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Marketing Alberta Communities Regional Economic Development Workshops March 14 to 18, 2005 Module 1 – Effective Marketin

Marketing Alberta Communities Regional Economic Development Workshops March 14 to 18, 2005 Module 1 – Effective Marketing Package. Presented by:. Self Introduction Consultant serving Canadian economic development agencies at all levels of government since 1997.

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Marketing Alberta Communities Regional Economic Development Workshops March 14 to 18, 2005 Module 1 – Effective Marketin

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  1. Marketing Alberta CommunitiesRegional Economic Development WorkshopsMarch 14 to 18, 2005Module 1 – Effective Marketing Package Presented by:

  2. Self Introduction • Consultant serving Canadian economic development agencies at all levels of government since 1997. • Specializing in economic analysis, strategic planning and the creation of targeted marketing programs. • More than 30 years experience in economic development: • City of London (94-97) • Canadian Consulate General – Los Angeles (90-94) • Niagara Region Development Corporation (82-90) • Regional Municipality of Halton (79-82) • City of St. Catharines (74-79) • Past President of EDAC (2003) • Past President of EDCO (1986) • EDAC/University of Waterloo Economic Development Program

  3. House Rules • You will interrupt me • You will ask questions & challenge my point

  4. Setting the Stage Trying to Define What We Do

  5. The Development Officer’s JobThe Wizard • This isn’t a Profession it’s a Black Art. • An EDO is expected to stimulate investment and job creation in the community with little or no resources and no control what-so-ever over the factors that actually contribute to a healthy economy.

  6. The Development Officer’s JobThe Facilitator • We have no real power or authority. • Virtually all the factors affecting the investment decision are beyond our control. • Exchange rates, interest rates, business cycle, trade policy, market swings, 911, SARS, BSE, etc. • We don’t control the decision-making process of our clients - the potential investors. • Unlike many of our American competitors, we can’t offer financial incentives to influence a decision. • However, we can bring people together with ideas to make things happen.

  7. The Development Officer’s JobSlay the Nine-Headed Hydra • In addition the EDO is also expected to provide leadership in: • Town Council & Committees • Department Heads Meetings • Chamber of Commerce and Committee Meetings • Downtown Redevelopment • Transportation Issues • Heritage Preservation • Industry Association Activities • Stimulating Exports • Accessing Capital for Local Companies • Commercializing New Technology • Tourism Promotion • Festival & Event Planning • et al

  8. My Personal Rant • In trying to become more sophisticated in what we do, we too often lose sight of the fundamentals in economic development. • Example - How many economic development plans include “Innovation”, “Smart Growth” or “Cluster Development” • How many communities are targeting one or more of the following: • Biotech, Life Sciences, Nutraceuticals, Bio-Mass, Alternative Energy • or the dreaded “High Technology” • Stop & think!!! Who’s creating jobs in your community? What can you do to support them? • Get Back to Basics in Economic Development

  9. What are the Basics? • Know your Community • Ensure your Community Profile, Business Directory and other databases are up-to-date and comprehensive • & easily found on the web. • Know your Companies • Visit your companies, learn everything you can about their products & processes, their operations & growth strategies. • don’t forget to collect info on the “Parent Company” and the company’s reporting structure.

  10. Economic Base Theory Back to Basics Understanding How Local Economies Work

  11. Back to BasicsEconomic Base Theory Understanding Local Economies “Basic Industries” – are those businesses that serve customers outside the region (exporting) and thereby attract “new” money to grow the local economy Examples – manufacturing, agriculture, tourism “Non-Basic Industries” – are those businesses that serve local customers and thereby redistribute money within the local economy Examples – most retail & personal services businesses

  12. Back to BasicsEconomic Base Theory There can be “Basic”elements in a number of “Non-Basic” industries. • Example - to the extent that a local business also attracts customers from outside the region, a portion of their business becomes “Basic”. Example – Big Box Retailer, Large Auto Dealership • A high Location Quotient (LQ > 1.00) in a typically “non-basic” industry can point to “basic” elements in that industry.

  13. Back to BasicsEconomic Base Theory “A standard interpretation of the economic base model is that exports and the income they inject into the local economy are all that really matter - they cause or enable all other economic activities. Income earned in export-oriented activities circulates through the local economy, putting people to work in locally oriented economic activities that provide the vast majority of jobs. The standard interpretation of the economic base model would dismiss a restaurant or recreational facility as derivative or secondary, .... [t]he alternative interpretation would say that such local economic activity absorbs and holds dollars longer in the local economy, increasing jobs and income. ... The economic base model should not be interpreted as meaning that only exports matter. Rather, export earnings interact with a particular local economy to determine the overall level of local economic activity. Both export earnings and the local economic structure matter. The internal logic of the economic base model has simply been misinterpreted." Power, Thomas Michael, (1996) Lost Landscapes and Failed Economies. Washington DC, Island Press

  14. The “Leaky Bucket” Modelfor the Local Economy

  15. Back to BasicsEconomic Base Theory Consider the contribution of each industry from a “Strategic” viewpoint “If your goal is expansion of jobs & wealth – you will want to stimulate your fastest growing sectors” – use the community’s natural competitive advantages to further stimulate key industries. “If your goal is diversification – you will want to fill the gaps in the economic structure of the community” – nurture under-represented business sectors to round out the local economy.

  16. Strategic Plan vs. Work Plan • Strategic Plan provides your compass heading • The overall direction of your economic development program • Work Plan & Budget represent map you use to get there. • Your route around obstacles, the speed at which you intend to travel and stops along the way.

  17. Components of an Economic Development Program • Business Attraction • Most visible of all programs however it often accounts for only 10% of EDO’s time. • Generally consumes most of the operating budget. • For brochures, exhibits, advertising & promotion, etc. • Business Retention & Expansion • Most effective of all programs. • Maxim - Existing businesses will generate as much as 90% of economic growth in the community • Small Business/Entrepreneurial Development • In our experience there is an insatiable demand for business counseling and advisory services. • Counseling, Business Planning, Financing for Small Enterprises, Mentoring

  18. Components of an Economic Development Program • Tourism Programs • Destination Marketing • Mass Marketing • examples: advertising, maps & brochures, packaging tours, sports tourism, meetings & conventions, event management. • Tourism Development • Working with investors & entrepreneurs • develop new/expanded accommodations & attractions. • The two programs address different audiences and use different languages

  19. Components of an Economic Development Program • Downtown Redevelopment • High priority in many communities although with mixed results. • Big Box is firmly entrenched in the marketplace • Retail Chains don’t do Main Street • The economics of office buildings are tough in many smaller communities • Entertainment venues (sports stadium, performing arts, theatre, restaurants, pubs, night clubs) work well in many communities. • Special Projects • Different for every community • Examples: incubator projects, angel networks, commercializing new technology, export programs, infrastructure projects

  20. Marketing Your CommunityBusiness Attraction The Role of Foreign Direct Investment in Canada

  21. Steps to Developing a Marketing Plan 1. Assemble Information for Community Profile • (If you go no further than this, you will have developed the capacity to respond professionally to inquiries from prospective investors.) 2. Address Impediments to Growth (Infrastructure) 3. Pick your Target Sectors (where are they located?) 4. Prepare your “Pitch” (Marketing Materials) 5. Plan your Approach (Marketing/Sales Techniques) 6. Assemble Resources & Execute (Budget & Staffing) 7. Measure Results Against Objectives & Adjust

  22. Foreign Investment in Canada • 24% of all Canadian corporate assets are foreign-owned • They generate 31% of all corporate operating revenues • Foreign owned firms tend to be larger • High concentrations of foreign ownership found in the following industries • Chemical Industry - 68% • Transportation equipment - 54% • Electrical Equipment – 50% • The US is our dominant investor • 2/3's of all foreign investment in Canada is American

  23. Total Stock of FDI In CanadaSource: Statistics Canada

  24. Sources of FDI In CanadaSource: Statistics Canada

  25. The Unique Canadian ChallengeWhich is more attractive for your business? Canada Eh? The American Way Relic & Nick of The BEACHCOMBERS The Boys & Girls of BAYWATCH

  26. The Canadian Challenge • Everyone wants into the American market • Canada is too small – only 1/10th the US market. • California has a larger population and GDP than Canada. If it were a country it would knock Canada out of the G8. • Although we’ve got a lot of advantages, we’re often not on the radar screen of prospective foreign investors. • “It’s not that companies have misconceptions about Canada - in many cases they have no conception at all.” • Premier Bernard Lord, New Brunswick • “If you can’t be big - you’d better be clever” • Create a distinctive offering to stand out from the crowd • Appeal to specific needs of prospective investors

  27. Site Selection Criteria • Relative Ranking will be different for each case. • Hard Factors • Market Size • Proximity to Customers/Suppliers • Labour Force Availability and Cost • Available Land or Buildings • Business Operating Costs • Transportation Infrastructure • Utilities (sewer, water, electricity, gas) cost and availability • Proximity of Business Services • Soft Factors • Community Receptivity • Quality of Investor Servicing • Quality of Life

  28. “Real” Site Selection CriteriaSource: Chris Tillett - Coopers & Lybrand, UK • 1. Market Access • Can I reach my customers from this location? • 2. Culture • Am I going to feel comfortable here? • 3. Investor Servicing • How did the community respond to my inquiries? • 4. Operating Costs & Incentives • Will my costs be competitive in this location?

  29. Site Selection Criteria • Access to Labour • American companies are increasingly drawn north in search of labour. • Canada’s unemployment rate hovers between 7% & 8% - in the US it is ~5.5%. Although facing shortages in certain skills we have more available labour, plus wages/benefits costs that are 18% -20% less than comparable jobs in the US. • This is the major reason for presenting yourself in a regional context – highlight the labour force that is available across the region. • Retiring “baby boomers” will have a profound effect on our labour markets.

  30. Canadian Demographic Picture% of Population by Age Group – 2004Source: Statistics Canada Baby Boomers Marching Toward Retirement

  31. Rating Marketing MethodsSource: Chris Tillett - Coopers & Lybrand, UK • “Face to Face” vs. ‘Institutional’ Marketing • The bulk of the budget for economic development is consumed by publishing brochures, videos, advertising, trade shows, direct mail programs, etc. • Research shows the most effective economic development are those based on relationship marketing - “face to face” networking with your clients • It’s also the least costly of all economic development activities

  32. Rating Marketing MethodsSource: Chris Tillett - Coopers & Lybrand, UK Activity Frequency Effectiveness Rank • Corporate “Aftercare” Programs 4 5 1 • Business Networks 6 4.8 2 • Chamber Links 4 4.1 3 • Direct Mail to Brokers & Consultants 5 4 4 • “Sales” Calls 3 4 4 • Public Relations 3 4 4 • Attending Conferences 7 3.6 7 • Outward Missions 5 3.6 7 • TV Advertising 2 3.5 9 • Membership Foreign Organizations 2 3.5 9 • Trade Shows 8 3.4 11 • Trade Press Advertising 5 3.2 12 • Inward Missions – Fam Tours 4 2.8 13 • General Advertising 6 2.8 13 • Direct Mail to Potential Investors 9 2.8 13 • Directory Listings 4 2.5 16

  33. Rating Marketing MethodsSource: Chris Tillett - Coopers & Lybrand, UK • “Corporate Aftercare” • Most effective of all programs • Objectives • Strengthen the investment • Deepen its roots with new products, new functions • Attract Suppliers • Foster local inter-trade • Early warning of potential rationalization • Ambassador Testimonials • Direct Mail • Note differences between direct mail programs targeting “Investors” vs. “Brokers/Consultants”

  34. KPMG StudyThe Competitive Alternative www.competitivealternatives.com/

  35. Operating Costs forSelected ‘Traditional’ Industries – 2002Eastern North America

  36. Operating Costs forSelected ‘Traditional’ Industries – 2002Western North America

  37. Relative Importance of Labour to ‘Location-Sensitive’ CostsTraditional Industries - KPMG Study 1999

  38. Relative Importance of Labour to ‘Location-Sensitive’ CostsHigh Tech Industries - KPMG Study 1999

  39. Canadian AdvantageLower Wages & Benefits Costs • COST of US$100 of LABOUR CAN USA Avg Wage/Salary $86.00 $100.00 Avg Statutory Benefits 8.59 13.08 Avg Supplementary 16.60 27.90 Total Wage & Benefits $111.19 $140.98 • Source: KPMG Study 1996

  40. For further information contact us at : 182 Willow Ridge Road, RR #3 Ilderton, ON N0M 2A0 Tel: (519) 666-3668 Fax: (519) 666-3670 Email: mfischer@execulink.com

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