Экономические науки/6.Маркетинг и менеджмент

Yerysh Larysa, Titova Ekaterina

Donetsk national university of economics and trade

named after Mykhailo Tugan-Baranovsky

The roles of various promotion techniques

Conventional wisdom holds that a targeted strategy is the most appropriate approach to investment promotion. A study of investment promotion made by SRI International posits that there is almost universal consensus on the point that investment promotion activities should be targeted, both in order to direct investment flows into 'priority' sectors and to utilize scarce promotional resources efficiently. There is a certain amount of logic to support this conclusion. Empirical observations, however, suggest that, contrary to conventional recommendations, some promotion agencies adopt a general approach to promotion and others use a mix of techniques that include targeted and general techniques. The frequency with which techniques other than targeted approaches appear makes one wonder whether targeted promotional strategies are more effective than general strategies under all conditions. If not, under what conditions are other approaches more effective? In this study we shall propose a model that is consistent with the approaches to the investment promotion processes that we observed. Under this model targeted promotional techniques and general promotional techniques are likely to be used, and to be effective, in different circumstances. This model explicitly recognizes the close parallels between the industrial buying and the investment decisions and, accordingly, draws on the work of researchers who have studied the promotional techniques that are most effective in selling industrial products to corporations.

Although investment promotion is ultimately aimed at attracting investors, at another level of generalization promotion activities are designed to accomplish three different objectives:

* to improve a country's image within the investment community as a favorable location for investment (image-building activities);

* to generate investment directly (investment-generating activities);

* to provide services to prospective and current investors (investment-service activities).

Image-building and investment-service activities have as their ultimate objectives the attraction of more investment. But their immediate goals are different, and, it could be argued, appropriate measures of effectiveness are different. In the course of interviews with officials from promotion agencies we identified at least twelve different promotional techniques that were in use by at least some of the countries that we studied. They are as follows:

1. Advertising in general financial media.

2. Participating in investment exhibitions.

3. Advertising in industry- or sector-specific media.

4. Conducting general investment missions from source country to host country or from host country to source country.

5. Conducting general information seminars on investment opportunities.

6. Engaging in direct mail or telemarketing campaigns.

7. Conducting industry- or sector-specific investment missions from source country to host country or vice versa.

8. Conducting industry- or sector-specific information seminars.

9. Engaging in firm-specific research followed by "sales" presentations.

10. Providing investment counseling services.

11. Expediting the processing of applications and permits.

12. Providing postinvestment services.

These promotional techniques were typically employed for different purposes. Some, especially techniques 1 to 5, were usually directed toward building a particular image for the country; in contrast, techniques 6 to 9 were used to generate investment directly, and techniques 10 to 12 were investment-service techniques.

Although the goals of the techniques overlapped to some extent, this classification scheme seems to capture reasonably well the objectives that typically lay behind the use of the various techniques.

All promotion agencies in the sample were using, or had used in the past, one or more of the image-building techniques. Most agencies used image-building techniques simply with the objective of changing the image of the country as a place to invest. These countries had no expectation that these activities would generate investment directly. Britain's IBB, Investment Canada, Ireland's IDA, Singapore's EDB, Locate in Scotland, and Malaysia's MIDA all fell into this category. Shortly after their creation, the IBB and Investment Canada engaged in intense promotional campaigns, with the intention of changing the image of their respective countries in the corporate investment communities. IDA began its active promotional activities with an advertising campaign designed to establish an image of Ireland as a prime site for internationally mobile investment. The EDB advertised in the wake of the recession of the mid-1980s with the aim of reminding the business community that in Singapore was, despite the recent recession, still a very attractive investment location. MIDA and Locate in Scotland maintained a minimal advertising exposure in media aimed at particular industrial sectors to keep their respective countries in the minds of potential investors.

Another, smaller group of agencies expected image-building techniques to generate investment directly but were disappointed that the activities were not effective in accomplishing their goals. The early years of Jamaica's JNIP and of Costa Rica's CINDE and the efforts of Indonesia's BKPM illustrate this, second group of agencies. During the early years of its life, Jarraica's JNIP used advertising, missions, and seminars and participated in investment exhibitions in an attempt to create a favorable image in the international investment community following the election of the conservative Seagra government. The agency also, however, expected that these techniques would lead directly to investments from abroad. Eventually, JNIP'S disappointment led it to change its approach to promotion. CINDE began investment promotion efforts by using promotional activities such as seminars, participation in investment exhibitions, and missions, all designed to generate investment directly. Although CINDE, in 1987, still participated in investment exhibitions, the agency no longer expected these exhibitions to produce investment directly. It had, moreover, shifted its principal focus to other approaches. Indonesia's BKPM used investment missions and seminars, arranged either by the agency or by consultants, as the agency's primary promotional techniques. BKI'M expected that these events would lead directly to investments, although we believe that they were not effective in that effort. One agency in the sample fit into a third category: Thailand's BOI expected image-building techniques to generate investment directly and found that the techniques did indeed seem to generate investment. The agency sponsored a promotional campaign in Japan during 1986 that relied principally on advertising and direct mail activities. The campaign appeared to be successful in generating investment directly. We believe, however, that this case represents an exception to the general pattern.

We classified direct mail or telemarketing campaigns (technique 6), industry or sector-specific investment missions and information seminars (techniques 7-8), and firm-specific research leading to "sales" presentations (technique 9) as investment-generating. All the agencies in the study that had used investment-generating techniques considered that these techniques could generate investment directly. (Only Indonesia's BKPM had not, before 1988, used any investment- generating techniques.) The consensus among agencies, however, was that these techniques were effective only to the extent that they were a vehicle through which decision makers, in companies likely to invest, could be identified, personally contacted, and encouraged to invest in a particular country. Jamaica's JNIP, Malaysia's MIDA, and Britain's IBB attempted to identify companies to which tailored presentations could be given primarily by following up direct mail, telemarketing efforts, leads from specific seminars, or, in the case of the IBB, companies in the agency's key corporate directory. Ireland's IDA, Scotland's LIS, Investment Canada, Costa Rica's CINDE, and Singapore's EDB identified prospective companies primarily by engaging in detailed, firm-specific research. The identification of prospective companies was followed by efforts to gain audiences; with decision makers in these companies so that sales presentations could be conducted. There is also evidence to support the logic that we propose as an explanation for this particular sequence of stages. Three of the agencies support the view that agencies shift from a focus on image building when they feel that appropriate images of their country have been built either in the minds of the larger investment community, or in those of targeted groups of investors. The other three agencies provide at least partial support for the alternative proposition that agencies move from an image-building focus to an investment-generating focus as they learn more about investment promotion. We nevertheless conclude that the weight of the evidence, from empirical observations and from the literature in industrial marketing, points to an explanation and a logic for separate emphases on image building and investment generation in a particular sequence. But learning from mistakes is also clearly a factor.