One of the key principles of retailing is understanding your target market. Retailers have to make the right product decisions, develop an intuitive store layout and promote their business successfully.
One of the key principles of inward investment is understanding your target market. Inward investment agencies have to make the right market decisions, develop an intuitive proposition and promote their region successfully.
Investors have over 10,000 agency choices globally they can work with, from national to regional level, publically and privately funded. There are typically only circa. 12,000 Greenfield investment projects annually so all agencies needs to work harder. It is the same principle for retailers and the products they stock on their shelves. As consumers we are bombarded with choice.
In the grocery business, retailers will typically stock a mix of branded and non-branded products. The branded products carry pre-conceptions with shoppers that the product is more superior to the non-branded items. As shoppers we trust branded products and have preconceived ideas about quality and what we are buying.
It is the same trend in investment too. The top three US States for inward investment annually over the last 10 years have been: California, Texas and New York. We all have preconceived ideas about these States and as a result these States don’t have to work as hard to establish their credentials and are not operating dedicated international inward investment functions (although they do participate in the attendance at international events). Overall, they don’t invest as much time and effort positioning themselves in inward investment arena however continue maintain the top three positions in the US investment polls annually.
It is a similar story in many leading European cities such as London, Paris and Frankfurt. Inward investment projects land with no involvement from the national, regional or city IPA. The city and brands are so strong and widely known globally that companies are sold on the city as a destination before they even find out about local wages or office premises!
So what can we do as Economic Development professionals? Firstly there is nothing we can do to stop the wave of investments to these destinations. Their place marketing efforts often happen in tandem with tourism efforts and their brand is so widely recognised globally that they will always be a draw for investors.
What we can do is try to capitalise on their success by understanding which investors have invested in these destinations and see whether they have further expansion plans. In some cases, the companies who have invested won’t be effectively account managed, particularly if there isn’t an Economic Development function in operation. Other agencies will be overwhelmed with the number of investors landing in their region and there could be a collaboration angle.
Proactive place marketing can also come into play here to help improve a destination’s competitive positioning and potentially align itself with the potential opportunities that these investment destination magnets produce; OCO Global’s Marketing Services team have the experience to assist regions with this type of proactive marketing.
Furthermore, these “branded” destinations, like the branded goods on the supermarket shelves normally command a higher price premium. Non-branded goods in the supermarket are normally purchased by shoppers for price benefits and this is where some agencies will be able to play. Large cities will always command higher prices than their regional counterparts and they can be significant benefits for companies to expand regionally once they have a foothold in a major international city.
Finally, despite the historical dominance of branded good for shoppers. There is an increasing trend for the discerning shopper to be savvier about what they purchase. Consumers are increasingly questioning provenance of goods, their quality and price. In the UK, shoppers are contributing to the rise in market share for discount retailers such as Aldi and Lidl. Perhaps this trend may start to translate into more considered investor location decisions before selecting the brand first.
Now let’s go shopping!