Place‐based marketing strategies, brand equity and vineyard valuation

Publication Date01 Oct 1998
Pages379-399
DOIhttps://doi.org/10.1108/10610429810237673
AuthorStephen F. Thode,James M. Maskulka
SubjectMarketing
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 7 NO. 5 1998, pp. 379-399 © MCB UNIVERSITY PRESS, 1061-0421 379
Introduction
There are many approaches to developing a firm’s marketing strategy
(Kotler, 1997). The notion of a marketing strategy emphasizing the country-
of-origin of the goods or merchandise to be marketed is also well
represented in the marketing literature (Papadopoulos and Heslop, 1993). In
using the term “place-based” marketing strategies, however, we exclude
from our discussion and framework those strategies which are merely
country-of-origin (COO) based. Our rationale is that, while COO strategies
have been successful in helping a firm (or an industry) attain brand equity
for a given product, these strategies do not necessarily derive their
uniqueness from a specific geographic location[1]. Therefore, we categorize
“place-based” strategies as a more specific extension of the COO strategies.
We propose that much of the imputed economic value of certain classes of
products can be attributed to the unique growing area for agriculturally-
based products. Does a specific geographic designation signal superior
flavor, texture, aroma or any other quality performance criteria? We believe
it does in many circumstances. Numerous examples provide anecdotal
support: Bordeaux wines, California raisins, New Mexico chile peppers,
Portuguese cork, Perrier mineral water, Belgian chocolates, Kentucky
bourbon, Dutch tulip bulbs and Virginia’s Smithfield hams to name but a
few. All of the preceding examples utilize the platform of a specific
geographic location as a significant component of their marketing success.
Why does place matter?
In the period known as the era of mass marketing (1950-1980), it was
possible to successfully differentiate or position a product on the basis of a
heavily-funded mass advertising program alone. During this era many
products were marketed on the foundation of visible or salient product
attributes that successfully differentiated them from competing products
(Ries and Trout, 1982). The US carbonated beverage brand 7-UP, for
example, has been successfully promoted as the “Un-Cola” primarily on the
basis of its clear appearance – disassociating itself from the monolithic
“brown cola” category (Wind, 1982). One of the most famous examples
which captures the power of “image marketing” is Charles Revson’s,
founder of Revlon cosmetics, frequently cited observation, “In our factory,
we make lipstick; in our advertising, we sell hope” (Meyers, 1989).
While product positioning based on salient attributes and image is still
viewed as a necessary, viable strategy, marketers increasingly lament that
there are simply too many “parity” products (Giges, 1988). One solution to
the “parity” trap, as proposed by (Porter, 1980), is the process of strategic
Place-based marketing
strategies, brand equity and
vineyard valuation
Stephen F. Thode
Director, Goodman Center for Real Estate Studies, Associate Professor
of Finance, Lehigh University, Bethlehem, Pennsylvania, USA
James M. Maskulka
Associate Professor of Marketing, Lehigh University, Bethlehem,
Pennsylvania, USA
An executive summary
for managers and
executives can be found
at the end of this article
Developing marketing
strategy
The era of mass
marketing
market planning to help achieve a sustainable competitive advantage (SCA).
Porter’s approach of aligning company strengths with market opportunities
to achieve a sustainable advantage has been widely adopted by firms around
the world. However, in a world characterized by escalating competition, this
approach has been challenged on the grounds that a sustainable competitive
advantage is becoming more difficult to achieve and, more importantly, to
maintain (D’Aveni, 1994).
While acknowledging that the level of competition world-wide has
intensified, we propose that sustainable competitive advantage-based
strategies are still viable as long as they are unique, truly differentiable and
directly tied to the tangible quality of the product. One of the underexploited
“positioning” opportunities in business today is place of origin. Place
matters if there is a perceptible, not necessarily quantifiable, link between
the product’s place of origin and presumed quality of that product.
It is also noteworthy that our premise regarding the strategic importance of
geographic place has been formally embraced by the European Commission.
In a recent proposal, the European Commission has recommended that 318
food items be afforded trademark-style protection (“protected designations
of origin”) on the basis of geographic place of origin. Some examples
include: Luxembourg honey, Roquefort cheese, Sheffield lamb and
Kalamato olives. If the recommendation is approved, competing food
products for sale in the European Union which are produced outside the
designated geographic area may not use these names (Coleman, 1996).
The benefits of a place-based strategy
We identify three benefits for agricultural producers or processing/packaging
firms which pursue a place-based marketing strategy:
(1) additional incentive to emphasize product development;
(2) improved marketplace competitiveness; and
(3) the creation of a sustainable competitive advantage.
Dynamic competition among place-based producers encourages
development of superior quality in agricultural products and permits the
producer to proactively assess whether they produce a superior product. It
can also stimulate specialization in product development (experimenting
with different genetic strains or seeking hybrids, for example) to create a
quality-differentiable product.
The increasing relevance of a place-based strategy for many agricultural
products has additional significance in the USA. The US government has
recently begun to phase out financial subsidies that once provided a price
“guarantee” for the farmer/producer (Drabenstott, 1996). As a consequence,
US agricultural producers will be increasingly driven by market forces – an
environment in which price will be more directly determined by the ultimate
consumer. Producers seeking higher profits may be required to pursue a
more niche-oriented strategy based on product differentiation, rather than a
strategy of merely increasing output or decreasing costs.
A place-based strategy also provides the firm with the opportunity to
establish a sustainable competitive advantage. Very little “product attribute”
superiority is sustainable in today’s intensively competitive environment
(D’Aveni, 1994). D’Aveni’s evocative theme posits that nearly all attribute-
driven product differentiation strategies can be compromised by
competitors; either through intensive R&D efforts, aggressive competitive
380 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 7 NO. 5 1998
Sustainable competitive
advantage-based
strategies
Dynamic competition

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