Place brand positioning based on provincial competitiveness index: Implications for Danang city
Le Van Huy, Tran Thi Thu Dung/ MICA 2018 Proceedings
International Conference on Marketing in the Connected Age (MICA-2018), October 6th, 2018
Danang City, Vietnam
Place Brand Positioning Based on Provincial Competitiveness
Index: Implications for Danang City
Le Van Huya*, Tran Thi Thu Dungb
aFaculty of Marketing, University of Economics – The University of Danang, Danang City, Vietnam
bDuy Tan University, Danang, Vietnam
A B S T R A C T
Danang has been leading the Provincial Competitiveness Index (PCI) since 2013. The index provides
independent, unbiased information about the business environment in each locality of Vietnam. Based on
provincial competitiveness index, many researchers and practitioners can understand how entrepreneurs
perceive about every province or city. In addition, the cross-province differences in firm performance and the
connection to provincial governance reforms also are considered. However, in order to attract investors who
are the essential stakeholders of every place, the localities should not only rely on the scores of component
indexes but also need to know their competitiveness. In reality, toward a province or a city, attaining high
scores on PCI do not mean having competitiveness on the component indexes. This study uses
multidimensional scale (MDS) and ALSCAL tool based on provincial competitiveness index to explore the
differences among Vietnam localities. Then a perceptual map is formed to recognize the current locations of
each province or city in investors’ mind. The findings show that two indices groups building differentiation
of Danang include: 1st factor – entry cost and proactivity, 2nd factor – land access and time costs. Some
implications are given for Danang in positioning the city brand image based on differentiation.
Keywords: Place branding; place brand positioning; provincial competitiveness index; multidimensional
scaling; Danang
1. Introduction
Building and developing place brand toward stakeholders such as residents, visitors, investors is one of the
important issues of every locality. Places can differentiate their images in comparison with the other destinations.
In the process of competition, each country, each province/town needs to have different ways of building the
image based on their advantages. In reality, every locality, more or less, already owns a strength. A location need
to position the difference as compared to the others.
Differentiation and positioning in operational management quality as a basis for communication, investors
attraction is one of the steps in the process of developing branding strategies in general and place branding in
particular. With the multidimensional scaling (MDS) approach based on data from 2011-2017 of the ten indices
(provincial competitiveness index - PCI) conducted in Vietnam, the study forms a perceptual map in brand
positioning to help build local branding strategies for the cities in the central critical economic region
* Corresponding author. E-mail address: [email protected]du.vn
This research is funded by Funds for Science and Technology Development of the University of Danang under grant number B2016 – DNA
– 14 – TT.
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Additionally, the study of Tran, Grafton, and Kompas (2009) about institutional reforms in Vietnam also
applies PCI and indicates that the development obstacles come from governance. Some issues in reforms
implementation are related to providing information, property rights (land, contract enforcement and dispute
resolution, administrative procedures and official arbitrariness). Among cities in Vietnam, Danang took the lead
on the Public Administration Reform (PAR) Index from 2012 to 2015, followed by Hai Phong, Dong Nai, Dien
Bien. This index reflects the annual performance and public administration reform of people’s committees of
provinces/cities under the central government management (danang.gov.vn). Beside the PAR index, the reform
issues mentioned earlier have a relationship with the component indices of PCI. PCI is the more suitable index in
Vietnam economic context. Not only in Vietnam, but PCI is also popular to evaluate provincial competitiveness
such as the study of Wang and Wang (2014). As can be seen, in cases of making decisions involving multiple
criteria, PCI is the proper one to consider.
According to Danang Investment Promotion center, last year Danang had 380 foreign direct in investment
(FDI) projects with the registered capital of 3.9 billion USD. In particular, 89 projects are inside the industrial
zones, accounting for 28.01%. Japan is the dominant country where investors come. However, which attributes
considered as attractions of Danang city toward investors are still limited.
In this study, city positioning which belongs to place branding is also a decision based on multiple criteria.
That is why the study adapts PCI as a different way to the previous authors. By using mean values of 10 indexes
since 2011, the perceptual map is formed to help the policymakers in knowing which attributes are appropriate
for Danang in investors attraction.
2. Literature review
2.1 Provincial competitive index
Vietnam has achieved great success in attracting investment and enterprise development. The business
investment environment has made remarkable progress and at the same time, has become an attractive business
location for both international investors and domestic investors. To achieve these important achievements, not
only reform efforts have been made by the central government and ministries, but also increasingly by major
provinces and cities. The breakthrough in establishment and operation of the government over the past year is
the decentralization of authority in licensing and management of investment activities for localities. Hence,
provinces and cities have the favorable conditions, and the spirit of creativity, emulation, and competition to
each other are encouraged. Additionally, the quality of economic governance, the administrative procedures for
reformation can be improved. As a result, a more friendly and attractive image of business investment
environment is created as well (Vu Tien Loc, 2007).
In Vietnam, provincial competitiveness can be seen most obviously through provincial competitiveness index
(PCI). It is the result of the collaboration between the Vietnam Chamber of Commerce and Industry (VCCI) and
the U.S. Agency for International Development (USAID). Due to some changes related to the merger of some
provinces/cities and research environment, some criteria are no longer appropriate. Starting from 2013, the 10
measures used for the study include (1) Entry costs, (2) Land access, (3) Transparency, (4) Time costs, (5)
Informal charges, (6) Bias, (7) Proactivity, (8) Business Support Services, (9) Labor training and (10) Law &
order to gather the "voice" of private enterprises in 63 provinces and cities (Malesky, 2006). The index provides
information related to provincial/city leaders on the impact of their policies on private sector operations.
Indicators offer useful information for local leaders, helping them identify areas and ways to implement
economic governance reforms most effectively. Some localities have similar natural conditions, but the different
modes of management and local economic management lead to varying results in the perception of economic
sectors. Thus, provincial competitiveness index again confirms that the economic governance plays a vital role in
local development and prosperity.
2.2 Place brand positioning and development
Brand positioning is the creation of a brand's unique position in a competitive environment to ensure that
each consumer in the target market can distinguish the brand from the other competing brands (DeSarbo and
Rao, 1986). Brand positioning is important because it is directly related to the customer's thinking and
perception. The model of Urde (1999) integrates core value positioning that relies on attributes to create
awareness, belief, loyalty to the brand as well as the difference between the brand itself with the competitors.
Therefore, marketers need to recognize the different "attributes" (indices) of each locality based on the cognitive
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mapping that builds the image of the brand. In order to be able to position the brand successfully, it is necessary
to carefully examine the current location and establish the perceptual map to accurately locate the brand as
compared to its competitors.
According to Quang (2008), there is a positive correlation between the PCI and the place brand image index.
In addition to the exceptions in establishing, developing place brand based on "preferential nature," such as
produce, resources (natural scenery, underground resources, etc.), almost superior products or competitive
advantages are human-made. Definitely, the future development of localities does not depend on geographical
location, climate, natural resources. It depends on the expertise, skills, human qualities and local organization
(Philip Kotler, 2002). Thus, the local planners need to consider developing a local brand through the creation of
a good image, an attractive, impressive image towards the target market of the locality. In other words, building
"unique arguments" to attract target customers is an issue need to be mentioned.
3. Methodology
Locate identification and brand positioning are often based on perceptual maps through a multidimensional
scale (MDS). The basis for establishing an MDS positioning method includes: (1) the ranking of critical
attributes that the customer is interested in by each brand, and (2) the ranking of the differences between each of
the characteristics mentioned earlier among brands in the same category (Gioi and Huy, 2006). The purpose of
this task is to compare the advantages of this brand to other brands on the basis of the attributes perception and
distinction between the actors involved. From this, reactions of competitors can be estimated, and brand
positioning can be conducted more appropriately.
Within the scope of this study, the author used ten indices of the PCI index. The ten component indexes are:
(1) Entry costs, (2) Land access, (3) Transparency, (4) Time costs, (5) Informal charges, (6) Bias, (7) Proactivity,
(8) Business Support Services, (9) Labor training and (10) Law & order. It should be noted that the higher the
component indices will be, the higher the PCI provincial competitiveness index. According to Quang (2008),
there are many correlations between the PCI component score and position as well as the image of local
(provinces and cities) brands. Although provincial competitiveness and place brand are not the same but
localities can use the system of these positioning attributes (PCI indices) to communicate and develop the image
of themselves.
The study considers the stability of the attributes in the perceptions of the interviewees (private sector) in
assessing reform efforts and economic governance at the central and local levels aiming to change new economic
management mechanism, improving competitiveness and creating the more favorable business environment for
Vietnamese enterprises. The authors use the mean data of the period from 2013 to 2016 of the indicators in
positioning analysis through a perceptual map. Multidimensional Scaling (MDS) with ALSCAL technique based
on PCI indicators allow forming the cognitive map to be generated using SPSS 23 software. Regarding data, due
to certain differences in natural condition, climate, culture between the North and South Central Vietnam, the
study only focus on the comparison between provinces/cities in South Central Vietnam including Da Nang,
Quang Nam, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa. In addition, the comparison with some
provinces/cities with potential and practical investment attraction such as Hanoi, Ho Chi Minh City, Hai Phong,
Binh Duong, Dong Nai is also conducted.
4. Data analysis
As mentioned above in the methodology, for the construction of a positioning map, the study uses the mean
of the PCI component scores based on the results of the PCI study for the years 2013-2016. The mean values of
the component indices are shown in Figures 1 and 2.
South Central provinces/cities
and some provinces/cities
Le Van Huy, Tran Thi Thu Dung/ MICA 2018 Proceedings
Referring to Figures 1 and 2, we find that Da Nang is a city with high indexes as compared to the South
Central provinces. Da Nang has many advantages concerning indicators (1) entry costs, (2) labor training, (3)
proactivity, the pioneering leadership of city authorities. At the same time, compared with other provinces/cities
such as Ho Chi Minh City, Hanoi, Hai Phong, Hue, Da Nang has more obvious advantages in terms of (1) entry
costs, (2) proactivity, (3) informal charges and (4) time costs.
In order to facilitate local communication and marketing, awareness and differentiation in place attributes are
one of the most critical factors. These unique traits should be used in the development of communication
strategies, local brand development. In particular, it is easy to see the disparities of provinces/cities through the
proactivity of local leaders, private sector development policies, and labor training. Typically, the local planners
and the media look at the results of the provincial competitiveness index on the final index basis and the ranking
of the provinces/cities yearly. However, it is imperative that planners need to take into account the composite
indicators to see which strengths need to be worked out and where the shortcomings need to be addressed.
To understand the perception and assessment of stakeholders in the Provincial Competitiveness Index, here is
the private sector assessment, the cognitive mapping on the basis of MDS method (with the ALSCAL tool)
allows defining the specific positions of each province/city corresponding to the component indices. Based on
the MDS (ALSCAL) analysis, the number of critical factors selected was 2. The correlation coefficients between
the provincial competitiveness position of the South Central provinces/cities with the major components are
shown in Table 1.
Table 1: Correlation coefficients of provincial competitiveness index (PCI) for key factors
Key factor
No.
Provinces/Cities
1
2
1
2
Danang
2.69
1.44
0.36
0.61
-0.08
-0.45
0.91
0.87
-2.54
-1.35
-1.59
0.53
-0.19
2.69
1.18
0.01
-0.79
0.13
1.37
0.17
-0.56
-0.94
-0.2
Quang Nam
Quang Ngai
Binh Dinh
Phu Yen
3
4
5
6
Khanh Hoa
Ninh Thuan
Binh Thuan
Hanoi
7
8
9
10
11
12
13
14
Hai Phong
Ho Chi Minh
Binh Duong
Dong Nai
Hue
-0.31
0.45
0.39
0.55
1.18
It can be seen from Table 2 that the indicators (1) entry costs, (7) proactivity of local leaders are closely
related to the primary factor 1 because of their high coefficients. The elements which are (4) time costs spent to
implement state regulations, (2) land access and stability in land use, (10) law & order have a strong relationship
with the second major factor.
Table 2: Correlation coefficients between attributes (component indexes) with key factors
Key factor
No
Attributes (component indexes)
.
1
2
1
2
3
Entry cost
3.03
0.95
0.40
0.95
0.67
-0.34
Land access
Transparency
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4
Time costs
Informal charges
Bias
0.98
-0.62
-1.38
1.34
0.89
0.33
0.32
1.02
-1.09
0.14
0.61
5
6
7
Proactivity
8
Business Support Services
Labor training
-0.38
-1.14
-0.67
9
10
Law and order
5. Discussion and implication
5.1 Perceptual map
The location of the provinces/cities on the cognitive map:
Proactivit
Entry cost
Time costs
Land access
Fig. 3. Perceptual map of attributes (component indexes) and brand provinces/cities by key factors
In spite of leading many component indices of PCI, Danang cannot solely be based on these indexes to
promote the advantages. High scores do not mean high competitive advantages. The more important thing is city
image makers need to know which attributes are different to the other provinces/cities.
Figure 3 shows the brand awareness map of the trader in general or the private sector of the place brands with
the ten sub-indices of provincial competitiveness. Through this, provinces/cities will easily recognize the brand
position of their localities in the perception of entrepreneurs. The more closely to an attribute (component index)
a place brand is, the more likely the brand will be identified by the investors through that attribute. In other
words, a place can distinguish itself from the others based on the superiority related to the attributes closer to
them. In this case, the algebraic length is used to consider the distance of each place brand to the center of the
factor group (ideal point).
As can be seen on the perceptual map, Danang has a dominant position as compared to the other localities in
the central critical economic region and some other provinces/cities, especially for attribute (1) entry cost, (7)
proactivity, (4) time costs, and (2) land access. This dominance is also reflected in the fact that in recent years,
when city government has been trying to implement the one-stop policy, ensuring the provision of public
services in the shortest possible time. The city departments also survey customers’ evaluation of public services
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to understand their requirements and satisfy them. Besides, Danang advantages come from the city government
and departments coordination effectively in their essential tasks. Danang administrative procedures continue to
be implemented well with one-stop policy, one-door mechanism: 100% specialized agencies, districts, wards and
communes synchronize the one-stop mechanism, contributing to eliminating unnecessary procedures, saving
time and costs for citizens and organizations. Hence, the time of enterprises establishment is shortened,
procedures for tax declaration and payment are completed. As a result, the percentage of enterprises making
online tax payment declaration is increased, the electronic tax payment is encouraged. Many other procedures
are simplified and the processing time is reduced. Some procedures can be listed such as an application for
construction permit, certificate issuance of land usage right, environment appraisal report, design and approval of
fire protection.
Da Nang City has also promulgated and implemented many programs, schemes, mechanisms, and policies to
support and encourage enterprises to overcome difficulties for stable development. Since 2014, the
implementation of the Business Year Program has had a positive impact on the business community, which is
highly appreciated by business associations, enterprises, and entrepreneurs. These efforts are the antecedent to
boost the implementation of the Enterprise Development Scheme until 2020 of Danang. City leaders always look
for and develop more channels of contact, dialogue, discussion, determination to accompany business. The
process of solving problems and obstacles for enterprise also is flexible and creative.
5.2 Differentiation based on component indices
In reality, the higher scores of component indexes, the more efforts of local government have already been
conducted in providing better services to investors. However, to create the differentiation, it is necessary for
localities to create an absolute difference in scores compared to the rest provinces/cities. It should be noted that
brand competition (especially place brand) is not a face-to-face confrontation but a "parallel race." In some other
competitions, a developed business can "suppress" competitors, but in place marketing, this is almost impossible
to accomplish. The winner in the competition is the override, not the preventer. Thus, the classical competition
methods such as face-to-face attack, flank attack, guerrilla attack in the principles of Philip Kotler are no longer
appropriate. In the outdated thinking of "competition by destroying the enemy," the localities put together
solutions such as price reduction or dumping to attract customers (here are the investors) (Quang, 2008). This
fact leads to severe consequences, damaging the value of a country as a whole. Hence, in order to be able to
develop, provinces/cities need to improve their indicators and, at the same time, need to select one or more
indexes for their localities to differentiate themselves as the basis for place brand positioning.
As compared to the results from Huy (2013), the index ‘proactivity’ of the local leaders is still the dominant
characteristic toward investors in Danang. In the period 2009-2011, beside ‘proactivity,’ two indices ‘land
access’ and ‘time costs’ are advantages of Danang in positioning. In spite of high score in entry cost, this index
is not the basis for Danang to differentiate itself. However, nowadays the perceptual map shows the role of entry
cost in city branding. Additionally, the two remaining indexes (land access, time costs) from the previous results
also appear in this study. In general, to aim to investors, entrepreneurs as the crucial stakeholders, Danang should
brand itself involving to proactivity, entry cost, land access, time costs. Danang should build a consistent, brief,
clear communication message to attract these audiences.
Beside choosing proper communication channels, it is necessary to have sync in coordination among
governors. Small and Medium Enterprises Association, Young Entrepreneurs Association should be considered
as communicators of the real value of Danang business environment. These associations already show their roles
in creating the dynamic entrepreneurial background for Danang. However, Danang government needs to have
the policy to take advantages of their supports in promoting city brand. Additionally, the other stakeholders such
as citizens, overseas Vietnamese, international students, tourists can become the effective communication
channels. If they are satisfied with Danang regarding leadership proactivity, the investors will have the positive
perceptions on city image. The attributes like entry cost, land access, time costs will be the consequences based
on this proactivity.
More specifically, the proactivity of city leaders has already been famous for a long time. This indicator has
been reflecting the image of Danang leaders with policies related to planning, compensation, “five no, three yes”
program, enterprise supports. In spite of this, Danang needs to have an annual message that is consistent with the
long-term message aims to citizens and businesses. Since organizational marketing can be adapted to city
marketing, Danang can consider this as a public relation strategy toward its community. The legal frameworks,
flexibility, clarity need to be awarded in addressing obstacles to the private enterprises. In reality, Danang
leaders had many specific, pioneer policies that even are preceded as compared to the central state policies.
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These actions are perceived positively in views of citizens and visitors. Notably, the official web portal of
shop policy, improving public services.
Regardings to entry cost and time costs, the state departments need to clarify the procedures for setting up a
business. Besides this, the instructions in details for business registration, supplementary registration, kinds of
necessary documents/certificates/permits also need to be informed. Danang can promote the improvements in
these issues, especially the role of the documentation consultants at the receiving agencies. Publicity campaign
can be considered to conduct in Danang also. As compared to other cities, Danang has advantages from ‘land
access’ attribute which is the issue that any investor ponders in location decision for the business. Danang
publishes the procedures related to Land Hand-over/ Land Lease, issuance of Construction License, Land Use
Right Certificate, Transfer of Land Use Right Certificate for investment projects.
Notwithstanding, the official web portal of Danang does not mention the differentiation of the city. The
reasons why investors should choose Danang are a strategic location, plentiful and educated human resources,
developed physical infrastructure and investment support services, dynamically growing economy, expanded
physical infrastructure and investment support services. No words related to proactivity of the city leaders, land
accessibility, ideal costs (entry cost or time costs) for starting a business are mentioned. Hence, Danang needs to
position itself based on these attributes instead of general statements as shown in the web portal. Also, the
unique design of Danang administration center should be promoted as not only a symbolic office of the modern
city but also a convergence of all administrative departments, a proof of efforts in cost reduction and proactivity
of Danang.
6. Conclusion
The study has attained the purposes involving to understanding the attributes (component indices) of Danang
city brand. Based on these indexes that exceed from PCI, Danang can know its location on positioning as well as
in the perception of investors. As stressed above, place branding must first be part of the plan and be the
responsibility of local leaders in the strategy for economic development. Additionally, there must be a
combination of residents and businesses in each sector. In place marketing, the human factor plays an important
role, especially for investors. Therefore, a proper brand positioning strategy that is consistent with the
development goal must be built on the basis of the local image in the investor mind. Only when the
"homeowners" feel and realize the values and branding goals that their local communities are aiming for, the
provinces/cities have the right to hope for a broader promotion toward foreign investors.
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