Study on the Mechanism of Value Increment during City Marketing
Jia-peng Dong1， Yun-long Ding1, 2
1 Transportation Management College, Dalian Maritime University, Dalian Liaoning 116026，
2 School of Economy and Management, Harbin Institute of Technology, Harbin Heilongjiang 150006
Abstract: In the process of urbanization and
globalization, value oriented city marketing strategy plays a
critical role in the city development. This research defines
and classifies the concept of city value from the viewpoint of
subject utility, involving three high homogeneity factors and
six low homogeneity factors. In ideal conditions, city value
increment is spontaneous. However in reality, an increment
process requires active interventions of different marketing
subjects and the adjustments of the dynamic model.
Specifically speaking, the adjustments are described in this
article as the customer requirements’ identification, city
marketing strategy making, value linkage together with
integration, and the aim improvement. The case analysis of
Paris verifies the dynamic model of value increment during
city marketing.
Key words: City value, City marketing, Value
increment
I. INTRODUCTION
Development in China is in the process of
urbanization and globalization. The urbanization has
brought large numbers of people into the city, with
economic and social activities further aggregating to the
city, while the limitation of the regional cooperation is
broken by globalization which accelerate the integration
of worldwide economic factors.
Globalization of industrial layout and the new
construction of international division of labor show the
importance of competition which is the dominant
mechanism of the global economic development. The
importance of regional and city development is
increasingly obvious in this process. Global capital
movement and commodity exchange have been promoted
during globalization. In the circumstance, city marketing
has become an important strategy to obtain the better
position and more profits in the new international division
of labor and industry layout [1].
In order to maximize the benefit of city and achieve
the sustainable development, we must stick to the valueoriented city marketing strategy and focus on the
comprehensiveness and persistence. However many
researches on city marketing lack the consideration about
the complexity and sustainability of city marketing. How
to achieve comprehensive and sustainable value
enhancement is becoming the most important issue to
solve.
This paper will analyze the composition of city
marketing and the value increment mechanism, and come
up with the dynamic model of city value increment which
can promote the development of the city marketing theory.
科
This research is supported by the Liaoning Philosophy and
Social Science Foundation (L09BJY015).
II. FROMATION AND CONNOTATION OF CITY
VALUE
A. Formation of systematic city value
From the evolution of the theory of the urban
developing, the understanding of the city development
experience the process of ignorant-idealized- planning
and rationalism-consideration of the public interestsglobalization, finally becoming regional concept [2].The
city is a huge and complex system taking the human as
the fundamental body and consisting many elements (such
as material, culture, information etc.) and composition
(such government, individual, enterprise etc.). The goal of
the urban developing is diversification. The city is
regarded as a concept of aggregation, therefore the sustain
development of city, the happy life of citizens, the
prosperous of culture , the increment of social welfare etc
should all be set as one objective of city development.
Should all become the goals of the city development [3].
The criteria of international assessment about the city is
becoming various, the city index system proposed by
U.N. include economy and society development,
environment, political activity, housing and traffic etc.
[4]. The process of urban developing is due to
comprehensive effect of many elements. The city is the
platform of many elements aggregating which become the
dynamic of the city urban formation and development [5].
While the open environment of city developing make it
become a new form for world city [6]. New systematic
urban view need take the relationship of the various parts
of the city dominant elements as a whole and achieve the
superiority accumulating and sustained development of
urban competitiveness, which means sustained value
increment of city value.
B. Definition of city value
The introduction of the city values is the reflection of
the essential problem “what city is, how it works" which
emerged in the process of city development. City
development strategy should depend on the customer
needs, which means the customer request should be
regarded as the starting point of a city development and
the basic motive of the city marketing strategy.
Consideration about city value, there are still diverse
views among the academia domestic and abroad. Ni
PengFei [7] defined the city values from the concept of
the city benefits. Xu Feng [8] put forward the view of
Value Realization of the City Production Theory, which
pointed that there were three perspectives of the city
production values-Exchange Value, Production Value and
Consumption Value. Liu Yanping thought that city values
inherent in the relationship between city products and city
customers, in the city development and competition, and
in the relationship between the public values and personal
values. Moreover, he believed that the essential of the city
marketing is the process of delivering the customer value
to obtain the customer’s satisfaction and loyalty.
Even though there are dispute about the definition of
city value in academia, but still, the essential elements of
city value can be figured out through different voice. First
is the utility subject of city value; Second is utility
constitute and implementation of city value. Third is the
measurement of city value. Fourth is the uniqueness of the
city value compared with other product value.
C. Relationship between city values and city marketing
In the process of city value appreciation presents two
kinds of opposite mechanism. From the demands
perspective, city value embodies in the optimization of
urban customers delivery. From the supply perspective,
city value embodies in the maximization of the public
value. Therefore, the value of the whole city involves the
public sphere, the private sector and public - private
sector. The value increment by multiple factors can be
regarded as the results of four elements: the internal
incentives, the external environment, the competitive
pressures, and the demands of the customers. The
dynamic system of city marketing is as shown in Fig. 1.
Government
Power
Industrial
Power
Citizen
Power
Inner Incentives
New City
Substitute City
Supplier bargaining
power
Demand-side
bargaining power
(Public Values)
City Marketing
(Private Marketing)
Customer
Requirements
III COMPOSITION AND MECHANISMS OF VALUE
INCREMENT OF WHOLE CITY VALUE
B. Mechanisms of Value-added of whole city value
City Competetion
As the direct embodiment of customer utility, city
value fully reflects five valuable activities of city: the
overall strength of a city in a specific period, the power of
market in resource allocation, the ability and efficiency of
the fully use of resources, the ability to gain advantages in
the future and potential competition, and the influence to
the outside world-including attraction and affinity [9].
City value determines the ability of the further
development of a city, so city value reflects a city’s
comprehensive competitiveness. Consequently, the
essential purpose of city marketing is increasing the city
value.
activity, exogenous endogenous activity, endogenous
exogenous activity and external exogenous activity [1].
It can be seen from the discussion of the above, the
close connections between the various elements need to
consider the overall value, the city value creation process
requires the synergy of the various elements, and the
government need play a significant role in this process
[13].
Residents,
employees,
businesses,
investors, tourists
and export markets
within and outside
the city
A. Elements of whole city value
Environment Factors
The key to realize the city value is to make the
recognition and management of all the possible
opportunity and its nodes, to explore development in the
value net of regional and global levels, which further
introduced the concept of City Value Chain (CVC). Porter
[10] raised the Value Chain (VC) model in the industry at
the earliest, which consists of a series of closely linked
economic activities including basic activities and support
activities. In the VC model, the enterprise plays the main
role. Analogized in the Porter's value chain model,
domestic scholars put forward the city value chain model
[11]. Other scholars form the view of local government
role defined the city value chain as the enrichment activity
of the strategy formulation, function analysis evaluation,
development plan of the government in the process of city
value enrichment [12]. Liu YanPing modified the value
chain model. He pointed the model should face the
direction of creation of the city marginal values. The
model expanded the value stream, added the urban
infrastructure, the company cooperation management and
defined it as value support activities. Furthermore,
According to the characteristics of space, the value
creating activities were separated as internal endogenous
institutionaliza
tion
Technique
Profitability conditions
Fig. 1. Dynamic system of city marketing [14]
Due to the difference on overall effect between the
different subjects are imposed by the city value. The city
value has diversity on the different components. So the
whole city value is relative to the size of the main subjects.
City value with its subject is a two-way choice
relationship. The changing of demands of the subject will
lead the changing of orientation and range of the city
value increment. At the same time the diversity of the city
value will lead the different preference choice. On the
other hand, the present of city value will affect the
diversity of element attraction. So, the city value
enhancement is a continuing process of self-reinforcing
and adjustment intervention. Overall, the growing power
of the city value increment is an upward spiral. In order to
reveal the mechanism, the following part will firstly
analyze the spontaneous process of city value increment
in ideal state, and then analyze the intervention-adjusted
value increment process.
In an ideal situation, city value will develop along an
expected direction and autonomous complete value-added
process in a long period. This process includes three basic
steps: the first step is determining the orientation of city in
areas like industrial development, facilities and image
construction according to restricted conditions like
environment and historical conditions, then forming a
long-term strategy and plan. The city and the subjects
form relatively stable city composition. The second step is
building a frame of city value based on strategy and plan,
developing and building all kinds of elements reasonably
based on value orientation. The third step is following
basic development order and making sure the
development conform to the normal market mechanism,
the order of natural and the social order, getting the scale
growth of city value through subjects’ normal value
creation activities.
However, as previously mentioned, the city value is
affected by the combination of internal incentives and
external environment, competitive pressures, demand
traction. This may lead to demand generation of new
value, or generate a short board element which led to the
development of lacking of incoordination and inadaptation. The city marketing subject need to take the
initiatively intervene to adjust in order to ensure the
continuity of the city value increment; to make it back to
the spontaneous increment process. This adjustment
process usually consists of four basic components.
Firstly, identify the customer needs, determine the
target value
It must understand urban and rural customers’
principal demands or significant restraints for public
service and make clear the direction of city development.
Simultaneously, to realize contributing factors, this can
improve present supplements. Following the gradient
direction of merit function, it should finalize one or a
couple of value factors as the targeted value.
Secondly, formulation and implementation of the
target value-oriented city development strategy
It takes the improving goal value as the major
objective, combined with the long term strategy, making
the short term city developing strategy. It needs to adjust
the previous implementation of the project, resource
allocation, and institutional settings. After formulate city
development strategy, the government play a leading role
in the process, using the policy supplying, legal drafting
to develop system security platform. And use funding,
resources tilting and financing to establish material
security platform implementation of the strategy.
According to the characteristics of the target value, to
nurture, guidance, encourage the enterprises and nonprofit organizations to participate in strategy
implementation and to make the evaluation and feedback
of the subjects’ value in this process.
Thirdly, use other advantages and integration of
value.
When the target value is under inferior position in
the city competition, the city simply improvements target
value from the internal is more difficult. At the same time
the cities can formed attraction based on the external
resources, gather the advantage of the target to achieve
the value of integration.
Fourthly, increase the target value, and re-adjust the
overall value.
After target value enhancing, it need to use the
advantages and overcome the inherent disadvantages of
the target value. It should overcome the short board effect
in city development strategies. After the overall value
adjustment, all value elements have achieved a relatively
stable coordination state and back to the city value of the
spontaneous process.
City orientation
long-term strategy and
plan
Build city value frame
YES
Value increment
appears any
change?
NO
Identify customers'
demands
Determine objective
value
Formulate &
implementation of
city orientated
strategy
Enhance objective &
Adjust overall value
Other usage of
integration value
City value autonomous
growth
Fig. 2. Dynamic mechanism of city value increment
Actually, the appreciation of city value mostly is
under an adjusted condition, which will be affected by
self-reinforcement and adjusted intervene. One significant
difference between city marketing and city planning is
dynamic in the marketing process. Depending on the
clinical situation, the adjustment of marketing strategies
needs to be taken in time. City marketer needs to make
active responds to the changing situation, thereby
committing to continuing added value of city value. The
paragraph below uses Paris as a case study to demonstrate
the ongoing adjustment process of the value increment in
city marketing.
IV. CASE STUDY: TAKING PARIS AS AN EXAMPLE
Paris is an area of 12,072 square kilometers,
accounting for 2 percent of the French territory, is the
largest area of France's 22 regions and the level of
economic development in a Europe fifth. Paris’
population is 11 million (of which the urban population
9.5 million), accounting for 18.9 percent of the population
of France. The region's population density is 902 persons
per square kilometer. It has the 22% labor of France
(4924.56 million), 27% of the gross national product, 38%
of the enterprises, 50% of scientific research efforts, 495
state colleges, and 171 vocational training centers [15].
A. Identify customer needs, find target value
Paris industrialized development occurred in the
1960s, accompanied by a sharp influx of foreign
population and the surge in urban population, population
density and poor condition of human settlements become
the characteristics of that time. On the one hand, the
deterioration of living condition in the city center; on the
other hand, the boom of purchasing power caused by the
economic development and growth in demand, this
principal contradiction led to the structural contradictions
of urban space, mainly reflected in two issues. First, urban
residents moving out to the suburbs which expand the city
scale, the second, it is the decline of the inner city and cut
of construction funding, the reduction of urban
commercial reduce the convenience of central area’s
commercial and service level, further block the tourism
industry, which cannot meet the needs of customers
outside the city. As a result, the demand of living
environment by the urban city residents and the demand
of the central area of business facilitation by the outside
residents became the major customer needs.
B. Formulation and implementation of target valueoriented real-time strategy
Paris municipal government took city marketing
strategy including city scale control and central area
transform to meet the customer demands. Paris municipal
government put forward the conception of Whole Paris
Big Region in 1965 and aimed at expansion of city scale.
The main idea is building eight satellite cities around
Paris, each satellite city population of 500,000 people.
Eight satellite cities distribute along the east-west axis of
Seine. The city center connects satellite cities through ring
road and subway. Aimed to the recovery and
transformation of central area, Paris municipal
government paid attention to the construction of new
residential and commercial building in modern block, and
promoted the updates of public service facilities. Besides,
the government highlighted the traditional style of the
block through large-scale repair, maintenance and
renovation of historic buildings and blocks, enhanced the
attractiveness of the traditional block through penetration
of green space. The strict executing of the “local urban
planning” makes the Paris planning carry out successfully.
Paris adopts flexible land development measures, so
that maintain the vitality of the neighborhood of Paris.
Paris makes some district of the neighborhood into a
special development district, which bring the convenience
to the owners.
C. Using overall value to enhance value increment
capacity and efficiency
Long history and culture, rich heritage, beautiful
environment of the Seine constitute the unique advantages
in the development of Paris. Paris municipal government
pays high attention to those advantages and made strict
protective measures. Over 5000 buildings have been
protected, and some are protected in group. The form of
protection is not using them as a museum, but giving
them new life and history, giving them multifunction such
as living, business and entertainment, protecting them
with dynamic form. Now, these buildings and blocks have
become a part of Paris’s modern life. They give Paris a
new name –the charm city, they attracted the active
participation of citizen and visitors, greatly accelerated
the transformation of Paris's inner city and development
of blocks, they promoted Paris’s construction.
D. City value of linkage proliferation ability enhanced
After new city construction and inner city
transformation, the Paris area planning sub-city center and
the new city has been successively built in a certain scale,
economic structure and infrastructure layout of Paris
reassembled, together with the mitigation of urban
expansion and the construction of the inner pressure. Paris
ultimately successful achieves the linkage value
increment under continuous development and increase the
attractiveness and competitiveness of the city.
From the Paris city marketing case, it is basically in
line with the dynamic adjustment path presented in our
previous model: the identification of customer
requirements, determine the target value - the formulation
and implementation of the target value-oriented strategy the overall value of the integration - the overall value of
value increment into a new cycle.
V. CONCLUSION
City values as the embodiment of customer demands
and the effectiveness satisfaction, it reflects the return of
the basis function of “city can give people a life”. In this
paper, the mechanism of its key areas of the city value
increment was preliminary validated by the case study of
Paris, France. Accordingly, some conclusions of value
increment in the city marketing can be drawn as follows:
(1) City value is consisted by multi-factor
characterization of the city with non-homogeneity, selfeffect, the differences between the subjects.
(2) City value increment is the combination of a
continuous process of self-reinforcing and adjustment of
intervention, in which adjustment and intervention
generally include identifying demands, determine the
target value - the formulation and implementation of the
target value-oriented strategy - the overall value of
integration - the overall value of value increment.
(3) City marketing process need to respond
positively to the changes in the value increment, to
achieve the continuity of the value increment by the
intervention.
Because of the complexity of city systems, this paper
just discusses the marketing process in the overall value
increment mechanism and how to identify the target value,
and the microscopic role of various elements of the city
value in marketing process. The study is still open to
further research and in order to better guidance to the
marketing practices of city management.
ACKNOWLEDGMENT
The authors appreciate the support of the Liaoning
Philosophy and Social Science Foundation (L09BJY015).
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