IV. The Place
Some countries are geographically disadvantaged. Recent studies have demonstrated how being landlocked or having a tropical climate carry a hefty price tag in terms of reduced economic growth. These unfavorable circumstances can be described as “natural discounts” to a country’s price.
What can be done to overcome such negative factor endowments?
In classical microeconomics, the element of “place” in the marketing plan used to refer to the locus of delivery of the product or service. Well into the 19th century, the “place” was identical to the region where the product was manufactured or the service rendered. In other words, textiles weaved in India were rarely sold in Britain. American accountants were unlikely to practice in Russia. Distribution was a local affair and networks of dissemination and marketing were geographically confined.
A host of historical and technological developments drastically altered the scene and frayed the straitjacket of geography.
The violent disintegration of the old system of geopolitical alliances led to the formation of massive, multiplayer trading blocs within which and among which the movement of goods and, increasingly, services is friction-free.
The vast increase in the world’s population – matched by the exponential rise in purchasing power – created a global marketplace of unprecedented wealth and a corresponding hunger for goods and services. The triumph of liberal capitalism compounded this beneficial effect.
The advent of mass media, mass transport, and mass communications reduced transaction costs and barriers to entry. The world shrank to become a veritable “global village”.
The value of knowledge (processed information) has fast risen to surpass that of classical (physical) goods and services. Information has some of the properties of a public good (for instance, nonrivalry) – coupled with all the incentives of a private good (e.g., profit-making).
Thus, the very nature of distribution had been irrevocably changed. The distribution channel, the path from producer to consumer (in our case, from country to foreign investor or tourist, for example) is less encumbered by topography than it used to be.
Even the poorest, most remote, landlocked, arid, and disadvantaged country can nowadays leverage air flight, the Internet, television, cell phones, and other miracles of technology to promote itself and its unique offerings (knowledge, plant and animal species, scenery, history, minerals, cheap and educated manpower, cuisine, textiles, software, and so on).
The key to success is in a mix of both direct and indirect marketing. Nowadays, countries can (and do) appeal directly to consumers (ads targeted at tourists or road shows aimed at investors). They present themselves and what they have to offer, circumventing brokers and agents of all kinds (disintermediation). Still, they should not fail to cultivate more traditional marketing channels such as investment banks, travel agents, multilateral organizations, or trade associations.
With many of the physical obstacles to marketing removed in the last few decades, with the very concept of “place” rendered obsolete, promotion emerged as the most critical facet of nation branding and place marketing.
About the Author
Sam Vaknin ( http://samvak.tripod.com ) is the author of Malignant Self Love – Narcissism Revisited and After the Rain – How the West Lost the East. He served as a columnist for Central Europe Review, PopMatters, and eBookWeb , and Bellaonline, and as a United Press International (UPI) Senior Business Correspondent. He is the the editor of mental health and Central East Europe categories in The Open Directory and Suite101.