International Journal of Public Sector Management

Can Cities Market Themselves Like Coke and Pepsi Do?

Erik W. Matson
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To cite this document:
Erik W. Matson, (1994),"Can Cities Market Themselves Like Coke and Pepsi Do?", International Journal of Public Sector
Management, Vol. 7 Iss 2 pp. 35 - 41
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 Can Cities
Can Cities Market Themselves Market
Like Coke and Pepsi Do? Themselves?

Erik W. Matson
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PHH Fantus Corporation, Chicago, USA 35

Introduction
Can cities market themselves like Coke and Pepsi do? The answer for many public
sector organizations worldwide can be Yes!!! But the question is how and what
does it take to do this is this magic and what have businesses learned over the
years that works?
Traditionally, the public sector has been slow to accept and/or utilize avant
garde consumer marketing techniques for public sector implementation. The
process of understanding exactly what the techniques mean and how to translate
them and make them useful for their own attraction and retention efforts can
turn out to be a profitable experience for cities. This article examines the how
and what in a broad way, designed to provide stimulating ideas for city marketers
and exposure to a variety of concepts used extensively and successfully by
consumer marketing oriented businesses.

Background
The application of classical marketing approaches have led literally hundreds of
development organizations into an increasingly intense high stakes battle to out-
perform competitor communities and win prestigious business projects.
What have communities learned from this high stakes battle and never-ending
spiral? While some communities swap stories of successful targeting campaigns
and recruitment trips, other areas have found their forays into marketing less
than satisfying. For these communities, the response of the private sector to
marketing efforts has been disappointing, and in the light of ever increasing costs
some marketing plans have been severely curtailed or cancelled completely.
The problems that communities encounter in their campaigns are varied and
complex just the same as Coke has experienced with the introduction of New
Coke. Some are simply the result of poor planning, bad timing or inadequate
resources. Increasingly, however, the issue of who wins and loses in this
competitive arena PHH Fantus believes are tied to the use (or lack thereof) of
avant-garde consumer marketing methods.

Forces to Recognize in Acquiring/Retaining Customers

Present marketplace intensity to both acquire and retain customers has never
been greater. Therefore, competitive advantage will go to those public sector
organizations which are most willing to invest and use proven consumer marketing International Journal of Public
techniques to reach and develop a relationship with their targeted customer Sector Management, Vol. 7 No. 2,
1994, pp. 35-41 . MCB University
segment in the way that Pepsi and Coke continuously strive. Press, 0951-3558
 IJPSM The 1980s saw many events which transformed businesses like Pepsi and
7,2 Coke. These consumer-oriented businesses experienced changes in the forces
impacting key strategy areas: investment; distribution channels; trade and
manufacturer relations; shareholder pressure; marketing and promotional
programme design; new competitors and proliferation of products across their
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traditional categories, etc.

36 These same types of demand are now impacting on cities and other public
sector entities in a similar manner as they confront their own fundamental
paradigm shifts. Six key forces are portrayed below which in our experience are
usually not fully considered in strategies to acquire/retain customers:
(1) Slow down in level of capital investment key industry segments are
experiencing difficulty owing to the general economic recession, cost
cutting to improve profitability and profit pressure due to increased
shareholder value demands. Businesses are fundamentally looking at how
to maximize their existing locational and physical assets without new
investment.
(2) Increasing company sophistication pressure on the public sector marketer
is being felt in several areas:
companies are increasingly focused on maximizing profitability across
their value chain by effective placement of their locational asset(s);
providers not only have to understand the companies business and
provide focused messages, but also have to deliver results;
companies are now experienced purchasers of community services
and can secure advantageous environments and service forcing an
understanding of your assets and making focused targeting a key
imperative;
companies are developing and enhancing their global strategies and
are repositioning potentially before a community has an option to talk
to them.
(3) New city/region entrants many new geographic markets are becoming
increasingly aggressive, competitive and sophisticated. In turn, companies
are looking at extensions of their core businesses and are more willing to
examine first, new to them, alternative geographic markets.
(4) Pressure on communities to perform growth has been flat or declining
for many urban and middle geographic markets; putting increased pressure
on public sector management by taxpayers to attract the big name companies
and create jobs and increase the tax base for existing, and new programmes.
(5) Clutter and company postures our experience dictates that 40-50 per
cent of companies throw away undifferentiated mail unopened making
it more difficult to reach the most desirable companies and/or segment.
In addition, a small but increasingly secure group of companies are taking
a far more aggressive posture regarding finding the right location that
 their name and reputation alone will make a community do everything in Can Cities
order to persuade them settle there. This leads directly to bidding wars Market
and an ineffective use of capabilities by all concerned communities Themselves?
involved or not involved. While there may be no easy solutions to this
dilemma for communities, the head in the sand follower approach is a
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risky one. Consequently, a better approach is likely to be a thorough

assessment of alternative marketing approaches, ideally in a proactive 37
partnership with other community stakeholders.
(6) Product proliferation and difficulty of achieving differentiation the level
of sophistication and number of products we are experiencing in public
sector engagements worldwide are greater than ever. These programmes
are serving to create a highly competitive playing field and minimal
differentiation. This in turn places a premium for the community to develop
a differentiation strategy and implementation programme designed to
allow success.

Impact on Cities Efforts

Pepsi and Coke have learned to overcome the increasing pressures and demands
to reach the targeted customer. Total market growth has roughly paralleled
population growth and the playing field has become very fragmented. Public
sector marketers likewise must overcome the above forces and their impact. This
impact can be diverse and great depending on specific situations, but generally
is the same for all communities:
A declining number of actual companies settling in your community as
geographic competition grows and community marketing effectiveness
declines.
An expansion of possibilities for companies as new communities are
offering and/or positioning themselves to compete with traditional players.
Increasing barriers to entry for communities as companies develop
sophisticated mechanisms to look at locations; and players refine their
own competitive assets barring other less equipped communities from
competing for investment dollars.
A greater need for tailored products designed for focused targeting of
companies; and the institution of a consultative-selling process to
prospective investors.

Communities and Consumer Marketing Techniques

So can cities market themselves like Coke and Pepsi do? Yes!!! And there is no
special magic that businesses have learned over the years that cannot fundamentally
be applied to your attraction/marketing efforts.
To survive and prosper in this more challenging environment, providers will
need to examine five key steps on the road to improving their competitiveness:
 IJPSM (1) The economic development organization must focus on developing its
7,2 own competitive assets and capabilities strategy. To aid in the development
and implementation of a comprehensive programme, geared for success,
the public sector marketer should factor Best Demonstrated Practices
(BDPs). BDPs are those things which help an organization build sustainable
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competitive advantage by incorporating the best portrayed example,

38 regardless of geography or organization into a new role model for that
particular asset or area. Areas usually considered in the analysis are:
business climate, service delivery, technology infrastructure, regulatory
climate, international orientation, financing infrastructure, labour quality,
labour availability, transportation infrastructure, strategic vision of the
organization, organization/leadership, service effectiveness, locational
differentiation and cost position. As part of this analysis the marketer
needs to segment fully the current and potential customer base developing
a customer segmentation model. This initial step begins to create an
individual, differentiable brand and the direction for programmes targeted
at specific companies in specific segments, without regard to geography.
An illustrative example is of a Midwestern state which followed its classical
economic development strategies and was finding minimal success. They
challenged their paradigm, in the context of this type of analysis, which
resulted in a detailed understanding of their competitive profile and an
overhaul of their account management strategies as a primary building
block in new attraction efforts.
(2) Cities and other public sector organizations need to develop more customized
and targeted products/capabilities designed to leverage the customer
segmentation model. Designed correctly it should meet specific customer
needs and build a unique position in the marketplace for attraction/retention
efforts versus other community providers. An example of a technique used
in consumer marketing by consumer packaged goods/consumer goods
manufacturers can be applied in an innovative way. This uses a psychographic
(socio) profiling. Psychographic profiles of your population base (city/region
residents) can easily be determined and used as a possible means to
prioritize attraction investment decisions. Basically you compare your
segmented customer bases psychographic profile to the targeted
industry/company location and analyse how their psychographic profile
either matches yours or does not. For example, you might be trying to
attract technology/software companies into southern France. Generally
people like to hunt and fish in this area Across the top ten areas where
industries/companies of this type are presently located only two have
similar resident population profiles concentrate your initial efforts on
these two areas over the other eight. Pepsi and Coke type companies
normally pursue this type of analysis when looking at locational strategies
and implementation especially service and retail-oriented segments.
 (3) Look at your investment over the lifetime of the customer when establishing Can Cities
your programme and selling it publicly or to your senior public sector Market
management. Your goal should be to attract a company and establish a Themselves?
long-term relationship beneficial to the community and the company.
Further prioritization of your investment efforts may be gained by applying
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a Net Present Value (NPV) over a longer-term period. This makes initial
attraction investment outlays seem more palatable and allows more realistic 39
returns on investment.
(4) One of the largest assets that worldwide consumer product manufacturers
like Pepsi and Coke use extremely well is database marketing. This technique
is utilized to capture all the geo/demo/psychographic and past marketing
programme information for present and future customer attraction efforts.
Public sector marketers also need to invest in database marketing capabilities.
It supports consultative selling by providing new methods to approach
potential customers and predicative modelling of results. Successful
programme implementation must consider the following four critical
points:
The database should be developed to track the customer relationship
and incorporate geo/demo/psychographic profile and information
tailored to:
your identified industry/marketplace attraction/retention efforts;
your own internal operating environment, maximizing accessibility,
efficiency and delivery capabilities;
your customer base.
The information resident in the database is fundamental in targeting
the customer base:
to refine your targeting capabilities over time;
to aid in new customer acquisition and retention;
to reinforce brand identity/franchise of your area and/or organization;
to develop potential models of customer behaviour and future
locational decision requirements;
to exploit and/or leverage other parts of the marketing mix.
It becomes a learning vehicle for the public sector organization by:
capturing derived benefits of each campaign providing an
understanding of customers response histories;
capturing an ongoing record of assets which were of particular
interest to potential companies;
capturing the efforts expended on a particular campaign (dollars,
time, response, etc.);
 IJPSM testing new direct promotion vehicles to reinforce these efforts;
7,2 capturing ensuing needs/trends and building them into any new
database marketing efforts.
The database marketing effort evolves (very important) and needs to
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be continually refined after each campaign by:

40 effectively incorporating what is learned about your customer, i.e.
who is targeted, types of promotion vehicles used, timing of the
campaigns, message(s) sent and received, products/services used;
working in an ongoing cycle which seeks to understand what is
the value created for the community over a customers prospective
lifetime;
continually increasing the effectiveness of previous capital/resource
investment by always building your database and subsequent
usage.
Best Demonstrated Practices to consider when developing a database
marketing capability for your organization are:
list accuracy and maintenance become vital in ongoing development
of your proprietary database;
realizable list life is in the span of one to three years without
any investment continually refine your list and maintain accurate
profiles of your target segment/companies. If the data being used
in your marketing effort are not meaningful, you will probably
miss the target;
the development of a proprietary database allows you to control
the message to your target companies. It becomes an effective
message informing these targets about your own new competitive-
ness, constantly reinforcing your brand image just as Coke and
Pepsi do via TV ads and supermarket campaigns.
(5) Proactively pursue partnerships with private enterprises and other
regions/communities. Pepsi and Coke do this extremely well. They have
developed effective alliances with fast food chains and other service
providers to block each other or competitors from markets. They also have
leveraged technology and their other brands, such as Frito-Lay or Pizza-
Hut to bundle products to create a more appealing product mix and greater
perceived value for the customer. Conversely, customer and regional
relationships in the public sector have the ability to create barriers to
other competitive attraction efforts. In addition, they also provide
mechanisms to learn more about your customers business. By definition
this also creates opportunities for new product development as information
is shared between partners and benefits are realized. Regionalization or
trading bloc partnerships also can strengthen market position by providing
missing product offerings, leveraging technology investments and
 reducing costs to perform targeting. Integral to this concept is that the Can Cities
public sector organization should re-evaluate its own service-offering Market
bundling and analyse the delivered value to customers across all services
in the bundling. The primary goal is to reduce opportunities for cherry-
Themselves?
picking by competitors and build in switching costs to the customer if
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they contemplate leaving your location.

In summary, it is critical that areas utilize focused, targeted marketing to supersede 41
existing capabilities. Pepsi and Coke are constantly examining innovative ways
to retain market share and reach new customers.
Public sector organizations need to make this an imperative also and winners
will be the ones to implement proactive initiatives and programmes designed to:
(1) Develop an overall environment conducive to supporting the existing or
proposed marketing base and maximize your investment outlays.
(2) Develop and implement marketing capabilities based on your competitive
assets and capabilities and specifically identified targets:
strategize and identify the effort;
invest in the capability;
develop a customized capability for specific attraction/retention efforts;
factor best demonstrated practices into the programme;
implementation and programme management is ongoing and should
continually incorporate programme results.
(3) Propagate a strongly-branded message and image of your assets and
capabilities.
(4) Finally, satisfy customer requirements and needs through continual learning
and investment.
Yes a city can market like Pepsi and Coke as consumer marketing techniques
have worked for Pepsi and Coke they can work for you! Cities definitely have
the opportunity to change their paradigm and employ innovative targeted
marketing capabilities to send a message and help a company make money and
develop value while maximizing your areas potential.
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