfreie Städte (urban municipalities) - Frankfurt am Main, Wiesbaden, Darmstadt, Offenbach am Main, Mainz, Figure 4-1: Map of Rhine Main Region (adapted from IHK 2009a, p. 1)

Worms and Aschaffenburg - and 18 Kreise (districts). In total 468 municipalities form the region. With almost 5.52 million inhabitants, approximately 2.84 million jobs and a gross domestic product of 70,300 Euro per employee, the Frankfurt/Rhine-Main metropolitan region is one of the leading regions in Germany

and

Europe"

(Pla-

nungsverband 2009a, p. 3). “Frankfurt Rhine Main is Germany´s most cosmopolitan region. In many international benchmarkings Frankfurt Rhine Main fetches top rankings and is clearly among the most appreciated business locations in Europe.” However, Frankfurt city also has the highest trade tax assessment rates of the region (IHK 2010, WWW). For an overview of the most important facts see table 4-1.

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Table 4-1: The Frankfurt Rhine Main Region in Figures (IHK 2009a, pp. 1-2)

Surface area

14,876 square kilometers

Population

5.5 millions

Gainfully employed people 2008

2 millions

Companies

365,000

GDP 2006 (EURO)

174.3 millions

Communities

468

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4.2 Sectors of Industry “During the past years the traditional banking center has developed almost unnoticed into the German internet and telecommunications capital where the central network nodes of the Federal Republic come together“ (IHK 2010, WWW). Frankfurt Rhine Main is now home to a diverse range of different industrial sectors. The mix of industrial sectors is well balanced, offering high levels of success potential. From research & development to production to global marketing – in Frankfurt Rhine Main you can access all the resources you need to guarantee efficient performance, benefit directly from the existing industry-specific infrastructures and from a subcontracting industry that is tailored to your precise needs (FrankfurtRheinMain GmbH 2010, WWW). The following major sectors of industry are located in the Frankfurt Rhine Main region: Automation, Automotive Industry, Chemicals, Financial Sector, Health Care, IT / Telecommunication / Software, Logistics / Transportation, Management Consultancy, Materials Technology and Media / Advertising (IHK 2009a, p. 2).

4.3 SWOT Analysis on the Frankfurt Rhine Main Region Based on the SWOT analysis of the International Chamber of Commerce, specific recommendations have been developed for the Frankfurt Rhine Main Metropolitan Region. The idea is to identify the strengths of the Rhine Main Region and establish defensive strategies to prevent its weaknesses from making it highly susceptible to external threats and to pursue opportunities respectively to overcome weaknesses. The results can be divided into six different areas (IHK 2009b, p. 7):

Promotion of Economic Development and Regional Marketing Recommendations in this field of action include the facilitation of outsourcing in the area of skill-intensive services of universities and research institutions. Furthermore the

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International Chamber of Commerce advises the organization of joint fair presences of small and medium service providers with similar profile as well as of service providers and industrial enterprises which act along the same value chain. The implementation of a marketing initiative “service careers” in the metropolitan region Frankfurt Rhine Main is considered just as important as the image promotion with Lighthouse-projects (international construction exhibit Frankfurt Rhine Main with main-focus “residencies”). The last suggestion in the area of promotion of economic development and regional market-

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ing is to intensify international commercialization of the metropolitan region as a location for knowledge intensive enterprises.

Research and Innovation There is a need for continuous know-how transfer between universities/research facilities and service providers and for an assessment of scientific capacities in the metropolitan region Frankfurt Rhine Main in the area of service research. Besides, more professors and scientists should be won over for the subject of service engineering and networking of existing expertise.

Labor Market and Qualification Recommendations in the field of labor market and qualification include the better use of existing knowledge potentials by integrating highly qualified women and elderly workers, the significant raise of the investment in education as well as the adjustment of the qualifications to the (long run) needs of local enterprises in the field of knowledgeintensive services.

Internationality and Foreign Trade Recommendations include the implementation of a regional export offensive along the theme services going abroad, setup of international networks of service providers and subcontractors for key-industries and supply of services for small and middle-sized enterprises in the field of skill-intensive services.

Attractiveness of the Frankfurt Rhine Main Metropolitan Region It is necessary to assure attractive housing space and cultural offerings to optimize the work-life-balance.

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Corporate Development Implementation of family oriented work models and development of organization models with attractive social benefits individual development possibilities of careers are just as important as cooperations with universities to recruit graduates and joint presentation of small and medium sized companies at job fairs.

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The Planungsverband intends to develop the Frankfurt Rhine Main region as a leading European metropolitan region by the year 2020 (Planungsverband 2005, p. 5). To do this, the region must assert itself in the international competition between regions. One prerequisite for this process is that everyone involved in the region coordinates their efforts, because communication and the exchange of information form the basis of a successful region. Since the particular strength of the Frankfurt Rhine Main region lies in the multiplicity of towns and municipalities that it is made up of, the Planungsverband intends to make use of this extraordinary quality by developing the various different strengths and potentials of the different towns and rural areas. The idea is to secure the development of the urban centers, make optimal use of existing settlement areas, and, in particular specific cases, develop new areas for settlement. Another task is to more clearly define the region's profile and to meet the needs of a dynamic economy. The Competence Networks in the areas of biotechnology, finance, communication technology and media, logistics, materials science and management consulting are especially important for the region's profile and deserve particular support. Since the region is an international nodal point for networks of goods, services, finances and information, the planning group intends to optimize people's mobility and develop all transport facilities further. Another point on the agenda is to use the fact that Frankfurt Rhine Main is home to more research institutions than other similar regions and develop the region as a region of knowledge (Initiative Wissensregion Frankfurt Rhine Main1). Besides, the region wants to continue to be an open, tolerant location, and remain a particularly attractive place for young, qualified people from around the world. At the same time, the intention is to be an attractive place to live for young people, and to be a region which is family-friendly and increase the quality of life to ensure that the people of

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the region enjoy living there. The plan is to improve the cultural and recreation facilities in the region, as well as the attractive landscape and, to do this, to extend the Regionalpark (Planungsverband 2005, p. 5).

1

For further information please visit http://www.wissensportal-frankfurtrheinmain.de.

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4.4 Locational Advantages In terms of qualified staff, quality of telecommunications, and external transport links, Frankfurt is ranked third place in Europe (Cushman & Wakefield 2009, pp. 15-27). Further locational advantages that are being marketed to the public are listed below.

International traffic hub The Frankfurt Rhine Main region is one of the most important traffic hubs in Europe. Frankfurt am Main international airport was recently ranked no. 1 among the top 20 airports in the EU-27 in terms of total freight and mail carried in 2008 and no. 3 in terms of total passengers carried in 2008 (De la Fuente Layos 2009, pp. 5, 9). “Frankfurt Central Station is the most frequented railway station in Germany. The public transport network in Frankfurt Rhine Main is one of the largest in Germany. And the Rhine and Main rivers are the most important inland waterways in Europe. Frankfurt Rhine Main has an excellent infrastructure. 35 million people can be reached within a 200 km radius” (FrankfurtRheinMain GmbH 2010, WWW). In short, all roads lead to the state of Hesse. As one of the continent’s most important linchpins for people, goods, and information from all around the world, no other European region has shorter routes and faster connections to offer (Invest in Hessen, WWW).

High-performance data networks “In Frankfurt Rhine Main it is not just traffic and money that flow in every possible direction. Data also speed across innovative data highways from here out into the great wide world” (FrankfurtRheinMain GmbH 2010, WWW). “Hesse bundles the digital information and communication networks for data transfers. Virtually all of the major telecommunication service providers, carriers and data transmission companies are based in Frankfurt. The DE-CIX internet node in Frankfurt handles 85 percent of all

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German and 28 percent of all European web traffic” (Invest in Hessen, WWW).

Leading financial center “Frankfurt am Main ranks eighth in terms of global financial centers - behind London, New York, Singapore, Hong Kong, Zurich, Geneva and Chicago. However, the financial system in Germany has been more stable than in London or New York over the past six months” (Yeandle et al. 2009, p. 7).

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Excellent financial and insurance expertise converges in Frankfurt Rhine Main. Frankfurt am Main has an excellent reputation as one of the world's leading financial centers. As home to the European Central Bank (ECB), it is the City of the Euro. Currency policy decisions affecting 300 million people are made here. The city on the Main river is also home to: the German Federal Bank (Deutsche Bundesbank), the Asian Development Bank, the Chinese Central Bank and the World Bank group” (FrankfurtRheinMain GmbH 2010, WWW).

Dynamic services center The services sector has an extremely strong presence in Frankfurt Rhine Main. According to the Frankfurt/Rhine-Main Regional Planning Association the sector provides some 80 percent of all economic performance (ibid.).

Modern industrial location Frankfurt Rhine Main is one of Europe's leading industrial locations. In the fields of biotechnology and pharmaceuticals, chemicals, automation, materials technology and medical technology, in particular, companies in the region rank among the leaders in their sectors of industry” (ibid.). „High-tech clusters have formed throughout Hesse not only at the interface to traditional industrial sectors, such as chemicals and automotive construction, but also within the dynamic services industries, such as the financial and media sectors. The expertise of the academic facilities and research centers melds with the innovative entrepreneurial potential and the willingness of technology service providers to invest“ (Invest in Hessen, WWW).

Global exhibition and trade location “Frankfurt Rhine Main is one of Europe's leading trade fair centers. The region offers

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more than 50 trade fairs and exhibitions each year. Including 15 of the world's largest – such as the IAA, the traditional Frankfurt Book Fair, Ambiente and Premiere” (FrankfurtRheinMain GmbH 2010, WWW). In 2008 there were 36 fairs in Frankfurt with 39,814 exhibitors and 1,540,968 guests (IHK 2009a, p. 2).

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Quality of life “With a population of about 5 million, Frankfurt Rhine Main is the second largest economic area in Germany. The region encompasses parts of three federal states and is one of the most dynamic and best performing economic regions in Europe” (FrankfurtRheinMain GmbH 2010, WWW). “However, Hesse is much more than only a business location. Hesse is offering pure groove and full quality of life: Cordial people, idyllic landscapes, romantic villages, traditional folk festivals, multi-facetted culture, historic vineyards, relaxing therapeutic baths, and many thousands of other possibilities to experience, discover, to savor, and to relax - all of that is Hesse. As the HA Hessen Agentur likes to put it: You come to Hesse to work. You stay in Hesse to live!” (Invest in Hessen, WWW).

The World’s Meeting Point In Hesse almost every expatriate will find a community of fellow countrymen and thus feel a bit like home. Whether it is due to its economic importance or its excellent international infrastructure, whether due to its world-largest commodity futures exchange or the world-famous fairs – Hesse is a more attractive bridge head for many countries and companies throughout Germany and Europe” (ibid.).

Research and development “Frankfurt Rhine Main is home to highly qualified specialists offering diverse areas of expertise. Well-known institutes and a dense network of prestigious universities and research-intensive companies ensure close links between research and business” (FrankfurtRheinMain GmbH 2010, WWW). This offers potential investors an efficient network of ideas and expertise for the transfer of knowledge, further education and cross-border cooperation (Invest in Hessen,

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WWW).

Education and Labor “Like no other place, Hesse disposes over an enormous potential of highly qualified skilled personnel. 18 colleges, 4 Max-Planck Institutes, 32 technology and business centers and more than 100 scientific research installations ensure a personnel configuration in Hesse which can compete with know-how, wealth of ideas, and spirit. Whether highly-qualified specialists or researchers, young university graduates or promising talents,

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consultants or back staff – Hesse has expert personnel to offer. No wonder that in this state every 10 minutes a new company is started” (ibid.).

4.5 Attracting, Retaining and Expanding Businesses Frankfurt Rhine Main provides potential investors with a number of services to facilitate the foundation of a company. The FrankfurtRheinMain GmbH for example offers comprehensive advice on setting up a company for as long as the investor is in the region. It also supports in the search for suitable office premises or a corporate site that is tailored to the precise needs and puts you in touch with interesting networks (FrankfurtRheinMain GmbH 2010, WWW). Another contact point is formed by the HA Hessen Agentur GmbH which also gives advice in looking for the best possible site in Hesse (site consultant team) and offers a personal counselor that can provide quick and unbureaucratic individual support in setting up a new branch office. The team of experts also supplies information about public funding schemes and puts you in touch with a close-knit network of partners in both Hesse and around the world (Invest in Hessen, WWW). A list of the agencies and their services can be found in the appendix Table X-3: List of Agencies and Services.

4.6 Designing the Image Frankfurt's economic head of department already demanded a new image campaign in 2008. The uncoordinated marketing activities and countless initiatives of the past were criticized. A stringent concept had been failed to be applied. Against this background the Wirtschaftsinitiative FrankfurtRheinMain (Industrial Initiative FrankfurtRheinMain), developed a strategy in collaboration with arthesia, a creative thinktank from Zurich, to counteract these deficits. The result of this process was the Copyright © 2013. Diplomica Verlag. All rights reserved.

'Themenwelt Frankfurt/Rhein-Main' (Theme World Frankfurt Rhein Main). The Themenwelt's core elements are: 'Ewiger Drehpunkt' (everlasting center of rotation), 'Offene Denkmaschine' (think tank) und 'Wachsende Schönheit' (rising beauty) (Harting 2008, WWW). Altogether they tell Frankfurt Rhine Main's story and function as strategic guideline in the development of the region. FrankfurtRheinMain GmbH had two new themes developed for the image campaign. One of them advertises under the headline „Discover our unique ways to make your

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visions come true" for dynamics, diversity and the short distances in the Frankfurt Rhine Main Region (FrankfurtRheinMain GmbH 2010, WWW).

4.7 Distributing the Place’s Image and Messages The FRM (Frankfurt Rhine Main) magazine has become an important marketing tool in distributing the region’s message. The magazine is supposed to show the compactness and complexity of the Frankfurt Rhine Main region and give expression to its strengths. In 2009 further projects were launched by the FrankfurtRheinMain GmbH. Offices were opened in the United States and China to supply better services and assistance to the markets, and since October 2009 the region is present on YouTube. If you enter FrankfurtRhineMain on www.youtube.com you will find a number of image videos. Besides, several ads have been run in diverse print publications.

4.8 Opportunities and Problems “Due to the difficulties in control, many places find themselves in a situation where different organizations are marketing the same place but with different or sometimes even opposite arguments” (Moilanen and Rainisto 2009, p. 19). This also is the case in the Rhine Main Region. There are marketing agencies that are trying to sell Hesse, agencies that are marketing the Rhine Main Region and others that are trying to promote Frankfurt city. The variety of contact points does not make it easier for potential investors to find their way around. Alongside Planungsverband cooperation in the centre of the region, various other bodies and cooperative organizations have been set up (Planungsverband 2007, p. 5). Besides, the use of differing slogans is counterproductive when trying to brand a place. The Hessen Agentur GmbH and Hessian Ministry of Economics, Transport, Urban and Regional Development use the slogan ‘Hessen - there´s no way around us’ shown in Copyright © 2013. Diplomica Verlag. All rights reserved.

figure 4-2 (Hessen Agentur 2010, WWW). The FrankfurtRheinMain GmbH on the other hand uses the slogan: “FrankfurtRhineMain - Become a part of it!” figure 4-3 (FrankfurtRheinMain GmbH 2010, WWW).

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Figure 4-2: Hesse Slogan (Hessen Agentur 2010, WWW)

Figure 4-3: FrankfurtRheinMain GmbH Slogan (FrankfurtRheinMain GmbH 2010, WWW)

Despite the problems the region is facing, Frankfurt Rhine Main also has great potential. In the Cushman & Wakefield survey 2009, 500 companies were asked how well they knew different cities as a business location and Frankfurt was ranked fourth (Cushman & Wakefield 2009, p. 10). This is conducive as it implies that there already is a certain awareness of the region, which can be built upon. In terms of cost of staff, the climate governments create and quality of life for employees however, Frankfurt scores poorly and receives place 26, 18 and 24 (ibid., pp. 1527). These are some starting-points for improvement. It can be concluded that a well-thought-out and consistent marketing strategy is indispensable for the success of the region. Frankfurt Rhine Main must increase its aware-

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ness internationally and promote a positive image of itself.

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5 The Rhine Main Region in an International Context 5.1 Hong Kong As discussed earlier, regions more and more compete internationally. Therefore it is important to not only follow the local market, but also look beyond one's own nose. Hong Kong shall be used as an exemplary competitor in Asia, as Asia, especially China, is emerging as the world's economic growth engine and Hong Kong is the perfect base from which to access this dynamic market (InvestHK 2010c, WWW). There are many reasons to invest in Hong Kong as table 5-1 shows. Besides its strategic location, Hong Kong has the lowest tax misery in Asia Pacific and the 3rd lowest in the world (Anderson 2009, WWW).

Table 5-1: 10 Reasons to Invest in Hong Kong (adapted from InvestHK 2010b)

Top 10 Reasons to Do Business in Hong Kong 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Strategically located at the heart of Asia Gateway to Mainland China Low and simple tax system A stable and efficient pro-business environment World’s freest economy One of the world’s most competitive locations World-class infrastructure: transport and telecommunications A leading international financial centre Efficient, productive, skilled and multi-lingual workforce Asia’s most popular city for international business, with a cosmopolitan lifestyle and vibrant expatriate community

Hong Kong also has the second best opacity in the world after Finland (Kurtzman and Yago 2009, p. 3) and enjoys free flow of capital, talent, information and goods and services. The city has been ranked ‘World’s Freest Economy’ for over a decade (Gwartney et al. 2009, p. 106). Hong Kong is also ranked the second most competitive location in

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the world (IMD 2009, p. 1). Hong Kong is China’s international financial capital and one of the most competitive financial centers in Asia (Z/Yen Group Limited 2010, p. 18). Besides the aforementioned hard facts, there are also many appreciated characteristic traits that carry weight. Discipline, compliancy, willingness to learn new things, diligence and pragmatism are some of them. On the other side the Chinese mentality is seen to be little creative, little initiative and hierarchical thinking (Bühler 2000, p. 182).

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Locational Advantages Hong Kong offers many locational advantages as a business location. For one thing Hong Kong is positioned at the Gateway to China and the Pearl River Delta – the factory of the world. All Asia’s key markets are within 3½-4 hours flight time and half the world’s population is within 5 hours flight time. Besides, Hong Kong is a Regional business hub. Just as New York and London serve as the business and financial capitals of North America and Europe, Hong Kong occupies the same position in Asia. For another thing Hong Kong is the right international business environment as English - the language of business - and Chinese are the official languages and it has a WorldClass Infrastructure. Hong Kong also is a Global Communications Hub as 98 percent of households and 95 percent of business buildings have broadband access. Hong Kong claims to have some of the most unique and Talented Professionals in the World and The Right Lifestyle. People in Hong Kong enjoy an abundance of choice when it comes to entertainment, dining and nightlife. Finally, in contrast to China, Hong Kong has Liberal Immigration Policies (InvestHK 2010a, pp. 3-13).

Services Hong Kong offers potential investors an unbeatable service package. All services are not only customized but free. Sector-specific advice and business opportunities are as natural as visit programs. Interested investors receive the latest information on Hong Kong’s business environment, tax and business regulations, immigration requirements and are introduced to business contacts and service providers. Besides, InvestHK helps in generating free publicity to support the launch or expansion of the client's Hong Kong business. Help in general is available at any stage of the business development process. InvestHK also gives advice on settling in Hong Kong and helps with housing,

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healthcare and the application for international school places (InvestHK 2010c, WWW).

Designing the Image Hong Kong presents itself as a very open and international place. In its image brochures you are greeted ‘Welcome to Hong Kong. A uniquely international business city with a Chinese perspective.’ On the investHK website Hong Kong promotes itself more aggressively. Its Slogan is: HONG KONG. RIGHT PLACE. RIGHT TIME. (ibid.).

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5.2 Los Angeles Los Angeles is unique because of its combination of place, resources and open attitudes towards new ideas. Especially the Creative Economy of the Los Angeles Region is undeniably important to the region’s economic growth. As defined in the OTIS 2009 report, about 342,300 people in Los Angeles County worked directly in the creative industries in 2008. Many interesting ideas have come out of the Los Angeles area over the years. The fortune cookie, the internet, Barbie, the Hula Hoop, Celebrity PR and much more (OTIS 2009, pp. 1-4). With three world-class research universities, several private think tanks, a key NASA outpost and some of the nation’s most important research and development facilities, Los Angeles County also lays claim to a sizeable chunk of the high-tech marketplace (LAEDC 2010c, WWW). An overview of reasons to invest in L.A. is displayed in table 5-2. Table 5-2: Reasons to Do Business in Los Angeles (adapted from LAEDC 2010a, pp. 1-2)

Top 10 Reasons to Do Business in Los Angeles 1. 2. 3. 4.

Large Market Large, Well-Trained Workforce Excellent Access to National & International Markets Large, Well-Established International Trade Business Support Infrastructure 5. Major Entertainment Industry 6. Diversified Economic Base 7. Leader in the Design and Production of Technology 8. Major Force in Apparel Design and Manufacturing 9. Cultural Center 10. The Weather and Geography

Locational Advantages Apart from the above mentioned advantages, L.A. also is a major center for higher education and a leader in engineering design, environmental technology and international Copyright © 2013. Diplomica Verlag. All rights reserved.

trade activities. L.A. furthermore benefits from a large number of clusters (LAEDC 2010a, pp. 1-2). L.A. County’s top 10 industry clusters, ranked by employment, are: Tourism & Hospitality (456,000), Professional & Business Services (288,000), Direct International Trade (281,000), Entertainment (266,000), Wholesale Trade & Logistics (199,000), Technology (152,000), Health Services & Bio-Medical (133,000), Materials & Machinery (123,000), Financial Services (112,000) and Higher Education (122,000) (ibid., p. 2). 40

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Problems Despite the various advantages L.A. claims to have as business location, reality shows different. In his article, Fine discusses shattering results which were released as part of the Los Angeles County Business Federation’s annual survey of 455 businesses throughout Los Angeles County in 2009. In the survey of Los Angeles business owners, 74 percent characterized the city as unfriendly to business. The L.A. businesses cited the city’s business taxes, bureaucracy, and the length of time it takes to get permits and licenses as major problems (Fine 2009, n.p.). In this difficult situation, Mr. Austin Beutner has been entrusted with the thankless task to improve L.A.'s image. In an interview with the Wall Street Journal, Mr. Beutner said his goals were to create jobs, and to make Los Angeles the most business-friendly city in the country (Audi 2010, WWW). It remains to be seen what the future holds.

Los Angeles County Economic Development Corporation has also come to attention of L.A.’s deficits. LAEDC sees the problems in part due to the lack of a strategic plan for economic development to guide decision-making. Therefore five aspirational goals, 12 broad objectives, and 52 specific strategies have been developed to ensure a more vibrant, diverse, and sustainable economy for Los Angeles County in the years ahead. The main goals are: Prepare an Educated Workforce, Create a Business-Friendly Environment, Enhance our Quality of Life, Implement Smart Land Use and Build 21st Century Infrastructure (LAEDC 2010b, pp. 1-13).

5.3 Country Comparison Since there are only few surveys available that explicitly compare Frankfurt, Hong Kong and Los Angeles, I would like to use this chapter to give an overview of the

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standings of the respective countries.

The Global Competitiveness Report The Global Competitiveness Report assesses the ability of countries to provide high levels of prosperity to their citizens and provides benchmarking tools for business leaders and policymakers to identify obstacles to improved competitiveness (Schwab and Sala-i-Martin 2009, p. 3). The Global Competitiveness Index (GCI) is made up of over 113 variables which are organized into 12 pillars and three subindexes: basic require-

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ments, efficiency enhancers, innovation factors (ibid., p. 4). An overview of the 20092010 results is displayed in table 5-3. A more detailed overview of the different pillars is displayed in table 5-4.

Table 5-3: The Global Competitiveness Index 2009–2010 Rankings (Overview) (adapted from Schwab and Sala-i-Martin 2009, p. 13)

Rank 2009/2010 1 2 7 11 133

Score 5.60 5.59 5,37 5.22 2.58

Country/Economy Switzerland United States Germany Hong Kong Burundi

Rank 2008/2009* 2 1 7 11 132

In this year’s report, Germany is ranked 1st for the quality of its infrastructure. The country has very sophisticated businesses, ranked 2nd, just behind Japan. On the other hand, Germany’s labor market remains very rigid (70th for the labor market flexibility subpillar), where a lack of flexibility in wage determination and the high cost of firing provide a hindrance to job creation (ibid., p. 23). Hong Kong SAR retains its 11th position. The country continues to top the financial market pillar and places no lower than 8th in all indicators but one. Even though the crisis hit the country hard, Hong Kong undoubtedly remains one of the world’s major financial centers, and continues to lure both investors and companies. The territory has improved its marks in the infrastructure pillar, now placing second only to Germany. Finally, efficiency of the government (2nd), continues to be praised by business leaders (ibid., p. 30). United States falls one place and is ranked 2nd in the 2009/2010 Global Competitiveness Index. The country continues to be endowed with many structural features that make its economy extremely productive and that place it on a strong footing to ride out

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business cycle shifts and economic shocks. However, a number of escalating weaknesses have taken their toll on the U.S. ranking this year. Given that the financial crisis originated in large part in the United States, it is hardly surprising that there has been a weakening of the assessment of its financial market sophistication, dropping from 9th last year to 20th overall this year in that pillar. Labor markets on the other hand are ranked 3rd, characterized by the ease and affordability of hiring workers and significant wage flexibility (ibid., p. 21).

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Table 5-4: The Global Competitiveness Index in Detail (adapted from Schwab and Sala-i-Martin 2009, pp. 152, 164, 320)

United States

Germany

Hong Kong

Rank 2 1 1

Score 5.6 5.7 5.7

Rank 7 7 5

Score 5.4 5.5 5.5

Rank 11 11 12

Score 5.2 5.3 5.4

Basic Requirements 1st pillar: Institutions 2nd pillar: Infrastructure 3rd pillar: Macroeconomic stability 4th pillar: Health and primary education

28 34 8 93 36

5.2 4.8 5.9 4.3 5.9

8 16 1 30 24

5.8 5.5 6.6 5.3 6.0

6 11 2 16 43

5.9 5.6 6.5 5.7 5.8

Efficiency Enhancers 5th pillar: Higher education and training 6th pillar: Goods market efficiency 7th pillar: Labor market efficiency 8th pillar: Financial market sophistication 9th pillar: Technological readiness 10th pillar: Market size

1 7 12 3 20 13 1

5.7 5.6 5.1 5.8 5.0 5.6 6.9

14 22 18 70 36 12 5

5.1 5.1 5.0 4.3 4.7 5.6 6.0

5 31 2 4 1 9 27

5.4 4.7 5.5 5.6 5.9 5.7 4.7

Innovation and Sophistication Factors 11th pillar: Business sophistication 12th pillar: Innovation

1 5 1

5.7 5.7 5.8

5 2 7

5.5 5.8 5.1

23 15 28

4.5 5.2 3.9

GCI 2009–2010 GCI 2008–2009 (out of 134) GCI 2007–2008 (out of 131)

Index of Economic Freedom The Index of Economic Freedom is a series of 10 economic measurements created by The Heritage Foundation and The Wall Street Journal. Its stated objective is to measure the degree of economic freedom in 183 countries around the world (Heritage 2010, WWW).

"Germany’s economic freedom score is 71.1, making its economy the 23rd freest in the 2010 Index. Its overall score has improved slightly due to modest improvements in freedom from corruption and government spending. Germany is ranked 12th out of 43 countries in the Europe region, and its overall score is significantly higher than the world average" (ibid.).

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"Hong Kong’s economic freedom score is 89.7, making its economy the freest in the 2010 Index. Its score is 0.3 point lower than last year, reflecting increases in business and labor freedom that were offset by modest declines in several factors, particularly trade freedom, monetary freedom, and freedom from corruption. Hong Kong is ranked 1st out of 41 countries in the Asia–Pacific region. Hong Kong’s competitive tax regime, respect for property rights, and flexible labor market, coupled with an educated and highly motivated workforce, have stimulated an innovative, prosperous economy. Hong

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Kong is one of the world’s leading financial and business centers, and its legal and regulatory framework for the financial sector is transparent and efficient" (ibid.).

"The United States’ economic freedom score is 78.0, making its economy the 8th freest in the 2010 Index. Its score is 2.7 points lower than last year, reflecting notable decreases in financial freedom, monetary freedom, and property rights. The United States has fallen to 2nd place out of three countries in the North America region" (Heritage 2010, WWW). Table 5-5: 2010 Index of Economic Freedom (adapted from Heritage 2010, WWW) Country

1 8 23

2009 Overall 89,7 78,0 71,1

Business Freedom 98,7 91,3 89,6

Trade Freedom 90 86,92 87,48

Fiscal Freedom 93,0 67,5 58,3

Country

Monetary Freedom

Investment Freedom

Financial Freedom

Property Rights

Hong Kong United States Germany

83,1 78,12963 79,9

90 75 85

90 70 60

90 85 90

Freedom Labor from Freedom Corruption 81 87,4 73 94,8 79 39,9

Hong Kong United States Germany

Rank

Gov't Spending 93,7 58,0 41,4

European Cities Monitor When asked to consider in which worldwide cities outside Europe, where they are not currently represented, they may expand to in 5 years’ time, the 500 companies asked ranked New York number one. Hong Kong is the seventh most frequently mentioned destination, Los Angeles appears last in the list (among other cities) (Cushman & Wakefield 2009, p. 15).

Forbes: The Best Countries For Business, 2009

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In Forbes ‘The Best Countries For Business, 2009’ survey the United States is ranked second, and Hong Kong 9th (Gage 2009, WWW).

Opacity Index 2009 - Milken Institute The Opacity Index is a measure of five components that may be thought of as “negative social capital.” These are Corruption, Legal system inadequacies, economic Enforcement policies, Accounting standards and corporate governance, and Regulation. To-

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gether, these five factors spell CLEAR. A high score on the Index indicates higher levels of opacity in each of these areas. In the 2009 survey, Hong Kong is ranked second in the world after Finland; Germany is ranked 9th and United States 13th (Kurtzman and Yago 2009, p. 3).

Table 5-6: Opacity Index 2009 (adapted from Kurtzman and Yago 2009, p. 3)

Hong Kong Germany United States

Rank 2 9 13

Score 12 17 22

C 21 16 31

L 10 12 21

E 14 31 30

A 1 10 20

R 12 18 7

The World Competitiveness Scoreboard 2009 Hong Kong is ranked the second most competitive location in the world after the USA, Germany 13th (IMD 2009, p. 1).

The Global Financial Centres Index - City of London In the rating concerning the top global financial centers, Hong Kong comes third place, Frankfurt 13th (Z/Yen Group Limited 2010, p. 28).

Doing Business - The World Bank Group “Doing Business 2010 is the seventh in a series of annual reports investigating the regulations that enhance business activity and those that constrain it. Regulations affecting 10 stages of the life of a business are measured: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business” (IFC 2009c, p. III).

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Table 5-7: Economy Rankings 2008-2009 (adapted from IFC 2009c, p. 1)

Economy

Hong Kong United States Germany

Ease of Doing Business Rank

Starting a Business

3 4 25

18 8 84

Dealing with Construction Permits 1 25 18

Employing Workers

Registering Property

6 1 158

75 12 57

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45

Economy

Hong Kong United States Germany

Getting Credit

Protecting Investors

Paying Taxes

4 4 15

3 5 93

3 61 71

Trading Across Borders 2 18 14

Enforcing Contracts

Closing a Business

3 8 7

13 15 35

IBM Location Trends Measured by number of projects, London is the world’s top destination for investment. London is followed by traditional strong performers Singapore and Paris. Hong Kong appears 7th in the ranking, Frankfurt 16th (IBM 2009a, p. 6).

International Finance Corporation In the appendix Table X-4: Starting a Business in Germany, Table X-5: Starting a Business in Hong Kong (China) and Table X-6: Starting a Business in the United States, give a very good overview of the procedures and costs associated with setting up a

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business in Germany, Hong Kong and the United States.

46

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

6 Conclusion The existence of competition between places for new investment is a natural corollary of capitalist space-economies (Paddison 1993, pp. 339-340). As the information society advances and people and businesses become more mobile it becomes ever more important that places routinely reassess whether they are meeting the needs of their citizens and businesses. Places that fail to examine their prospects and potentials critically are likely to lose out to more attractive competitors (Kotler et al. 1993, p. 311). In this regard it is not enough to simply assume a region’s strengths. Marketing measures should always be based on facts (Melzer 2007, p. 23). SWOT analysis and place auditing have proven to be adequate tools in this strategic framework. Despite differences in various other aspects of place marketing, research agrees upon the idea that a solid analysis of the strengths and weaknesses of the place is precedent to its successful marketing since you must know your product to be able to sell it. My investigation of the current literature as well as my review of the Rhine Main Region and its exemplary competitors Los Angeles and Hong Kong has shown me that places are slowly but surely understanding the importance of place marketing. What makes the great difference is the implementation. Frankfurt Rhine Main for example has been very successful in a national context in the past. As Germany’s financial center and with the Frankfurt Main Airport it could easily compete with other metropolitan regions in Germany. However, according to Thomas Sevcik from Arthesia, Frankfurt Rhine Main is not facing national but international competition (Frey-Broich 2009, WWW). Finally, the marketers have sensed this and started tackling the problem. After the identification of the core problem, initiatives were founded and measures taken. Frankfurt Rhine Main has realized that it must do something to remain competitive. In future culture, education, leisure and quality of life will play a more decisive role. And this is where the region ranks poorly (Frey-Broich 2009, WWW). Copyright © 2013. Diplomica Verlag. All rights reserved.

Different associations and agencies are already working on the implementation. By the year 2020 Frankfurt Rhine Main intends to establish the profile of a knowledge region and a business region with high quality of life – international, multi-cultural and innovative (Planungsverband 2005, p. 12). However, it is important to not forget that Frankfurt city and Frankfurt as a part of the Rhine Main Region are closely related to one another. Working on one side but not on the other could be fatal. Bender provides an example that makes this interconnectedness clear. If someone from Dreieich is asked where he is

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47

from, he most likely will not answer Dreieich but identify himself with Frankfurt. The connection between city and conurbation area is mutual. Frankfurt needs the region to be able to compete with other regions. On the other side the region must realize that without Frankfurt, it is only province (Frankfurt Rhein Main, Die Wirtschaftsinitiative 2008, p. 7).

A look at Los Angeles reveals a completely different picture in the scope of regional marketing. Currently characterized as unfriendly to business by 74 percent of Los Angeles business owners, it does not live up to its famous name. Los Angeles County neither seems to be interested in foreign investors nor domestic. No other place made it harder for me to find information on its investment services and locational advantages. Hours of researching on the internet only left me more confused than before. However, at least L.A. County seems to have identified the deficits and is now tackling the problem.

Hong Kong on the other extreme is handling the increasing competition and expectations of investors brilliantly. Invest Hong Kong has bundled its services and makes it easy for potential investors to find the information they are looking for. In comparison to L.A. and Frankfurt Rhine Main, Hong Kong offers the most comprehensive information and best service package. The marketing strategy is simple and thought-out and understandable.

In the course of my researches I experienced big differences in the ways places market themselves. Hong Kong and Los Angeles currently are pursuing two completely different policies in attracting investors: Hong Kong representing an investor friendly environment and free services and Los Angeles hardly supplying any support. I would like to place Frankfurt Rhine Main somewhere in-between. For further enhancement and increase in competitiveness, Frankfurt Rhine Main must continue to address competitive

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weaknesses and develop its strengths.

Concluding I can say that place marketing is and will be important. The competition in the global market for foreign investment is constantly intensifying, with countries around the world enhancing their offer to investors (IBM 2009b, p. 17). If you leave place marketing to chance, the worst-case outcome may be a negative, confusable or nonexistent profile (Kurzhals 2007, p. 31). What is important to success in the place

48

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marketing process is a systematic long-term approach of work and consistency (Moilanen and Rainisto 2009, p. 27). However, the best practices in place marketing have not yet appeared, and only a place’s imagination sets the limits as how innovative place marketing programs can be created (ibid., p. 26).

The following box gives a short outlook on how places must market themselves in future. In future: x

“Places need to establish a strategic vision to face the challenges.

x

Places need to establish a market-oriented strategic planning process to face the challenges.

x

Places must develop a genuine market perspective toward their products and customers.

x

Places have to build quality into their programs and services to compete with other places.

x

Places need skill to effectively communicate and promote their competitive advantages.

x

Places need to diversify their economic base and develop mechanisms for flexibly adapting to changing conditions.

x

Places must develop and nurture entrepreneurial characteristics.

x

Places must rely more on the private sector to accomplish their tasks.

x

Each place needs to develop its own unique change processes as a result of differences in the place’s culture, politics, and leadership processes.

x

Places must develop organizational and procedural mechanisms to sustain place development, and maintain momentum once it has begun” (Kotler et al. 1993, pp. 317-342).

In addition to the direct marketing actions places should also use the internet to improve municipal administration. E-Government is an important location factor and should not

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be dismissed as ‚luxury‘ (Weinberg 2002, p. 5).

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49

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Appendix Table X-1: Differences in Marketing Companies and Regions (adapted from Manschwetus 1995, p. 94) Criterion

Companies

Regions

Location

Mobile

Immobile

Point of Sale

Place independent

Place dependent

Kind of Exchange Objects

Products

Regional Service Offer

Price

Prices freely Definable

Fees and Taxes not changeable

Transaction Complexity

Low

High

Organizational Goal

Realization of Profit

Employment

Entrepreneurial Risk

Existent

Non-Existent

Pluralistic Decision-Making

Not necessary

Necessary

Public Interest

Seldom

Generally existent

Personnel

Employee

Employee, member of public service

Promotion System

Merit System

Merit System or Rule of Seniority

Returns on Marketing Effort

Difficult to Quantify

Very Difficult to Quantify

Marketing Know-How

Long Tradition

Little Experience

Duration of Transaction

Table X-2: Stages of the Strategic Market Planning Process (adapted from Moilanen and Rainisto 2009, p. 149; Kotler et al. 1993, p. 81) 1. Start-up and Organization x Securing commitment of the highest management (political and business life) x Getting organized x Creating visibility for the process x Political requirements

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2. Research Stage/Place Audit x Collect basic information for decision-making (economic/demographic characteristics) x How is place conceived in the home country and in foreign target audiences x Who are the main competitors? x What are the place’s strengths and weaknesses and opportunities and threats? x Analysis and interpretation of the results 3. Forming Brand Identity, Visions and Goals x Drawing conclusions from research results x Choosing elements for brand identity x What should the community become? 4. Strategy and Action Plan x Making integrated operational plans. Steps, visual look, timetables, costs, responsibilities x Determination of the Marketing-Mix x How can we reach our goals? x What actions must be carried out to carry out the strategies? 5. Implementation and Control x What must the community do to insure successful implementation?

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Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

Figure X-1: City Growth/Decay Dynamics (adapted from Kotler et al. 1993, pp. 5-7)

Growth Dynamics

Place is attractive 1. 2. 3.

New industry starts up Job opportunities are strong Life quality is attractive

Inward Migration, of New Residents and Visitors

Inward Migration, of New Businesses and Investment

Real Estate Costs Rise, Infrastructure Is Strained, Social Needs Rise

Government Raises Taxes

Place Becomes Unattractive 1.

Decay Dynamics

2. 3. 4. 5.

Outward Migration, of People

Major company or industry is hurt or exits Economics recession hurts business Unemployment climbs Infrastructure breaks down City budget deficit increases

Tourism, Convention Business Fall Off

Outward Migration, of Business

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Banks Tighten Credit, Bankruptcies Increase, Crime Increases, Social Needs Rise, City Image Deteriorates

Government Raises Taxes

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Table X-3: List of Agencies and Services

Agency

Services/Tasks

Website

HA Hessen Agentur GmbH

Pro Business Service : x Foreign Representative Offices x Location Information System x Co-operation data bases x Convention Planner Hessen x Advice in looking for the best possible site in Hessen (site consultant team) x Quick and unbureaucratic support in setting new branch office x Personal counselor can provide individual support x The team of experts can provide information about public funding schemes and put you in touch with a close-knit network of partners in both Hesse and around the world x Increase the confidence of the citizens, investors and attract tourists into the state of Hesse x Raise the awareness of its’ advantages locally as well as Internationally x We can put you in touch with your preferred location (district, town, city). x We offer comprehensive advice on setting up a company. x We provide general information about tax and law. x We support you in your search for suitable office premises or a corporate site that is tailored to your precise needs. x We put you in touch with interesting networks. x We make sure your employees feel at home in our midst. x We support you all the time – for as long as you are here. x Creation of a Regional Land Use Plan and a Landscape Plan x Carry out regional monitoring x Manage projects funded by the European Union x Offer advisory function for communities in the management of EU-Funds x Planungsverband is involved in three separate companies: the Rhine Main Regional Park Company, the Frankfurt Rhine Main Corporation – International Marketing of the Region and the Frankfurt Rhine Main Cultural Region Company x Promote coordination and cooperation in the field of economic development among the members in the Rhine Main region x Support for towns and municipalities in marketing industrial real estate x Creating contacts with groups of investors and real estate industry x Organization of real estate events in member municipalities and districts in the region

http://www.invest -in-hessen.com

Hessen Agentur GmbH

FrankfurtRheinMain GmbH International Marketing of the Region

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Planungsverband

Wirtschaftsförderung Region Frankfurt RheinMain Economic Promotion Board Frankfurt Rhine-Main Region

http://www.hesse n-agentur.de/

http://www.frmunited.com/

http://www.planu ngsverband.de/

http://www.region -frankfurtrheinmain.de/ http://www.planu ngsverband.de/

XVI

Mohr, Christiane. Selling the Business Location: Place Marketing in the context of the Rhine-Main Region : Place Marketing in the context of the Rhine-Main Region, Diplomica

x

Wirtschaftsinitiative FrankfurtRheinMain e.V. Industrie- und Handelskammer Frankfurt am Main

Hessische Landesregierung Hessisches Ministerium für Wirtschaft, Verkehr und Landesentwicklung Wirtschafts- und Infrastrukturbank Hessen HA Hessen Agentur GmbH Arbeitsgemeinschaft Wissenregion FrankfurtRheinMain Cluster Integrierte Bioindustrie (CIB) Frankfurt Bundeszentralamt für Steuern (Federal Central Tax Office) Germany Trade & Invest

The American Chamber of Commerce in Germany e.V.

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Das Deutschland Portal Facts about Germany

Statistisches Bundesamt

European Commission

Development of specialized catalogues for certain sectors x Central contact partner for information about the area The planning association is the responsible body of the Economic Promotion Board. Publishes the FRM magazine Frankfurt am Main Chamber of Commerce and Industry x Ensure the success of all companies in this region x First port of call for inquiries from foreign investors and business start-ups about the Frankfurt Rhine Main location Information all about the State of Hesse

http://www.wifrm .de www.frankfurtmain.ihk.de

Ministry of commerce, transport and development of the State of Hesse

http://www.hesse n.de www.wirtschaft.h essen.de

x x

www.ibhhessen.de

Promotion of industrial economy Regional promotion

Location Information System for Commercial Real Estate in Hesse x Exchange knowledge x Enable cooperations x Support innovation

http://www.stando rte-in-hessen.de http://www.wisse nsportalfrankfurtrheinmain.de

Integrated in HA Hessen Agentur GmbH

www.cibfrankfurt.de www.germantaxe s.info

Pages contain a wide range of basic information about German taxes, as well as numerous interesting links showing you Germany's advantages as a business location x Promote Germany as a location for industrial and technological investments x Identify investors for the German market x Advise foreign companies looking to expand their business activities in the German market x Provide information on foreign trade to German companies that seek to tap into foreign markets x Mission is to further the competitiveness of Germany as an investment location x Promote trade and investment between Germany and the United States x Strengthen transatlantic relations. The Deutschland Portal offers information on Germany A reference book offering all sorts of up-to-date and reliable information about Germany Federal Statistical Office Germany (Destatis) x Collect, process, present and analyze statistical information Provide the European Union with a high-quality statistical information service.

http://www.gtai.c om http://www.invest -in-germany.com

http://www.amcha m.de

http://www.deutsc hland.de http://www.tatsac hen-ueberdeutschland.de http://www.destati s.de http://epp.eurostat .ec.europa.eu/port al/page/portal/eur

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Enterprise Europe Network

x x x

European Business Network

x x

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x

Offers support and advice to businesses Helps them make the most of the opportunities in the European Union Offers information on EU legislation and funding opportunities Helps finding a business partner Connects over 500,000 companies and public figures in key functions in politics, economics, science and culture Offers reliable data and information on European economic locations

ostat/home/ www.eenhessen.de

http://www.ebn24 .com

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Table X-4: Starting a Business in Germany (adapted from IFC 2009a, p. 52)

This table summarizes the procedures and costs associated with setting up a business in Germany. STANDARDIZED COMPANY Legal Form: Gesellschaft mit beschränkter Haftung (GmbH) Minimum Capital Requirement: €25,000 City: Berlin

Registration Requirements: Time to

Cost

complete

complete

No:

Procedure

1

Clear the name of company at the local chamber of industry and 1

0

commerce 2

A notary notarizes the articles of association and memorandum 1

1014

of association 3

Open a bank account

1

0

4

Notary public files the articles of association with the local

10

403,5

commercial register, kept at local courts 5

Notify the local office of business and standards of the estab- 3

31

lishment of the company 6

Register with the professional association of the relevant trade*

1

0

7

Notify the local labor office of the establishment of the compa- 1

0

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ny* 8

Register employees for health and social insurance*

1

0

9

Mail out the documentation to the Tax Office*

1

0

* Takes place simultaneously with another procedure.

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XIX

to

Table X-5: Starting a Business in Hong Kong (China) (adapted from IFC 2009b, p. 52)

This table summarizes the procedures and costs associated with setting up a business in Hong Kong (China). STANDARDIZED COMPANY Legal Form: Limited Liability Company Minimum Capital Requirement: HK$1 City: Hong Kong

Registration Requirements:

Procedure

1

Choose a company name and obtain a business registration cer- 4 tificate Sign up Employee Compensation Insurance and Mandatory 1 Provident Fund (MPF) Schemes with a private company or a bank Make a corporate seal and company rubber stamp 1

2

3

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Time to complete

No:

XX

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Cost to complete

2034.22 0

215

Table X-6: Starting a Business in the United States (adapted from IFC 2009d, p. 52)

This table summarizes the procedures and costs associated with setting up a business in the United States.

STANDARDIZED COMPANY Legal Form: Limited Liability Company Minimum Capital Requirement: $0 City: New York City

Registration Requirements:

No:

Procedure

1

Reserve the company's business name (optional), file the company's articles of organization and adopt the company's operating agreement Apply for federal identification number (EIN) for tax and employer purposes Register to collect State sales tax Register as an employer with the Unemployment Insurance Division of the state Department of Labor Arrange for workers' compensation insurance and disability insurance Arrange for publication and submit certificate and affidavits of publication

2 3 4 5

Cost to complete

1

275

1

0

1 1

0 0

1

0

1

50

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6

Time to complete

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XXI

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Figure X-2: 2009 Tax Misery & Reform Index (Anderson 2009, WWW)

XXII

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