Customer-Centric Marketing Strategies

Customer-Centric Marketing Strategies: Tools for Building Organizational Performance Hans Ruediger Kaufmann University of Nicosia, Cyprus & International Business School of the University of Vilnius, Lithuania Mohammad Fateh Ali Khan Panni City University, Bangladesh

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Published in the United States of America by Business Science Reference (an imprint of IGI Global) 701 E. Chocolate Avenue Hershey PA 17033 Tel: 717-533-8845 Fax: 717-533-8661 E-mail: [email protected] Web site: http://www.igi-global.com Copyright © 2013 by IGI Global. All rights reserved. No part of this publication may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. Product or company names used in this set are for identification purposes only. Inclusion of the names of the products or companies does not indicate a claim of ownership by IGI Global of the trademark or registered trademark.

Library of Congress Cataloging-in-Publication Data

Customer-centric marketing strategies: tools for building organizational performance / Hans Ruediger Kaufmann and Mohammad Fateh Ali Khan Panni, editors. p. cm. Includes bibliographical references and index. Summary: “This book provides a conceptual understanding on customer-centric marketing strategies as well as revealing the success factors of these concepts with a goal to improve the organization’s financial and marketing performance”--Provided by publisher. ISBN 978-1-4666-2524-2 (hardcover) -- ISBN 978-1-4666-2525-9 (ebook) -- ISBN 978-1-4666-2526-6 (print & perpetual access) 1. Marketing. 2. Customer relations. 3. Organizational effectiveness. I. Kaufmann, Hans Ruediger, 1958- II. Panni, Mohammad Fateh Ali Khan, 1981HF5415.C87 2013 658.8’02--dc23 2012023414

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Chapter 21

Customer-Centric Strategies in Place Marketing: An Analysis of Places’ Identities and Perceived Images

Gianluigi Guido University of Salento, Italy

Cesare Amatulli University of Salento, Italy

Alessandro M. Peluso University of Salento, Italy

Giovanni Pino University of Salento, Italy

M. Irene Prete University of Salento, Italy

Cinzia Pace University of Salento, Italy

ABSTRACT This chapter reports the results of a survey articulated into two complementary studies, performed in four districts located in Italy. These studies assess the opportunity to design destination branding strategies on the basis of customers’ perceptions, providing a framework to quantitatively determine the identity of a local district and its perceived image. The chapter proposes that the perceived image of a place can be examined through the concept of perceived personality as adapted to a place, labeled as “destination personality,” and analyzed using the Big Five Model (Digman, 1990). The main contribution of the research consists in presenting a methodology for the evaluation of the consistency between the identity, the image, and the perceived personality of a district. Results demonstrate the strong validity of the destination personality construct as a conceptual tool to analyze the perceived images of local districts, and show how findings may be particularly useful for Destination Management Organizations (DMOs) to design effective marketing strategies capable of attracting and retaining resources.

DOI: 10.4018/978-1-4666-2524-2.ch021

Copyright © 2013, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Customer-Centric Strategies in Place Marketing

INTRODUCTION A customer-centric marketing approach requires a focus on needs and wants of individual customers rather than on those of mass market (Sheth, et al., 2000). Firms interested in adopting such an approach should be committed to interacting constantly with their customers, collecting highquality information, in order to understand their expectations, desires and perceptions, and designing appropriate strategies to increase customer satisfaction and loyalty. Adopting a customer-centric approach is becoming important in every domain of business and, particularly, in destination marketing. Places (such as cities, districts, regions, nations, and continents) compete to attract and retain the best (monetary and non-monetary) resources available in the marketplace, and this competition has been increasing during the last decades (Guido, 2007). For these reasons, the interest in customer-centric approaches is raising progressively among companies involved in the field of destination management (Liao, et al., 2010). The adoption of such an approach requires that firms, tourism boards, and other supporting institutions interact consistently with their customers, gather information about their needs and gain detailed insight into their perceptions, preferences, and behaviours. Customer relationship management, which concerns the set of activities aimed at recognizing and retaining customers (Ellatif, 2007), may play a key role in determining the success of destination marketing and destination branding strategies. Such activities, in fact, not only permit to deliver tailored services to users, but also support the design of effective communication programs which may foster customer retention. The development of successful place marketing policies is generally based on matching what a territory supplies (which, in turn, is connected with its endowment of resources and competencies) with customers’ demand (which is shaped by the

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information users have about the same territory, as well as their personal goals). Consequently, the stock of resources and competences existing within a certain geographical area and characterizing its specific industrial or tourist vocation (i.e., the so-called identity) should mirror users’ needs, inner desires, and expectations relative to the same place (Kotler & Gertner, 2002). The interplay of these psychological dimensions defines a places’ perceived image, that is, the sum of beliefs customers have of a given place (Kotler, et al., 1993). Consistencies or, conversely, discrepancies between identity and image of a local district can determine the success or failure of development strategies pursued by place marketers. From a managerial point of view, the congruency between destination image (users’ perception of the place) and destination identity (the specific and typical resources of the place) represents a significant issue for Destination Management Organizations (DMOs), because it influences effectiveness and success of place marketing strategies. This duality, based on the relationship and the correspondence between subjectivity (destination image) and objectivity (destination identity), should be considered by place marketing practitioners. In particular, marketing managers should communicate an image of a territory (the objective element) which is congruent with what it supplies in reality (the objective element). This chapter reports the results of a survey articulated into two studies, performed in four districts located in Italy, that assess the opportunity to design destination branding strategies on the basis of customers’ perceptions. They provide a framework to quantitatively determine the identity of a local district and its perceived image and propose that the perceived image of a place can be also examined through the concept of perceived personality as adapted to a place, labelled as destination personality, and here analyzed using a consolidated model of human personality (the Big Five Model, Digman, 1990).


The main contribution of our research consists in presenting a methodology for the evaluation of the consistency between the identity, the image and the perceived personality of a district, which may be particularly useful for DMOs to design effective marketing strategies capable of attracting and retaining resources. The chapter proceeds first by reviewing the conceptualization of local districts, in general, and identity, image and personality, in particular, then underlining the importance of the proposed methodological application. Next, the authors outline the research procedure followed for each of the two studies and discuss key findings from the empirical analysis. Finally, the chapter draws conclusions, considers managerial implications and limitations of the research.

RESEARCH BACKGROUND Conceptualizing the Local Districts Places compete for limited resources with the aim to reach a high level of development and, depending on the approach adopted, they can be defined in different ways. Formally, local districts are structures that consist in extensive spatial contexts identified as purely administrative enclaves. Functionally, they could be seen as organizational entities, defined as complex relations between actors operating within them. They are qualified as local districts (generally, as local territorial systems or LTS, Guido, 2007) of public and private actors implementing economic activities (economic dimension). Furthermore, they are found within a determined area, sharing physical and morphological aspects (spatial dimension) and cultural and institutional elements (social dimension). Local districts may be seen as “multi-sales products,” as they can be simultaneously “bought” by different users (e.g., customers). Employing

“districts-as-products” by a specific user category should involve neither a deterioration of such products nor the transfer of any real right (Ashworth & Voogd, 1995). This characteristic of districts represents a critical issue in place marketing activities, which aim at promoting a sustainable development. Therefore, identifying various segments of users appears to be necessary for each local system. Kotler et al. (1993) identified four main categories of subjects (users, customers): (1) visitors, tourists travelling and moving to a specific destination, for leisure or even for other reasons; (2) residential workers, citizens and workers endogenous to the territory; (3) firms, companies with headquarters in the territory doing business in the manufacturing or service industry; and (4) external markets, companies whose headquarters are outside the territory, offering goods and services to the system or importing its products. In place marketing strategy and targeting, specific goods and services should be offered to different user categories, according to the effective resources and competencies situated in the district. The marketing strategy should be based on the users’ perception of the system, which determines the district’s image. Therefore, it is necessary to identify the elements related to the identity, image, and personality of a district, highlighting its dual aspect (objective vs. subjective).

Identity, Image, and Personality of Local Districts Local districts possess resources and competencies constituting their internal potential, on which their strengths and weaknesses are based, specifically, endogenous resources—tangible and intangible assets within a place (infrastructure)—and exogenous resources—assets obtained from outside through relationships with other systems (e.g., imports/exports). The stock of resources and competencies available in a district determines its specific identity and qualifies its strategic voca-

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tion, which can be industrial or tourist (Crouch & Ritchie, 1999; Konecnik & Go, 2008; Skinner, 2008). Industrial vocation is characterized by a high concentration of productive and/or tertiary businesses, while tourist vocation is characterized by a high concentration of resources (often natural), traditions and facilities (specifically designed for leisure; hotels, restaurants, etc.) that attract visitors. The specific vocation of a district represents the strategic ambit of a place marketing approach; therefore, it is the main unit of analysis of the planning process (Guido, 2007; Trunfio, et al., 2006). Identifying the strategic resources that determine the identity of a district is an important phase of the local development process. Nevertheless, what the territory supplies overall and the choice of competitive advantage through which the strategic subject pursues development depend on strategic resources management (Kotler & Gertner, 2002). In addition, successful place marketing strategies do not solely depend on the strategic subject’s capability to use its internal potential to the best advantage, qualifying individual districts with a specific vocation, but it presupposes an analysis of demand and of the perceptions different target users form about the specific district where or for which they operate. In short, the effectiveness of place marketing policies is conditioned by the degree of congruity between what the district supplies, determined by its resources, and the demand for goods and services from their respective target users. In particular, the latter is derived from users’ expectations (and desires) and the perceptions of the territories themselves. Finally, to be successful, it is necessary to reach consistency between the identity of districts and what users perceive, thus reducing any gap between objective reality and perceived image. These aspects have been widely recognized by recent studies in the field of place/destination branding (see Hankinson, 2004; Morgan, et al., 2002). Research has borrowed the concept

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of perceived image from consumer marketing literature and applied it to territories. According to recent studies (Obenour, et al., 2005; Sirgy & Su, 2000; Tasci & Gartner, 2007), the ability for a territory to attract and hold sufficient resources for development depends not so much on their objective characteristics as on the differentiation between their potential and capability. As a result, these territories should adopt specific communication strategies in order to create or enhance a perception of their distinctive image on the part of target users. The perceived image construct, traditionally used in marketing research to indicate the mental representations consumers form about brands, has been applied in place marketing to describe the peculiar characteristics of a territory (Hankinson, 2007). Echtner and Ritchie (1993) provided a conceptualization of perceived image as applied to territories and tourist destinations. The two authors defined the destination image as a multidimensional construct that captures the set of the subjective impressions of a territory, based on its tangible and intangible characteristics. These characteristics may be perceived to be either common attributes possessed by other territories, or unique and distinctive elements of that territory. Although some conceptual differences and theoretical distinctions exist (Gallarza, et al., 2001), other researchers recognize the complexity of this concept; in particular, in a meta-analytical study, Tasci et al. (2007) proposed alternative conceptualizations of the perceived image of territories: they stated that the perceived image of a district is a complex mental representation of the territory possessed by current and potential users. This mental representation consists in the users’ specific knowledge of the place; it is based on personal beliefs or convictions deriving from direct experiences with the specific district, or from indirect experiences—information from internal or external sources (Govers, et al., 2007; Guido, 2001). The processes guiding users’ perception


of districts have recently led researchers to adopt personality, which is a key construct in social psychology, in studies on the image of territories and tourist destinations. Personality qualifies the way individuals tend to respond to external stimuli over time, and captures specific individual structural differences (Ozer & Benet-Martínez, 2006). This has been adapted in consumer marketing (Aaker, 1997; Caprara, et al., 2000) to investigate the image of branded products. In consumer psychology studies (Aaker, 1997; Caprara, et al., 2001), brand personality has been defined as the set of typically human characteristics associated with a branded product. Based on this notion, more recently place marketing research has defined destination personality as the set of human characteristics associated to a place, such as a city, a district, a nation, and so forth (Hosany, et al., 2006). Few studies have related the concept of image as applied to territories to that of destination personality (Ekinci & Hosany, 2006; Guido, et al., 2009; Hosany, et al., 2006), conceptualized as an abstract and multi-dimensional construct based on the anthropomorphic characteristics users associate with specific locations (Ekinci & Hosany, 2006).

THE CONSTRUCTS OF PERSONALITY AND LOCAL DISTRICTS In psychology (Ozer & Benet-Martínez, 2006) and marketing research (Aaker, 1997; Caprara, et al., 2001), personality is a multi-dimensional construct which may be synthetically described with specific traits (or meta-traits) not directly observable and measurable. The Big Five Factors Model (Digman, 1990) is one of the most widely recognized theoretical frameworks in social psychology investigating human personalities and indirectly measuring latent dimensions. In particular, it has been adopted in branding research to investigate the perceived image of branded products (Caprara,

et al., 2001). This model is based on Cattell’s (1945) hypothesis of “linguistic sedimentation,” in which potentially infinite descriptive adjectives on human personality are reduced to a limited set of “typical” attributes in the common lexicon. The model suggests that personality can be described by means of five main latent traits: Agreeableness (how far individuals tend to be cordial and sensitive to others), Conscientiousness (the scrupulous, rational, and persevering manner with which individuals pursue certain objectives), Emotional Stability or Neuroticism (the ability to react to stimuli, controlling emotions and impulses), Energy or Extroversion (the propensity to establish and conduct relations with others), and Openness to Experience or Intellect (the degree of tolerance of different cultures and experiences, and the intensity with which these are experienced). Some scholars (Digman, 1997; Olson, 2005) have further synthesised the dimensional structure of the personality construct using two higher-order factors, or meta-dimensions. Guido (2006) identified a Utilitarian meta-dimension summarizing the traits of Conscientiousness and Emotional Stability, and a Hedonic meta-dimension linked to Agreeableness, Openness to Experience/Intellect, and Energy (Guido, et al., 2007). The research reported in this chapter applied this approach to the four districts, in an attempt to describe the perceived image of these territories effectively and efficiently. The present study addresses the gap within the literature regarding the relationship between the concepts of destination identity, image, and perceived personality. Therefore, the aim of the chapter is to adapt the Big Five Factors Model to destinations and describe how it could be used to evaluate empirically the consistency between the previously mentioned constructs. The data collected for the two studies were used to measure the image of four Italian districts as perceived by different target users, and then to evaluate the consistency with the corresponding personality traits.

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METHODOLOGY

Experimental Study on Places with a Stereotypical Image (Study One)

The two studies regarded two different typologies of LTS: the first study concerned two stereotypical places represented by two cities, while the second study was about wider territories typically recognized in literature as districts with a specific vocation. Research on these two different categories of LTS allowed exploration of the extended validity of the discussed framework. Overall the two studies involved 282 subjects belonging to the four categories of users as identified by Kotler et al. (1993), namely: visitors (25.5% of the sample), resident workers (33.3%), firms with head offices in the district (32.3%), and external markets (8.9%). More specifically, 141 were interviewed in the Piana del Fucino district and 141 in the Costa Teramana district (see Table 1)—both districts are located in Italy. As further specified, these two districts concern specifically the second study, but they also represent the context where data regarding the first study (based on other two different destinations) were collected. Data were collected using a structured closedend questionnaire divided into two sections referring to the two studies. A third part of the questionnaire, common to both studies, contained socio-demographic data regarding the characteristics of respondents (n = 282). The questionnaire included an introductory section containing information designed to make respondents aware of both studies’ general purposes and the characteristics of the analyzed places.

The first study focused on two districts having a stereotypical image of their respective strategic vocations, due to their distinctive traits (Golfetto, 1996): the city of Terni (in the Umbria region), with an industrial vocation, and the locality of Posillipo (in the Campania region), with a tourist vocation. Terni is tied to an industrial vocation due to the historical siting of steelworks, while Posillipo is a residential suburb of Naples, well known for its tourist attractions. As previously mentioned, the first part of the questionnaire concerned the study of these two places which have a stereotypical image (Terni and Posillipo). All respondents (n = 282) were invited to provide their impressions of both places. Given the stereotypical nature of these places, the possible absence of direct experiences with the district on the part of users was not considered a relevant issue. The subjects were allowed to evaluate these systems based even on indirectly acquired information through external sources or personal inferences (Prebensen, 2007). This part of the questionnaire contained, for each stereotypical place, a 10-item scale to evaluate the perceived personality of the examined place. This measure was borrowed from previous research (Gosling, et al., 2003) which proposed this scale as an instrument that is more parsimonious than others in assessing personality. The items included brief statements referring to specific traits, borrowed

Table 1. Composition of the sample Piana del Fucino Sample (n = 141) (%)

Costa Teramana Sample (n = 141) (%)

Overall Sample (n = 282) (%)

Visitors

20.6

30.5

25.5

Residents-workers

34.7

31.9

33.3

Companies located in the LTS

35.5

29.1

32.3

Type of Users

External markets

9.2

8.5

8.9

Total

100

100

100

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from human personality and evaluated on a fivepoint Likert-type scale. Therefore, the respondents were asked to imagine the two places as humans and to indicate the extent to which they could recognize specific anthropomorphic traits.

Teramo and including seven municipalities, has a recognized tourist vocation specializing in seaside tourism, favoured by a low and sandy coastline. In the second part of the questionnaire, questions refer to either the Piana del Fucino or Costa Teramana districts, depending on whether the respondents worked or lived prevalently in one or in the other area. After providing the respondents with the purposes of the study and the characteristics of the specific district, the first group of questions evaluated its perceived image (Table 2). Two direct questions measured on a seven-point Likert-type were used to evaluate the tourist and industrial images perceived by the respondents. For each type of image, some indirect measures were also considered as indicators of specific factors at the basis of the constructs. Specifically, for the tourist image, questions on subjective perceptions were

Experimental Study on Recognized Local Districts (Study Two) The second study concerned the industrial district of Piana del Fucino and the tourist district of Costa Teramana, both in the Abruzzo region, Central Italy. The former, located in the province of L’Aquila and including thirteen municipalities, has an industrial vocation of foodstuffs and agricultural specialization with many products such as mineral water, sweets, and vegetables. The latter, situated along the coast in the province of

Table 2. Measurement of constructs used in the first part of the questionnaire Constructs (direct measurement)

Perceived personality of the LTS

Tourist image (How much do you think LTS X has a tourist vocation, that it typically favours tourism and/or residential districts?)

Industrial image (To what extent do you feel that LTS X has an industrial vocation, that it typically favours productive and commercial activities?)

Factors

Indicators (indirect measurement)

Agreeableness

Authentic, Cordial, Generous, Loyal, Sincere

Conscientiousness

Reliable, Constant, Efficient, Responsible, Scrupulous

Energy

Cheerful, Determined, Dynamic, Energetic, Enterprising

Emotional stability

Well-balanced, Optimistic, Calm, Confident, Solid

Openness to Experience/Intellect

Perceptive, Creative, Innovative, Modern, Original

Accessibility of the territory

How accessible do you feel LTS X is from the morphological and structural point of view?

Attractiveness of the environment

Do you think LTS X has natural, physical, historical, recreational and entertainment attractions?

Hospitality of the residents

Do you think people who reside in LTS X are hospitable?

Presence of infrastructures

To what extent do you feel LTS X has the necessary infrastructures for the localisation and agglomeration of productive structures?

Attractiveness for external investments

To what extent is LTS X capable of attracting investments from outside the system?

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included (Milman & Pizam, 1995), considering: (1) the accessibility of the territory – determined by morphological, economic, and social conditions; (2) the attractiveness of the environment – natural attractions, contingent factors, anthropic factors, and tourist facilities; and (3) the hospitality of residents – the degree of openness of the local population toward visitors. For the industrial image, two questions concerned the subjective perception of: (1) the presence of infrastructures favouring localization and agglomeration of production activities, and (2) the attractiveness for external investments (Kotler, et al., 1993). Another group of questions had 25 descriptive adjectives pertaining to the five traits of personality (five adjectives for each dimension), according to the Big Five Factors Model (Caprara, et al., 2000, 2001). A seven-point Likert-type scale was used to evaluate the districts’ personality as perceived by users.

FINDINGS AND DISCUSSION Experimental Study on Places with a Stereotypical Image (Study One) The first study concerned the perceived personality of Terni and Posillipo, considered intrinsically as tied to a specific vocation (Golfetto, 1996). All subjects interviewed evaluated both places independently of the district they belonged to and any direct experiences they had had. A simplified scale of personality was used for these destinations; following an established procedure (Gosling, et al., 2003), five personality traits were calculated directly by averaging scores obtained for the indicators associated with more specific personality traits metaphorically associated with the two territories (see Table 3). The two meta-dimensions were calculated following an additive procedure and were respectively referred to as the Utilitarian and Hedonic

Table 3. Descriptive statistics and factors of the perceived personality of both Terni and Posillipo districts Factors and Indicators*

Terni

Posillipo

Mean

Std. Dev.

Mean

Std. Dev.

F1 Agreeableness

3.02

.74

3.02

.96

Generally reliable

3.08

.95

2.83

1.17

Tends to find defects in others**

2.96

.98

3.21

1.19

F2 Openness to Experience/Intellect

2.86

.81

4.03

.83

Has few artistic interests**

2.96

1.11

3.97

1.13

Has an active imagination

2.75

1.07

4.09

1.12

F3 Conscientiousness

3.98

.74

3.03

1.00

Tends to be lazy**

3.77

1.05

3.18

1.36

Is conscientious at work

4.19

.87

2.88

1.17

F4 Energy

2.74

.78

4.14

.74

Is reserved**

2.35

1.18

3.97

1.04

Is outgoing, sociable

3.13

.95

4.31

.99

F5 Emotional stability

3.03

.73

3.56

.91

Is relaxed, handles stress well

3.08

.99

3.71

1.18

Is easily irritated**

2.98

.94

3.42

1.14

Note: n = 282. *Indicators of the anthropomorphic traits attributed to the places imagined as “people” and expressed on a Likert-scale ranging from 1 (strongly disagree) to 5 (strongly agree). **Inverted scores.

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meta-traits (Guido, 2006). The Utilitarian metatrait was determined by averaging the composite scores of Conscientiousness and Emotional Stability, while the Hedonic meta-trait was calculated by aggregating the composite scores of Agreeableness, Openness to Experience/Intellect, and Energy. The means of these meta-traits were compared using a paired sample t-test. The results were coherent with the “stereotypical” image of the two places. For Terni, a perceived personality dominated by the utilitarian meta-dimension emerged (Utilitarian personality: mean = 3.50, std. dev. =.55; Hedonic personality: mean = 2.87, std. dev. =.53; t(281) = 17.30; p