The Importance of Geography and Place

Stephen DeAngelis

April 13, 2012

Both mariners and real estate agents have an appreciation and respect for geography, but for very different reasons. Let’s begin with the mariners’ perspective. Those who go to sea understand that the world remains a very big place and getting from here to there takes time (i.e., you can’t load goods on a ship in Amsterdam and deliver them to Shanghai the next day). As maritime carriers adopt super-slow steaming practices (i.e., approximately 12 knots/hour) to save money, distances mean even more. For example, at 12 knots/hour, it takes over 24 days to travel from the Strait of Gibraltar to Singapore taking the short route through the Suez Canal (a distance of 6953 nautical miles). Taking the longer route around the Cape of Good Hope (a distance of 10679 nautical miles), it takes over 37 days.

 

Real estate agents, on the other hand, aren’t so much concerned about distance as they are about location, location, location. Where specifically a home or business is located makes a huge difference in the value of a piece of property and the buildings that are on it. That’s why land in Manhattan is worth so much more than a land in Mesquite.

 

Business leaders have to understand and embrace both perceptions of geography if they are to do well. Obviously, they must have a mariner’s understanding of distance so they can determine how much inventory must be produced to account for products held in transit as well as how long it is going to take to get goods from factory to shelf. Business leaders are obviously concerned about location as well. They ask themselves where the best location is for stores, factories, suppliers, and so forth. The point of this brief discussion is that despite being fully involved in the so-called information age that connects and flattens the world — geography still matters. That is also one of the principal messages of the book All Business is Local: Why Place Matters More Than Ever in a Global, Virtual World by John A. Quelch and Katherine E. Jocz. I was provided a copy of Quelch’s and Jocz’ book for review by Tiffany Liao, from Portfolio | Penguin Group USA. In the introduction to the book, the authors write:

“With the rise of our increasingly global and interconnected world, marketers are encouraged to focus on the biggest picture possible — expanding brands throughout the world to achieve a leading global share. There is nothing inherently wrong in this approach, and the advances in technology have made this more practical than ever before. The danger lies when companies forget the importance of all other types of place. Global is glamorous and strategic, but when marketers focus solely on attaining it, they risk becoming irrelevant.”

You can only really appreciate the differences between places by actually visiting them. You can only succeed in certain places by appreciating and adapting to those differences. I first started writing on this topic back in 2006 in a post entitled Wal-Mart, Culture & Resiliency. Wal-Mart learned that the world is not a one-size-fits-all place. Quelch and Jocz put it this way:

“In our view, place determines how consumers interact with a product or brand. From the arrangement of breakfast cereals on supermarket shelves to the ease of navigation and checkout in a digital store, place very powerfully and routinely influences our choice of brands — or whether we buy anything at all.”

Unlike mariners and real estate agents, who deal primarily with real geography, Quelch and Jocz discuss four different kinds of “places.” They are: psychological, virtual, geographic, and global. They state, “We will show how place is critical to nearly every marketing planning decision, and why place, now more than ever, cannot be an afterthought.” They continue:

“In the past few years, we’ve been given mixed messages about how the world is arranged. Some scholars and pundits tell us the world is flat while others insist it’s spiky. Some politicians and observers tell that cultures and values are converging, while others point to cultural divergences that generate world conflict. Some praise globalization, while others point to its dangers. We’re told consumers want to live in a digital cloud but sill value the importance of physical touch. Only one thing is certain: competing trends are pulling multinational firms in all directions at once.”

Quelch and Jocz insist that it is precisely because all these trends must be taken into account simultaneously that “place” is now so important. They note that “all of the above thinkers can be right, depending on the context, marketing purpose, and business model.” Later on they write:

“We believe the ease with which marketing organizations integrate all aspects of place and move seamlessly back and forth from the local geographical to global, from the physical to the virtual, from the functional to the psychological is a source of competitive advantage.”

I have pointed out in several past posts that some supply chain pundits believe that, in order to address the growing complexity of supply chains, companies should consider supply chain segmentation. These discussions often focus on segmenting the various ways that orders are filled in a multi-channel retailing environment. Quelch and Jocz suggest that geography should also be considered. They write, “Geographic segmentation serves as a useful surrogate for consumer lifestyles and provides addressability of marketing communications to where people live and shop.” Of course, segmentation has to consider much more than marketing. Quelch and Jocz insist that business leaders must be “intelligently local.” They note that Joel Kotkin calls this type of strategy “new localism” and it “is why global brands like Pepsi are spending so much time these days on connecting with local communities.”

 

With all this talk of localism, Quelch and Jocz don’t ignore “the equity of global brands,” which they call “enormous.” They acknowledge that “economies of scale are not to be dismissed.” They write, however, that “there are comparatively few cases where a global brand pushing a standardized global product is the optimal marketing strategy.” By know it should be clear that Quelch and Jocz focus on getting local consumers to buy the products being offered by multinational corporations. They break their discussion into five, easy-to-read chapters (plus a Conclusion) that are filled with anecdotal evidence of the principles they are pushing. They begin their journey in the mind of the consumer (the psychological place “where brand meanings reside and marketing communications are processed”). Many a firm has failed to sell merchandise because it hasn’t understood the customer to whom it was trying to sell.

 

The second chapter talks about “the physical environment” and looks “at the ways in which the physical characteristics of places influence people’s wants and needs and how the smart design of physical spaces — with an emphasis on physical stores — attracts and motivates consumers to buy.” The authors insist that the “physical place still defines most purchasing behavior.” The chapter covers everything from the physical place occupied by a store to the physical place where products are displayed. Quelch and Jocz conclude, “Great brands … find ways to use physical space to optimize positive consumer associations and sales success.”

 

The third chapter builds on the perspectives provided in the first two chapters and applies them to “virtual space.” They discuss “both the parallels and the differences between online marketplaces and virtual marketplaces.” No discussion of virtual marketplaces would be complete with discussing mobile devices and Big Data and Quelch and Jocz discuss how these factors “lead to delivery of specialized products keyed to where the customer is located.” They note, however, that “there is no escaping physical space even in the virtual world.” The virtual world is built on servers with a physical location and order fulfillment in e-commerce still requires physical warehouses.

 

In the fourth chapter, Quelch and Jocz get more physical. They discuss “places as things.” That is, they talk about how places can be marketed. They write, “Increasingly, places like nations, states, and towns market themselves to attract visitors and investors.” They note, however, that “although marketing of places is commonly associated with tourism promotion, it does not stop there. In addition to promoting tourist attractions, countries and cities are competing for foreign direct investment.” They conclude that “place and physical context still remain powerful means for commercial marketers to communicate brand attributes.”

 

In the fifth chapter, Quelch and Jocz offer their “perspective on global place.” That is, they “focus on the strategies used by companies that are simultaneously marketing at the national and global levels.” They point to the slogan of HSBC — “The World’s Local Bank” — as something that “perfectly captures the dual requirements for companies with international or global aspirations.” They conclude, “Succeeding locally and globally requires intimate knowledge of what local customers value, … how local customers live and navigate in their communities, … and a clear understanding of alternative strategies for market expansion.”

 

In the concluding chapter, Quelch and Jocz note that “our place-based instincts remain more local than global.” I think they are correct. People like to claim some place as home — their little place in the world. As the author’s state, “The sense of place that comes with being part of community — not the global village but the local village — remains an important part of our psyche, and, its continuity, a source of comfort and well-being.”

 

Quelch and Jocz believe that each strand of “place” that they discuss is a business thread and they assert that those threads must “tightly woven together in businesses poised to grow in the global economy.” In the end, Quelch and Jocz admit that places are only important if people populate them. They write, “As the leading fashion designer Sir David Tang sensibly put it: ‘It’s not the place but the people that count.'”

 

I agree that people and places can’t be separated. Because people go (physically or virtually) to certain places, those places matter. Some of those places can be reached instantly, but companies should never forget that when you start moving real things around the real world it remains a pretty big place.