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Pop-Up Retail as an Enhancer of the City Brand - A Marketing Plan for Porto

Vítor Filipe Regedor Marcos Monteiro

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POP-UP RETAIL AS AN ENHANCER OF THE CITY BRAND – A MARKETING PLAN FOR PORTO VITOR R. MONTEIRO Dissertation submitted for partial satisfaction of the requirements to obtain the degree of: MESTRE EM ENGENHARIA CIVIL — ESPECIALIZAÇÃO EM PLANEAMENTO Supervisor: Professora Doutora Emília Maria Delgado Domingos Antunes Malcata Rebelo JUNHO DE 2014 MESTRADO INTEGRADO EM ENGENHARIA CIVIL 2013/2014 DEPARTAMENTO DE ENGENHARIA CIVIL Tel. +351-22-508 1901 Fax +351-22-508 1446  [email protected] Editado por Faculdade de Engenharia da Universidade do Porto Rua Dr. Roberto Frias 4200-465 PORTO Portugal Tel. +351-22-508 1400 Fax +351-22-508 1440  [email protected]  http://www.fe.up.pt Reproduções parciais deste documento serão autorizadas na condição que seja mencionado o Autor e feita referência a Mestrado Integrado em Engenharia Civil - 2013/2014 - Departamento de Engenharia Civil, Faculdade de Engenharia da Universidade do Porto, Porto, Portugal, 2014. As opiniões e informações incluídas neste documento representam unicamente o ponto de vista do respetivo Autor, não podendo o Editor aceitar qualquer responsabilidade legal ou outra em relação a erros ou omissões que possam existir. Este documento foi produzido a partir de versão eletrónica fornecida pelo respetivo Autor. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto To everyone with good ideas to challenge the status quo Learning never exhausts the mind Leonardo da Vinci Pop-up retail as an enhancer of the city brand – a marketing plan for Porto i ACKNOWLEDGEMENTS This section is dedicated to acknowledge all the people and institutions that foster innovation and pro-activity between the students. ABSTRACT This research is about how pop-up retail can be the driver of a city brand on the road to international competitiveness for the attraction of people, businesses and investment. There is a study about the brand of Porto and what are the issues conditioning it and preventing the city from achieving its maximum potential. Though this analysis focuses on city marketing, most of the literature concerning pop-up retail is confined to pure business marketing. This is one of the few bridges between pop-up retail and the urban environment, showing how one can benefit from the other. In this document it is proposed an action plan aiming to capitalize the endogenous resources of Porto, of its welcoming and authentic people and its rich cultural offer. It also fights the threats of the modern city such as ageing population and lack of business opportunities for young entrepreneurs due to absence of critical mass and investment. Pop-up retail is presented here as a win-win solution for decaying buildings to be recovered, local entrepreneurs to test their ideas, international companies to show up in the “place to be” and local residents to live in a city gaining prestige and with one of the most dynamic downtowns in Europe. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto iii RESUMO Esta investigação aborda o papel doo pop-up retail como o impulsionador da marca de uma cidade na corrida pela competitividade na atracção de pessoas, negócios e investimento. Aqui está presente um estudo sobre a marca da cidade do Porto e os problemas que a condicionam e impedem de atingir o seu potencial máximo. Apesar de esta análise se focar no marketing da cidade, a maioria da literatura referente ao pop-up retail está confinada ao marketing puro ligado aos negócios. Esta é uma das poucas ligações alguma vez feitas entre o pop-up retail e o ambiente urbano, mostrando que podem beneficiar um com o outro. Neste documento é proposto um plano de acção com o objectivo de capitalizar os recursos endógenos do Porto, da sua gente autêntica e acolhedora e da sua rica oferta cultural. Visa também combater as ameaças da cidad tais como o envelhecimento da população e a falta de oportunidades de negócio para jovens empreendedores devido à ausência de massa crítica e investimento. O pop-up retail é apresentado como uma solução “win-win” para a recuperação de edifícios em decadência, empreendedores locais testarem as suas ideias, para as empresas internacionais aparecerem no “place to be” e para os residentes locais viverem numa cidade que está a ganhar prestígio e como uma das baixas mais dinâmicas da europa. ÍNDICE GERAL ABSTRACT ............................................................................................. II RESUMO .............................................................................................. III 1 INTRODUCTION .................................................................................. 1 1.1. GENERAL CONSIDERATIONS ........................................................................................................... 1 1.2. STRUCTURE OF THE DISSERTATION ............................................................................................... 2 2 POP-UP RETAIL .................................................................................. 3 2.1. POP-UP RETAIL ORIGINS ................................................................................................................. 3 2.2. BENEFITS TO LANDLORDS .............................................................................................................. 3 2.3. POP-UP AS A BUSINESS STRATEGY .................................................................................................. 4 2.3.1. CHANGE IN SOCIETY, CONSUMER AND RETAIL .............................................................................. 4 2.3.2. EXPERIENTIAL MARKETING ........................................................................................................... 5 2.3.3. CHARACTERISTICS OF POP-UP RETAIL ........................................................................................... 6 2.3.4. THE USES OF POP-UP AS A BUSINESS STRATEGY ............................................................................ 7 3 LOCATION FACTORS ....................................................................... 11 3.1. CITY, RETAIL, LOCATION ............................................................................................................. 11 3.2. TYPES OF LOCATIONS ................................................................................................................... 12 3.2.1. FREESTANDING SITES: .................................................................................................................. 12 3.2.2. CITY LOCATIONS: ........................................................................................................................ 12 3.2.3. SHOPPING CENTERS ..................................................................................................................... 13 3.2.4. LIFESTYLE CENTERS: ................................................................................................................... 14 3.2.5. FASHION/SPECIALTY CENTERS: ................................................................................................... 14 3.2.6. OUTLET CENTERS: ....................................................................................................................... 15 3.2.7. THEME CENTERS: ......................................................................................................................... 15 3.2.8. OTHER LOCATION OPPORTUNITIES ............................................................................................. 15 3.3. LOCATION FACTORS ..................................................................................................................... 16 3.3.1. SELECTING THE OPTIMAL RETAIL LOCATION – ANALYTIC HIERARCHY PROCESS ....................... 16 3.3.2. PLANNING AUTHORITIES ............................................................................................................. 20 3.3.3. POP-UP LOCATION ........................................................................................................................ 21 4 PLACE MARKETING AND CITY BRANDING .................................... 23 4.1. THE CITY ....................................................................................................................................... 23 Pop-up retail as an enhancer of the city brand – a marketing plan for Porto v 4.2. CITY MARKETING ......................................................................................................................... 24 4.3. DIFFERENCE BETWEEN BUSINESS AND CITY MARKETING ........................................................ 26 4.4. BUILDING THE CITY BRAND ......................................................................................................... 27 4.5. FRAMEWORK OF BRAND ANALISYS – THE SIX PLACE BRAND CATEGORIES ........................... 31 4.5.1. PLACE INHABITANTS ................................................................................................................... 31 4.5.2. PLACE FAMILIARITY .................................................................................................................... 31 4.5.3. PLACE QUALITY .......................................................................................................................... 32 4.5.4. PLACE HISTORY ........................................................................................................................... 32 4.5.5. PLACE CHARACTERISTICS ........................................................................................................... 32 4.5.6. PLACE BUSINESS ......................................................................................................................... 32 4.6. MELBOURNE CASE STUDY............................................................................................................ 32 4.6.1. MARKETING CAMPAIGN .............................................................................................................. 34 4.6.2. ENGAGEMENT MONITORING ....................................................................................................... 34 4.6.3. THE CURIOUS CLASS .................................................................................................................... 34 4.6.4. BUSINESS PATHWAYS – THE IMPLEMENTATION ......................................................................... 35 5 ENHANCING PORTO’S CITY BRAND ............................................... 37 5.1. CATEGORY ANALYSIS ................................................................................................................... 37 5.1.1. PLACE HISTORY – (PORTO XXI , 2013) ....................................................................................... 37 5.1.2. PLACE CHARACTERISTICS ........................................................................................................... 38 5.1.3. PLACE INHABITANTS ................................................................................................................... 38 5.1.4. PLACE FAMILIARITY .................................................................................................................... 39 5.1.5. PLACE QUALITY .......................................................................................................................... 39 5.1.6. PLACE BUSINESS ......................................................................................................................... 39 5.2. SWOT ANALYSIS .......................................................................................................................... 40 5.2.1. STRENGTHS .................................................................................................................................. 40 5.2.2. WEAKNESSES ............................................................................................................................... 40 5.2.3. OPPORTUNITIES ........................................................................................................................... 40 5.2.4. THREATS ...................................................................................................................................... 41 5.3. GOAL ............................................................................................................................................ 41 5.4. POP-UP AS ENHANCER OF THE CITY BRAND ............................................................................... 42 5.5. MAIN COMMERCIAL STREETS ..................................................................................................... 43 5.5.1. RUA DE SANTA CATARINA .......................................................................................................... 43 5.5.2. AVENIDA DOS ALIADOS............................................................................................................... 44 Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 1 1 INTRODUCTION 1.1. GENERAL CONSIDERATIONS Life circling around consumption might seem futile at first sight. Although looking deeply into it, one discovers more than it meets the eye. Brands seduce customers and persuade them to pay more for a product than they would if thinking rationally. However thinking irrationally is not necessarily counterproductive, we can actually obtain more value from an emotional perception than from a rational benefit. The joy of a child opening a Christmas gift is much stronger that the fun she has while playing with it a week later. Therefore it is that moment of discovery and excitement that makes consumption worth it. Consumers are constantly harassed by strong stimulus from all directions all the time, thus being constantly ecstatic and seeking out for new opportunities of discovery in order to feel excitement and joy. It would be naïve to think that this mindset is restricted only to consumption and doesn’t reflect on the way that people experience the city and set expectations. Cities are much more than their infrastructure or their geographical characteristic, despite its undeniable importance. We never come back to the same city we saw when we were there for the first time. Discoveries and emotional connections shape our perception of the city way beyond its physical offering and other features perceived rationally. As our mindset, or the environment conditions, change, the city we perceive will change too. That is why, in my opinion, cities need to target the emotional side of the people in order to attract them and become top of the mind destination. Therefore, pop-up retail presents itself as a very effective solution within this current of thought because of its inherent ephemeral and intense features that contribute for economic and social competitiveness and evolution. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 2 1.2. STRUCTURE OF THE DISSERTATION This dissertation gathers knowledge on subjects not usually seen together: pop-up retail, location factors and city branding. Combining these three areas, a plan was developed to enhance the brand of Porto and contribute to its transformation and competitiveness. There is a display of the different perspectives on pop-up retail. For one side landlords, who at the first sight wouldn’t think they would benefit from such deal, on another side there are businesses that see this as an opportunity for development, while citizens who enjoy novelty have their wishes satisfied. A series of examples of successful cases show how any of the stakeholders are able to obtain value from this business model. Retail location factors are key to its profitability and the shape of the commercial environment available in a city. Understanding all the nuances at stake and the dynamics of different decisions regarding retail location strategy, enable the informed individual to make educated decisions thus being more likely to provide an effective solution to the problem under discussion. City brand enhancement is the goal of this study, though the novelty is the use of pop-up retail as a tool. Frameworks for brand analysis and construction are presented and a case study of Melbourne serves as inspiration for the brand envisioned for Porto. Lastly it is analyzed the current status of the brand of Porto and identified opportunities for development. Solutions are designed through the fomentation of pop-up retail and a stronger interaction at a global level. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 3 2 POP-UP RETAIL 2.1. POP-UP RETAIL ORIGINS Pop-up retail is one of the many forms a store may assume. The main particularity is its ephemeral character, settling in a place for a small amount of time, ranging from one week to 2 months. It is said that pop-up retail exists since the appearance of the first travel-sellers. However its main purpose was to collect more income by targeting a new group once the first was exhausted. This modern concept justifies the existence of such concept due to the need to impress the most unimpressive customer of all time, who probably doesn’t have the patience to read this entire paragraph. 2.2. BENEFITS TO LANDLORDS While pop-up retail may be useful as a business strategy for brands, there are operational issues such as dealing with the owner of the property to be occupied. A business partnership is viable only when there are benefits for both parts. Since the benefits for business will be discussed after, this chapter will address the point of view of the counterpart. Usually property owners renting retail spaces are looking for long-term, low-risk and steady revenue stream leases with successful tenants. It is common sense that this kind of deal enables landlords to hold a high degree of power and security. Studies show that REIT’s, one of the most relevant vehicles of property ownership, experience a domino effect of tenants departure and volatility of the stock price after a key tenant departure (Liu & Liu, 2013). Therefore pop-up retail presents itself as an unusual and somewhat risky way of leasing properties due to its short term nature and landlord disempowerment. On the other hand, pop-up retail can bring direct tangible advantages to property owners. Under the same principle applied to business, pop-up stores can play a positive role on the image of a property and attract new business. Following the success stories in Europe and in the United States of America, this leasing model has conquered some of the big New York landlords, such as the Carlyle Group (Mulvihill, K, 2010). The main feature valued by them is the possibility to show off the property and be object of a long-term lease by visitors whose attention was drawn by the pop-up store. One of the reasons why landlords avoid short term leases is the fear of vacancy periods. The higher the turnover of tenants more vacancy periods there are. Vacancy means no rental income, exposure to gradual degradation, vandalism/squatting and perception of a drop in the desirability of the building. Instead of being a promoter of vacancy due to short term deals, pop-ups can be seen as Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 4 way to mitigate the consequences of vacancy. By having a short term tenant in a period of vacancy, the landlord will benefit from the occupation of his building in a moment it would be otherwise vacant. There will be a rent that would never have existed without the pop-up store and the building will gain life once again, preventing degradation and vandalism. Still on the side of the prevention of vacancy, pop-ups relieve the fixed bills burden on the landlord side. Costs like utility bills, insurance and taxes are shared with a tenant who wouldn’t exist if it wasn’t for the short term agreement. In a nutshell, pop-up stores are good tenants for landlords in between long term agreements because they provide rent and physical activity to a place that was supposed to be vacant. At the same time, by attracting people and drawing attention it increases the chance of signing a better long term deal with a new tenant or even with the pop-up store itself. (TheStorefront.com, 2014). There are no studies about temporary rental an exclusive sustainable business model on the landlord side; however the critical mass on the tenant side is growing. For it to be possible there must be some value added both to the property and the business. Urban planning is a tool said to impact on the retail landscape (Cheshire, 2011) and it is the way followed by this research in order to make this equilibrium possible. 2.3. POP-UP AS A BUSINESS STRATEGY This chapter intends to expose the pop-up concept from the perspective of the business strategy and point out its main advantages. New trends on society have consequences in the way retail connects to its customers, in a way that may lead to some disruptions. Models that have proven their success in the past no longer hold such strong arguments. An example of the new approach conquering the customers is Experiential Marketing, which is focused in providing memorable experiences to the customer in order to enhance its relationship with the brand. That kind of marketing has potential to be highly implemented with the pop-up store concept. However, bonding with customers is not the only benefit of pop-up stores, businesses can use this strategy to achieve a wealth of features with growing desirability. 2.3.1. CHANGE IN SOCIETY, CONSUMER AND RETAIL Retailers are suited to thrive in an environment where life is organized around consumption; an environment where customers purchase goods not only because they need, but also because they want them. Whether they buy to obtain pleasure or to express their social status, contemporary customer’s lifestyle is guided by seduction, ever rising desires and volatile wishes (Baumen, 2000). They are always on the move, engaged in an ever-lasting running after pleasurable and temporary sensations/experiences (Pomodoro, 2013). They appear to be very open to unplanned purchases of novel goods and services (Collins,2004), which is an opportunity for retailers to exploit. Zara and H&M, two of the most successful fashion brands, are already adopting this kind of business strategy. They renew their merchandise at an impressive turnover reviving the desire for fashion and pushing unplanned sales due to the ephemerality of their collections. Pop-up retail is a solution capable to satisfy the consumer’s need to be constantly surprised with unique and temporary experiences and entertained with interactive performances (Pomodoro, 2013).They can be a reflection of the growing trend of ‘massclusivity’. It consists in granting the Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 5 feeling of exclusivity to the masses. With pop-up retail everyone has the chance to acquire an exclusive product at an exclusive price while living an exclusive experience, if they are shopping in the right place at the right time. Communication is key to create the feeling of ‘massclusivity’ and the point of sale is an important medium to achieve it. Being in a pop-up store is a way of brand expression and definition that converges with the current mindset of ‘hyperactive’ customers. Pop-ups are considered the latest expression of innovative solutions in marketing channel (Musso 2010). They are an expression of the ‘impermanent’ society and the customer constant search for novelty (Pomodoro, 2013). Their biggest strength doesn’t lie on the utilitarian side, instead, customers feel an hedonic appeal of novelty, distinctiveness and uniqueness ( Picot-Coupey, 2011). At the same time, the economic recession has impacted positively the spread of this practice, since retailers had to find ways to entice shoppers and garner exposure without investing in long-term leases (Gregory, 2009). Whether it is for pure marketing or financial reasons, pop-up stores are already considered a valid option for retailers. 2.3.2. EXPERIENTIAL MARKETING Experiential marketing consists in a set of practices that aim to amplify the brand’s essence through tangible, physical and interactive experiences between the customers and the brand (McKnickel, 2004). In order to develop the brand’s essence, it is indispensable to address customers on both utilitarian and emotional dimensions (McCole, 2004). Experiential marketing builds the bridge between the brand and the customer’s emotional dimension through the immersion in the brand experience. Focusing in the retail dimension, it is expressed through experience enhanced retail. It helps building product knowledge, general brand awareness and connects with the customer emotionally while giving him the sense of empowerment (Niehm, 2006). That connection is strategically important to ensure long term success derived from brand loyalty, which is triggered from repeated use of or experience with a brand. Such factors are proven to be critical since experience with a certain retailer decreases the impact of competitor brand strength (Woodside and Walser’s, 2007). Therefore, business that can deliver on experiences will increasingly be winners in the marketplace (Niehm, 2006). The balance is found when traditional retail is complemented with ‘guerilla’ approaches in response to changing consumer preferences (Collins, 2004). These are non-traditional ways to provide lifestyle-oriented brand experiences with limited resources. Such experiences enhance shopping destinations and related services that extend the whole customer’s brand experience. However, the effect of experiential marketing may differ both in sectors and consumer segments. In the case of pop-up stores as experience enhanced retail, studies show that it is more appealing to customers who exhibit higher tendencies in innovativeness and shopping (Kim et al 2009). Therefore younger and fashion-conscious segments are the main targets of this kind of experience enhanced retail. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 6 2.3.3. CHARACTERISTICS OF POP-UP RETAIL In order to understand how pop-up retail may be a useful strategy, it is necessary to understand its characteristics and potential. As per definition, Pop-up retail is a temporary retail space intentionally opened for a short period of time (Niehm & al., 2006). Its unique feature is that it is temporary: popups spring up and disappear quickly. A shopping district only composed by pop-up shops wouldn’t be recognizable from one month to another; a shop may be here today and gone tomorrow. Complementing this spirit of surprise, fascination and trendiness, the store is usually designed to generate a holistic and memorable experience (Schmitt, 1999; Pine and Gilmore, 1999), often obtained through a memorable visual spectacle. A pop-up shop may even be event-driven or mobile (Shanahan 2005), the rigid frameworks applied to regular stores are not applied in this case, which enables creativity and innovation to thrive. Good examples of the event format of pop-ups can be found in these two cases in the Netherlands and Belgium. In the Netherlands, Dommelsch Beer organized a tour of events for six months. It consisted in free concerts with well-known artists at various cafés. The brand engaged the customers by only disclosing the location and date of the concerts to those who submitted, on their website, the barcode of their products. In Belgium the brand was the well-known Martini. They opened roaming bars for two weeks each selling Martini brand-based cocktails, while the venue of these events was spread by word of mouth. These initiatives adopted the pop-up approach to surprise and seduce the customers making them feel part of the exclusive club of people in touch with the brand in such a sexy way. Whether it is an event like those mentioned or a regular pop-up retail venue, usually the employees have a lot of knowledge about the brand, showing the most appealing and complete face of it. In many cases it is a great opportunity to get to know directly the entrepreneurs behind the brands. The word ‘opportunity’ introduces another feature of pop-ups. This retail format allows low cost and low risk experiments, which enable the attraction of brands which wouldn’t be there if it wasn’t for that type of short term leasing agreement. So it generates the opportunity for the local customers to try an exotic product that doesn’t exist in that region because the brand could afford the risk to be there. At the same time it keeps attracting businesses that aren’t usually viable due to the onus of long-term commitment and allow them to show their products. Pop-ups bring customers, landlords, entrepreneurs and regular people, products, money and ideas that normally were not supposed to be in that place. Boosting the effect of novelty and uniqueness, there is the urgent side of the purchase or experience because the pop-up will disappear soon. Once people hear about a pop-up they feel the urgency to ‘get it while it lasts’. Attracting attention is one of the key features of this type of shop and adds value to both customer and brand (Gordon, 2004). From the consumer point of view, the perceived benefits are the availability of new products, the uniqueness of the experience, the facilitation of the purchase decision and the possibility to test the products (Niehm, 2006). These traits of pop-up seem to fill in some of the gaps in online retailing, thus being a good complement. Even though ‘guerrilla’ marketing techniques, such as word of mouth, are effective granting the sense of exclusivity and surprise, social media is essential to ensure the pop-up store receives the desired attention, while at the same time, location plays a very important role. Some strategies consist in borrowing the status of the location to the status of the brand perceived by the customers. In fact, many retailers opt for a pop-up store in order to be able to take advantage of a premium location that Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 7 they wouldn’t be able to afford in the long term (Picot-Coupey, 2011). Therefore it is safe to say that pop-up retail requires a modest investment (Surchi, 2011) and it is cheap for retailers to set up, as they do not have to commit to long-term leases (McDermott, 2013). The type of brands using this strategy, in fact, is diversified. Target, JCPenney, Apple, and Isaac Mizrahi are examples of completely different retailers recurring to pop-ups, which reveals versatility across store and product type (Howard, 2004). Some companies are attracted by the possibility of achieving the international status of a brand with stores located in the international ‘places to be’ (Picot-Coupey, 2011)The opportunity for that comes from the fact that it is easy to withdraw from a foreign market given how few were the resources invested. Regarding to the small investment there are still a few challenges that require local market conditions or ingenious solutions. An example of that might be the furniture, décor and equipment of the store. A good industry of support for that kind of services with rapid delivery and low cost is an important factor of desirability. However, smart solutions like a simple design, material choice or introduction of digital signage can lower both the cost and operational burden while boosting the ‘cool’ effect. 2.3.4. THE USES OF POP-UP AS A BUSINESS STRATEGY E-commerce is gaining more relevance each day while offline sales of top global retailers face negative growth in the last years. Internet and social media are changing the retail landscape and the companies are in need of smart solutions to adapt to such dynamic environment. Pop-up appears as the easiest offline method for quickly socializing retail (Storefront.com, 2013). This strategy has now fully entered into the strategic mix of brands and most of the evidences come from the world of fashion (Pomodoro, 2013). Blue-chip retailers already integrate it as a widespread element of the marketing mix. Besides marketing, those retailers also see it from the perspective of sales. Examples of those are Toys “R” Us, American Eagle, Jack-in-the-Box’s Munchie Mobile, Walmart, Macy’s, Gucci, Ann Taylor, Lexus, and Proctor & Gamble to name a few. The majority of studies done in this field refer to fashion as the most suitable industry, however the main factor of suitability for this strategy is the association of the business with the importance of the creation of the retail environment (Pop-up retail, 2005). Other than fashion, restaurants value the creation of a retail environment and the pop-up concept, thus, is growing in popularity. Still, it is in fashion that the majority of the experimentation has taken place, both by global and emerging bands. For the first ones there are four main uses to which pop-up retail provide an advantage. Opening pop-up stores in privileged places and providing memorable experiences are means to increase the brand image. Also the aspect of time-limited and broad exposure creates the conditions to enhance the promotion of new lines and collections. When combined with the factor of exclusiveness it is also a good tool to offer limited collections. Given the flexibility and easiness of doing business, global brands are using it to test new international and strategic markets. On the other hand, emerging brands who are building their audience find the opportunity to get maximum visibility, create excitement around the brand and test products, strategies and markets with small and achievable investments. (Pomodoro 2013). Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 8 The format based on surprise, exclusivity and discovery is used as a response to current customer expectations and fits in the new patterns of the post-modern economy described by Firat and Venkatesh (1993). Therefore it is valid to affirm that companies have found an easier way to follow the rapid pace of changes in demand (Decorp, 2008). The focus in demand is a growing trend once the power is shifting from the supplier to the consumer due to the increasing sprawl of information. To survive in such an environment, supply chain, marketing and business models are changing from a strategy of ‘pushing’ their products into the consumer to one in which the consumer ‘pulls’ the offer. It becomes crucial to understand the customer better and offer tailored solutions. Implying lower overhaul costs, pop-up stands as a great solution to develop niche targeting techniques. However the ‘push’ strategy is still valid in the sense of offering the brand experience and connection to the customer. With that in mind, it is essential to create buzz and get attention. It has been proven that experiential marketing increases the connection with the customer and raise the probability of word of mouth propaganda. Given the high ratio Buzz/Investment, a pop-up store is certainly a good decision on the Return on Investment side. To make the investment even more profitable, retailers ally the act of building interest in a new brand/product with market tests and experiences (Gregory, 2009 and Kingston, 2006). It is a ‘full scale market study at low cost’ (PicotCoupey, 2011). It is especially useful in companies in the process of international expansion. Due to the potential to create buzz, it is used as a method of brand dissemination across international markets (Surchi, 2011). Communication plays a relevant role in the stimulation and development of long-term relationships with the customers beyond direct profit generation (Doyle & Moore, 2004, Marcinick & Budnarowska, 2009). At the same time it provides valuable insights about market potential and foreign culture. That is why it has become a common internationalization mode for retail companies. International retail managers point out 6 main characteristics of pop-up stores: location, design and architecture, scenography, mobility, offer and events associated to it. It is a successful tool because it addresses positively 3 important criteria in retail foreign operation mode and decision (Treadgold and Davies, 1988). The first is the degree of control over the operation. Since they are not attached to longterm contracts, they gain power over the landlord and are not subject to costly long-term restrictions. The augmented control comes, as well, from the flexibility allowed by this system. That flexibility is only provided given the low amount of resources dedicated to the operation. In sum it is an easy way to test markets, get to know customers, try different venues in order to find the best mix of conditions and decide if a permanent store is convenient and how to do it. In the perspective of increasing revenue, it is sometimes used to aggressively market and sell merchandise on a seasonal basis. Traditional and online retailers often open pop-up stores in strategic places answering to the peak of demand on Christmas and other special events. For smaller scale retailers, instead of being an extra outflow with the objective of increasing revenue in the long term, it is an economic alternative to the traditional store. In fact, in places with a vibrating pop-up scene it is possible to observe a dynamism provoked by the use of pop-up stores by entrepreneurs to trial physical stores and making experiments trimming their startup ideas – it’s called Popup Hopping (Pop-up Britain, 2012). Since the fashion industry is the most serious propulsion device to this trend, it is relevant to expose the 3 types of pop-up stores proposed by Pomodoro. 2.3.4.1. Concept Brand Store In this type of store the experience is intense, fragmented, occasional and episodic. The purpose of it is to create a long-term relationship with the brand. It is useful when trying to launch a new collection or a limited edition, reinforce a specific market or segment generally improving the image Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 9 and awareness. It is common for the spaces to be highly spectacular, themed and multisensory so that customer lives an exciting and memorable experience. An example of this category was the Louis Vuitton temporary store opened in Corso Venezia, in Milan, to launch the summer 2011 collection of jewelry and accessories. The shop was transformed into an event called ‘Senses in Blossom’. To enhance the multisensory experience, the store was divided in 5 different areas to engage each sense. The areas were organized in open space facilitating the flow of customers, who could take souvenirs from each sensorial experience. “The five senses are fully involved and promise something unforgettable and glamorous” – said in their press release. To connect the experience with the concept of the brand, everything, since the sensorial experiences to the shape of the jewelry was thought around the flower theme. Given the success of this experiment, the event was replicated in other 4 Italian cities. 2.3.4.2. Community Store This store is conceived to support the existing affective and emotional relationship between consumer and brand (Thomson et al. 2005). It achieves its goal by creating the sense of belonging to a brand community (Cova, 2003). Customers engaged in a brand community feel part of a bigger group validating their beliefs and lifestyle, thus adding value to them. The key strategy to create this sense of community is through social events: themed nights and other happenings. These events usually have a glamorous and cool atmosphere and are designed to increase opportunities for exchange among fashion addicted, young consumers and enhance their brand experience (Brakus et al, 2009). To present a spring/summer 2011 limited preppy collection, Tommy Hilfiger launched a mobile pop-up store in the Duomo square in Milan. The pop-up was in form of a ‘preppy house’, resembling a beach house cottage. The store provided many social areas such as living rooms, lounge bars and an outdoor garden equipped with sofas and tables. It hosted special events like cocktail parties, jazz concerts and art exhibitions encouraging people to hang out there. At the same time there was a digital platform where people could discover where the house was and share their own opinion about the ‘preppy’ style and their local interpretation of that urban tribe. The strategy was to celebrate the Preppy culture and lifestyle, historically preconized by the brand. The customers were attracted to situation where they would interact with other customers with a similar style, have fun and experience something in common. The social and relaxing activity was privileged over the shopping, while these people see consumption as a leisure activity. Consequently, the use of the space was prevailing hedonistic. Besides Milan, this cottage went to cities like Madrid, Hamburg, Tokyo, Los Angeles, New York, Paris, Stockholm and London. 2.3.4.3. Test store The last concept is the Test Store. As the name suggests, it is mainly used to pre-test a new brand concept, product line or new market. It is especially useful when launching and emerging brand with low budget. However prestigious brands can benefit from it as well. It can be used to measure the affluence, volume of sales while observing the customer behaviors, attitudes and shopping motives. When equipped with appropriate tools to gather customer feedback it can fulfill a company’s research needs. Still in Milan, Ondademar opened a pop-up store in Corso Garibaldi. This is a Colombian luxury brand of swimwear. The purpose was to test the Italian market in order to, later, establish a flagship store. The furniture was light-colored and minimal, conceived to drive the attention to the colorful and painted merchandise, beachware, cover ups, scarves and dresses. The result was an exotic environment of many colors calling into memory distant places and travels. Despite the creative and Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 16 3.2.8.1. Airports: Airports enjoy a great intensity of pedestrian traffic naturally. Some people are in a rush, but many have to wait even hours before catching a flight or in between flights. People often need to buy items they forgot or weren’t allowed to enter in the airport with or want to buy some kind of souvenir returning from an exotic destination. Another advantage for the consumer is the low prices due to being in off duty zones. Therefore sales per square meter are higher than in regular mall stores and they are open almost 24 hours a day. The only challenges reside in the high rents and wages due to the premium location for business and inconvenient location for workers. 3.2.8.2. Resorts People in resorts are on vacations, in a relaxed mood with time to spend shopping. At the same time they usually stay inside the resort most of the time, to it is a captive audience composed by wealthy customers. 3.2.8.3. Store within a store Stores within other stores are a great way to fill holes in product offerings and benefiting from a symbiotic relationship. For the hosting store, it can represent an interesting event to keep customers excited about the place or satisfy customer’s needs in an area they can’t provide. For tenant stores it can be an opportunity to gain visibility or to associate with a more valuable brand and absorb the perceptions people have about it. 3.3. LOCATION FACTORS 3.3.1. SELECTING THE OPTIMAL RETAIL LOCATION – ANALYTIC HIERARCHY PROCESS To select the optimal retail location is a difficult decision with high impact both on sales volume as well as on marketing strategy. Therefore it has been subject to research through many alternative perspectives. In this research it will be presented the Analytic Hierarchy Process (AHP). The analytic hierarchy process (see fig 2.), developed at the Wharton School of Business by Thomas Saaty, allows decision makers to model a complex problem in a hierarchical structure showing the relationships of the goal, objectives (criteria), sub-objectives, and alternatives. (Saaty, 1980) Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 17 Fig. 2 - Analytic Hierarchy Process Many authors have studied this subject applying this approach, each with their own criteria. However, many points of parity can be found between them (See Tab 1, 2 and 3) Tab. 1 - Location Factors Researcher and Year of Research Main Criteria Sub-criteria Askin ÖZDAGOGLU (2008) Distance Distance to Buffets Distance to Restaurants Distance to Military Units Distance to Other Stores Traffic Jam Parking Place Facilities Vehicles Traffic Density Existence of Alternative Roads Plant Features Square Area (m2) Formation Distance to Main Road Demand Potential Price Demand Potential High Level Demand Medium Level Demand Low Level Demand Close Environment Existence of Competitors Ease of Maintenance and Repair Energy Provisions Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 18 Tab. 2Location Factors Yang c.L., Chuang S.P., Huang R.H. And Tai C.C. (2008) Market Attraction Market Size Passenger Traffic Mass Transport Competition Customer Features Safety Customer Features Numbers of Customers Density of Customers Income Level Purchasing Power Features for the Location Brand Loyalty Features for the Location Rentals Elasticity of Rental Contract Period Store Size Personnel Recruitment Expected Income Visibility of Store Accessability of of Store Synergy among branches Tab. 3 - Location Factors Tzeng, Teng, Chen and Opricovic (2002) Economic Factors Rentals Transport Cost Transportation/ Accessability Mass transport acessibility Parking Facilities Passenger Traffic Competition Nos. of Competitors Stiffness in Competition Trade Area Size of Trade Area Other Organizations Plant Density Tuncay Murat SERDAR (2008) Expected Trade Value Customer Purchasing Habits Customer Traffic Settlement with Comparison to Competitors Accessability Capital Investment Income Negative Area Factors for Retail Store Site Locations Accessability of Location Costing Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 19 Ebriyik et al (2012) have studied previous uses of this method and applied it to choose the best location for a food production company to sell their products. Three alternative locations were chosen and the method was applied in order to make an informed decision. Tab. 4 - Ebriyik Location Factors Retail Site Location Costs Rental Value Furnishing Cost Contracting time and conditions Competition Competition Power No of Competitors Distance to Competitors Traffic Vehicle Traffic Passenger Traffic Physical Features Store Size Parking Facilities Visibility Site Main Street Shopping Center Business Center Settlement and Social Residence It was built a comparison matrix confronting each of the criteria in proportion between themselves (see Tab 5). Tab. 5 - Comparison Matrix Main Criteria Costs Competition Traffic Physical Features Site Degree of Importance Costs 1 1/3 1/4 3 2 0,107 Competition 1 1 5 3 0,326 Traffic 1 4 5 0,382 Physical Features 1 1/2 0,061 Site 1 0,123 Comparing criteria in proportion of each other based on concrete data is the foundation of this method. For each of the criteria, it was made a matrix like this comparing the proportion between each sub-criteria. Applying this analysis to each criteria, Ebriyik was able to identify the most relevant subcriteria and understand clearly the weight of each factor. The last step is to compare the alternative locations regarding each sub-criteria and apply the different weights proportionally to the degree of importance. In the end it is possible to come up with a Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 20 value for each alternative. In this case, Bosna Hersek Settlement was the highest scoring with a ratio of 56%, followed by Türmak Lisesi with 25% and Toki mass housing with 19%. 3.3.2. PLANNING AUTHORITIES Despite not being pioneer in retail location research, Roy (1984) is still cited today because of his entropy maximization models involving the four influential agents on retail location. This model is referenced in this research to understand how the agents interact and what can be the role of each one in the development of places (see Fig 3) Fig. 3 - Multi Stakeholder Interdependence Planning authorities don’t have the means to directly enforce micro location and travel decisions of urban activities. People make their own choice about where they go, what they do and how they live. However, the development of the city should not be arbitrary; otherwise it may become disorganized and loose competitiveness. To ensure an optimization of the activities and promote the desired configuration of the urban development, planning authorities resort on indirect measures. It may be by enhancing or penalizing certain behaviors and decisions thus promoting the course of actions envisioned previously. Changing the structure of taxes, zoning law or transportation Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 21 infrastructure, can have a significant impact on the profitability of specific actions, that way planning authorities can entail the citizens to mimic their will. On the other hand, individual decisions may, or may not, follow the rational path conceived by planning authorities. Sometimes individuals, while working together with the same goals and enthusiasm, can obtain unusual sources of power and become a significant force of change. Given the great number of variables to be aligned, planning can’t ignore the role of the influential agents while drafting their strategies. Therefore this model gains relevance due to the interdependence considered among the agents. Ultimately, customers are the ones taking the decisions that influence the life of the city. At the same time, retailers have the ability to quickly adapt to customers’ needs and their actions can influence both customers and the city. This last agent is the connection point of the customers with both planning authorities and property developers. So the input imposed to the system come from customers and inherently from retailers. From the first it comes under the form of budget available to shopping and house location. It will determine where and how much do they shop, conditioning the format of the adequate commercial offer in the trade area. From the retailers, the inputs reside on the prices they practice, the salaries they pay and their financial performance. These two agents interact while retailers provide a product or a service in exchange of the consumer’s money. The consumer shopping decisions are proportional to the infrastructural conditions that provide convenience and value to the transaction. The location decision of the retailer depends on the customer base of the trade area and issues regarding the property itself, such as zoning policies and value of rents. These last two factors depend on the other agents: the property developer and the planning authorities. Retailers are only able to function due to the allowance to do business inside a property. This way, property developers have a great deal of power over the retail scene of a city. Developing more or developing less commercial properties in a zone, obviously, affects proportionally the local commercial activity. However too much development can lead to rent value problems, competition, undesirability of residence, etc… This way it is necessary to impose limitations and guidance to this agent. That is the role of planning authorities. With the help of policies affecting public and private infrastructure, they are able to influence property rates, making them more adequate to the consumer or repel/attract the business according to the area’s needs. The outputs of this system can be as relevant as the location of new centers, may them be physically relevant such as high density zones or intellectually attractive such as a district of innovation where people go to find interesting products. More tangible outputs are those such as the distribution and size of the stores, this is the result of the action of all the agents creating the conditions for the retailers to adapt to. The spatial distribution of profit and shopping trips are most important data for analysis in order to identify problems and opportunities or measure success of the commercial configuration of the city. Based on this model it is easier to understand the forces at stake when it comes to economic and social develop within a city in the scope of commercial activity. 3.3.3. POP-UP LOCATION Pop-up is a form of retail with very specific objectives, already mentioned in this research. This tool may take many forms and adapt to many different locations. Each solution is a tailored solution, thus existing the necessity to analyze every case on its own supported on the knowledge of previous examples. Nevertheless each brand or business has its own Marketing strategy and plan.Those marketing plans often have very concrete metrics, enabling the deciding agent to make an educated guess on Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 22 which are the favorable conditions in which they want to do business. Those metrics are, most of the times, fulfilled by demographic aspects, such as the segment targeted by the brand and the existence of that kind of people in the trade area. The conditions to access the location are important as well. Pop-ups are flash events with the aim to enhance customer experience and increase the visibility of the brand. Being located in a place with high foot traffic is essential to make people stumble upon the pop-up. If people do not pass by or are unable to reach it, the pop-up goes unnoticed. According to an expert of the business, a pop-up store is like a pop-up advertising on the internet. It is as much valuable as many people see the pop-up (see parallel with people clicking in pop-up ads on the internet). The adjacency influences the way people perceive brands, if they are in a trendy neighborhood, the brand will be associated to other trendy brands. On the other hand if there are bad neighbors, the bad reputation contaminates them. The presence of competition or the absence of substitute products to fulfill existing needs also have a role determining the impact a pop-up has. At last, the specific building attributes determine the physical experience for the customer. Not only in terms of comfort or beauty, the conditions applied to the short term leasing contract might make or break the pop-up investment. In sum, these were considered the key location factors for pop-ups: 1Program metrics. According to marketing plan 2Demographics 3Traffic & Access 4Adjacency 5Competition 6Building Attributes Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 23 4 PLACE MARKETING AND CITY BRANDING 4.1. THE CITY “There are more than 300 cities in the world with over a million inhabitants, and all those cities want to be the most attractive. In Europe there are more than 500 regions and 100,000 different kinds of communities competing individually for the same jobs, investments and talented experts.” (Moilanen & Rainisto, 2009) A city brand is “a network of associations in the consumer’s mind based on the visual, verbal, and behavioural expression of a place, which is embodied through the aims, communication, values, and the general culture of the place’s stakeholders and the overall place design.” (Zenker & Braun, 2010) The purpose of this research is to integrate pop-up retail in the urban environment and understand how it can benefit the competitiveness of a city and the life of its citizens. The perspective assumed here is one of pop-up retail as an enhancement factor of the city brand. According to Anholt (2007), the practice of city branding is the “management of the place image through strategic innovation and coordinated economic, commercial, social, cultural and government policy.” In order to address the potential of pop-up retail and city branding to provide competitiveness to a city, one must take into account the dynamics of creation and competition of cities. About the reasons why people started gathering and form cities, there are no strong evidences. However, dated since the invention of the written word, evidence of the first cities came from Mesopotamia around 4000 B.C. The reason pointed out was the lack of rainfall requiring people to organize themselves and build canals for irrigation purposes or from protection needs in plain areas (The Oriental Institute, 2012). Throughout time people started building their cities around communities with cultural identity and shared values instead of pure survival. In the middle of the XX century, for urban planning purposes, Gordon Childe (1950) defined ten criteria to be complied by cities in order to be recognized as such. Those characteristics, which had to achieve a certain standard, concerned: size and density of population, differentiation of the residents’ functions, payment of taxes, existence of monumental public buildings displayed as distinction symbols, existence of a ruling class, the writing knowledge, the elaboration of exact and predictive sciences and finally the concept of art. Nowadays we still observe similar guidelines and development orientations in our cities, though in a more complex dimension. Indeed the size of the city still matters and can be a source of competitive advantage, as size of the city implies more infrastructure, services and, most important, critical mass. City dwellers also have different jobs and functions in accordance with the functioning of the city and pay taxes. Monuments are still symbols for the cities. The ruling class exists under the different forms of modern governance. In the same way we could assume that writing now is embodied by the intellectual capital developed in universities and research institutions. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 24 Finally art and culture are still part of the city life, since it has a strong role in the definition of the community identity. What can be retrieved from this comparison is that cities have always had almost the same growth motivations and functioning model. The difference is that now there is much more competition to attract people and investment. It is in this context of competition between territories in order to attract people and investment that it was born the need to implement marketing and branding strategies in order to stay on top. City managers and planners started using this kind of strategies to attend their citizen’s needs and wants. The city image treatment became much more relevant since people were enabled to compare and access many cities around the world. People’s perception of the city is the brand with value in consumer’s mind. 4.2. CITY MARKETING The need to develop the city’s brand led to the adoption of marketing strategies, usually applied to businesses. Marketing can be faced as the tool to meet the consumer’s needs in a profitable way, creating value for all the stakeholders. This is well defined by Kotler and Keller (2009) as “an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders”. The Marketing Mix comprehends the 4 pillars of the marketing approach to deliver a value proposal. These are known as the 4 P’s: Product, Price, Promotion and Place. It consists in developing a coherent strategy towards these aspects in alignment with the brand in construction. The guiding factor is the customer that is why it is so important to do a correct segmentation and clearly define the target group to be satisfied by the brand. After having a deep knowledge about the customer it is possible to conceive the optimal marketing mix. Product: It is the benefit offered. It may be a product susceptible of consumption or it may be a service or a concept. The product development phase is responsible for the core value, everything else only adds up to that substance. To create a successful product, the needs of that specific group of consumers targeted must be satisfied in a tailored and efficient manner. It is usually said that one must not try to sell a comb to a bald man or a raincoat in the desert. Price: Besides the basic concepts, from economy, of offer and demand, marketing provides a way to maximize benefits by influencing the price. The strategies, adoptable regarding the price, always follow the principle of meeting customer’s needs. There are many pricing approaches, fixed mark-up to provide marginal profits to the retailers, demand-based relying on the customer’s perception of value often enhanced by brand value and it is also possible to set the prices in accordance to competition. To choose the size of the value harvest is a critical strategic factor to profitability and fairness of any project. Promotion: The engagement of all the stakeholders is critical to the success of any product or project. Commonly it is achieved through advertising; however it can be embodied by any kind of action that provides brand awareness and contributes to the commitment of consumers, citizens or managers. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 25 Place: A brand is a message and that message can only be perceived if it is coherent between all the points of contact between the brand and the final consumer. Therefore, the place where the product is delivered has a great influence on how it is perceived. Researchers found opportunities to implement this framework to many situations, even outside business. An example of that is this current of thought is the appearance of city branding, a useful inheritance from business (Kotler and Levy 1969). Organizations need to maximize their benefits towards their costs, they need to communicate, advertise themselves, define target groups and they need a broader definition of what they offer. Cosmetics can be seen as beauty, soap as cleaning, thus the city can be seen as work opportunities, street safety, entertainment or many other things depending on what the citizen is looking for. Also those organizations are sensitive to change and consequently have to re-determine their objectives and resources throughout time. It is possible to observe a switch from a traditional view of marketing as a business activity to a larger vision including areas previously seen as public relations. City Marketing is a powerful tool for planners to “maximize the efficient social and economic functioning of the area concerned, in accordance with whatever wider goals have been established” (Ashworth and Voogd, 1990). Through the city’s brand it embraces and promotes its values and image so that potential users are fully aware of its distinctive advantages (Kotler et al, 1993). Given the public orientation and multi agent environment, the target group of a city’s brand cannot be a niche. Instead it involves plenty of niches, to be satisfied by personalized solutions or by general solutions that satisfy all the stakeholders(see Fig 4). However it is possible to identify the main drivers of change and perception adapting and measuring actions towards them. Fig. 4 - Target groups (Van den Berg, 1999; Braun, 2008; Florida, 2004; Kotler et al., 1993; Zenker, 2009) Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 32 4.5.3. PLACE QUALITY The quality of construction, infrastructural support to daily activities, urban mobility and standard of living differentiate city brands. An example would be Switzerland vs. Eastern Europe, in which Switzerland represents a brand of high quality where people are willing to pay the high price to live there opposing to Eastern Europe known for its degradation. Cost efficiency is also a determinant factor of quality, making Germany a great brand on that field. 4.5.4. PLACE HISTORY The history of a city is the root of its culture and present behaviors of the citizens are a result of that. Architecture and culture are a reflection of the history of the city and when heritage is preserved it becomes the core of the city brand. 4.5.5. PLACE CHARACTERISTICS Spatial features define the possibilities of daily activity. Geographic characteristics may influence the shape of the urban fabric making it more or less characteristic. Example of that is San Francisco, with many ups and downs, which influences urban sprawl, mobility and economic activities. While Milan is a plain city whose geographic influence relies on the relative position towards other Italian and European Cities. The presence of entertainment facilities, public monuments or anything that differentiates one city from the other is an element of the brand. 4.5.6. PLACE BUSINESS Business determine the economic attractiveness of a city, whether people are looking for a job, looking for investment opportunities or conditions for consumption. A vibrant business environment affects heavily the competitiveness of the city and determines the power it has compared to other cities. Usually the capital of a country, which is its financial center, has the strongest brand. However there are situations where it doesn’t happen, case of New York or Milan which are the financial centers of the respective countries but are not the capital. These entire elements sum up the origin and reasoning of a city brand equity, which is the added value perceived regardless of the real value of the city. 4.6. MELBOURNE CASE STUDY That’s Melbourne it’s an initiative of the City of Melbourne made to promote the city and attract people while enforcing its brand. It was an output of the Council Plan 2013-17 of the city and aimed to boost the profitability of local businesses, while facilitating long-term prosperity. As an inherent characteristic, Melbourne is not like those cities with widely known natural beauty or impressive Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 33 monuments. The true potential of the city lies on the experiences and stories that people live while being there. For this purpose it became peremptory to endow value to the brand and turn any story interesting just by mentioning it took place in Melbourne. Fig. 9 - Melbourne Marketing Plan The marketing plan on Fig 9 is based on a vision where Melbourne City is the top of mind destination for shopping, dining, cultural events, sport, live music, arts as well as emerging strengths in recreation, leisure and intellectual nourishment. Melbourne’s promise is that every time someone visits the city leaves it with an interesting story worth sharing with others. The mission is to increase visitation to the city by inspiring those Melbournians who seek and use interesting experiences as social currency. This will be achieved by promoting Melbourne City offerings and experiences that are the “antidote to ordinary and routine”. Materializing these intentions, it was created the concept of the “Melbourne Moment”. It is an allegory of the unexpected, interesting, unpredictable and unconventional way that everyday activities are experienced in Melbourne City. To experience enjoyment in a way so far from ordinary during such mundane diary activities turns out to be very inspiring content to share with others. Through this Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 34 widely diffused idea, the perception is mounted that there is no other area in Melbourne or in the state of Victoria with such an abundance and diversity of this type of offering. Indeed, Melbourne City offers a vibrant environment capable to provide the visitors those promised feelings of excitement, surprise and sophistication. From trend setting experiences, such as night markets, to traditional and vintage style offerings like revival architecture or promotion of custom/hand-made products exploring endogenous resources and know-how. Innovative business models like waste-free restaurants, pop-up retail experiences and multi-offer establishments such as retail and art or Dining/drinking and fashion. Another interesting feature of this urban environment is the unconventional spaces repurposed beyond their original use targeting empty parking lots, rooftops with skyscraper views, derelict buildings, laneways and basements. 4.6.1. MARKETING CAMPAIGN The marketing campaign is about discovery in the city through a series of Melbourne Moments. Regardless of mood, company or resources, there is a Melbourne Moment anytime available for each one of the visitors in the city or its neighborhoods. The consumers are reached everyday with digital content sourced from local businesses and people who experience them. 4.6.2. ENGAGEMENT MONITORING Through reviewing bought print advertising, television, banners, radio, sponsorships, media deals and paid search, it is expected to attract more strangers. By improving owned websites, search engine optimization, e-mail, widgets/apps and social network pages, the customer base will be built. Finally the conversion to fans will occur due to self create/ user generated collaboration. Their expression on Facebook, Digg, YouTube, Twitter, Flickr and Instagram combined with comments, blogs, e-mails and forums will define the genuine city’s image through the eyes of the users and conquering their loyalty on the emotional side. 4.6.3. THE CURIOUS CLASS The audience targeted is Melbournians who live near the city within a 20 km radius or work in the city and belong to the so-called “curious class”. This is a class defined, not by their age, but rather by what they choose to do outside of their usual routine of work, study or raising family. The curious class likes to seek new experiences, keep their social lives interesting and unpredictable. They derive intellectual nourishment from discovery, always looking out for what is next and see comfort and routine of daily life as their barrier to discovery. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 35 4.6.4. BUSINESS PATHWAYS – THE IMPLEMENTATION In order to provide assistance to local businesses so they can best leverage from the city brand and align all the efforts, a digital marketing program will be developed to coach and educate local business owners about digital communications via workshops, seminars and one-on-one mentoring. See Fig 10 for more details about the implementation process. Fig. 10 - Business Pathways for Melbourne (That's Melbourne, 2012) Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 36 In sum, the City of Melbourne had a two-way approach to the case, on one side worked with the consumers, on the other with businesses. The consumer audience targeted was the curious class seeking interesting and exciting experiences. The marketing promise was for the city to be the antidote to routine. The interaction will be enhanced through curated and shared content regarding Melbourne Moments. On the Business side, the target will be small businesses that provide Melbourne Moments. Those will be briefed through workshops, seminars and mentoring. The City Marketing leverage will follow the same path as that one of the consumers sharing content on social media. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 37 5 ENHANCING PORTO’S CITY BRAND 5.1. CATEGORY ANALYSIS 5.1.1. PLACE HISTORY – (PORTO XXI , 2013) The origin of the city dates back to the IV century during the occupation of the Roman Empire. Etymologically Porto comes from Portus, which means “port” in Latin while having connections with the word “door”. This city was a mandatory stop for people who travelled around the country. The city lies in the valley of river Douro and it is since ancient history a place of commerce and launch of new ventures. Throughout times there were many different rulers of this region, the Suevi, Visigoths, Lusitanians, Moors and later the Catholics. The latter ruled the region for many centuries and it is the main influence nowadays. The city always had a strong relationship with the river and the sea, being one of the most attractive ports of the country, playing an important role in the age of the discoveries. It was also attacked during the French Invasions; however the city never fell even under siege. That is why it gain the name “Cidade Invicta”, meaning undefeated city, which lasts until today. There are many cultural traditions rooted from that time. From the typical dish “Francesinha”, literally meanining “Little French Girl” and “Tripas à Moda do Porto” to the name of the famous street “Cedofeita”. Later, as a consequence of the alliance to beat the French, there was a trend of English settlement in the city. It served as the port where the Port Wine was stored and shipped, becoming famous worldwide. In the XIX century Porto was massively modernized through new ideas, wealth and an entrepreneurial strength. That mindset affected the citizens’ identity with the sense of independence and freedom possible to observe today. It is considered the capital of the north and it staged the beginning of many political, economic and social movements. It functioned as an enhancer of industrial progress of the surrounding regions. Nowadays it is considered one of the motors of the Portuguese industry. Given the rich history and its reflection in the, yet stately, monuments it is nowadays World Heritage by UNESCO. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 38 5.1.2. PLACE CHARACTERISTICS This is a European city characterized by its strong heritage and geographical configuration. There is good infrastructure supporting daily activities and it is one of the most important cities of the country economically. With an area of 41,4 km2 and a population density of 5.739 people per km2, Porto hosted 237.591 inhabitants. In its metropolitan area there are more than 1 million people. The average cost of house purchase is 1.226€/m2. Currently this tends to be inverted, but in the past there has been an exodus from the city to the suburbs. This helped degrading the city, which is now struggling to recover its past glory. It provides a great offer in terms of education at all the levels, with its local University, Universidade do Porto, ranking among some of the best in the world. In terms of health and social protection, it ranks at the European standard with very low infant and early mortality rates. However the growing unemployment and aging population raise the number of people dependent from social security to 121.869 people, making the system unsustainable. The presence of Low Cost airlines in the local airport raises the passenger traffic to more than 6 million people a year, having a great impact on tourism. Urban mobility is fluid with small traffic jams during rush hour. There is a widely distributed network of buses owned by STCP, half of which powered by alternative energy. There is also the mix surface/underground metro operated by Metro do Porto, with 6 lines carrying 55.737.000 passengers a year. Despite the technologically advanced equipment, the design of the lines presents some inefficiency, taking too long arriving to the destination. The tourism is growing steadily, granting great international exposure to the city. It has been present in many award nominations including the winning some European Best Destination awards. Low cost flights and lodging, combines with the interesting architecture, heritage, good weather, good food offer, museums, art galleries and a vibrant nightlife attract many tourists who find Porto and affordable, yet with quality, recreational destination. The city is inserted in the river mouth of Douro, which represents a great landscape value enhanced by the city’s many bridges. Arrábida bridge, designed by Edgar Cardoso which is an alumni of the Faculty of Engineering of the University of Porto, has been during many years an engineering landmark. Another famous bridge is called Ponte D. Luis I and has a similar look to the Eiffel tower, which is normal since it had the same designers. The Port wine still has a great mark in the city, being one of the strongest elements of the brand, attracting many tourists and justifying significant infrastructure. 5.1.3. PLACE INHABITANTS The resident population has decreased during the end of the XX century and beginning of XXI. Younger population (0-24) represents only 20% while old-age dependency ratio reaches almost 50%. Fertility rate at 37% doesn’t seem to improve future perspectives. The demographic configuration appears as one of the most critical points that need to be addressed not only in Porto but widely in Portugal. Despite the trend of decadence in the city and the population, Porto has very proud inhabitants. Still embodying the personality of the undefeated city and fighting against the concentration of privileges and investment in Lisbon, the capital, the “Tripeiros” (nickname of the people from Porto) stand as the ambassadors of Portuguese resilience and attitude. Home to many cultural movements and bold ventures resulting in some of the biggest Portuguese companies, Porto has the people imposing their character to the national recovery from the crisis. They are genuine, lively, hardworking, Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 39 enthusiastic and a bit rough with a marked and loud accent. Sports idols congregate the proud community while conquering European respect in many modalities and putting the city in the world map. Many people living in the outskirts work in the city and perform there all the activities besides sleeping. That is why there is a very dynamic environment propelled by a younger population with a taste for the new and international trends. This city is a symbol of the Portuguese progress, one that is not ashamed of the past in which supports its future. 5.1.4. PLACE FAMILIARITY Given the relatively small size, compared to the world’s major cities, Porto enjoys a sense of familiarity hardly achievable in large urban centers. The sentiment of proud from the in-group makes it a friendly environment for tourists or anybody trying to fit in. The authenticity of the people covers up for the rough manners and promotes displays of warm connections even between strangers. The informal character of the city and the safety able to be experienced add up to that creating conditions for tourists and newcomers. A great example of this openness is the celebration of the city patron, São João. It is celebrated on the night from the 22nd to the 23rd June when the streets become full of people sharing sardines and launching small hot air balloons propelled by candles. Every corner of the city is flooded by people enjoying the warm weather as if they were at home. 5.1.5. PLACE QUALITY Porto is a relaxed city where it is possible to achieve a good standard of living, thanks to the good weather, safety, infrastructural support and entertainment available. It is a city in a developed country that has been greater than it is now. Therefore it is possible to observe some decay of buildings in the older areas, as well as an ageing population. However, because the living costs are low it becomes a great cost-benefit deal to live there. 5.1.6. PLACE BUSINESS Like any other Portuguese city, Porto has suffered with the European crisis. Unemployment became a problem and gradually people have been losing power of purchase. Given the loss of competitiveness of Portuguese industry to Eastern Europe and Asia, the economy suffered a blow and many industries closed. However there are some signs of recovery since the strongest industries survived and costumers are coming back, after realizing that the “made in Portugal” quality represents enough competitiveness. Meanwhile, the efforts to bring life again to the downtown seem to be effective as it is becoming a vibrant and dynamic place. Commercial activity is gaining relevance again, mainly due to entertainment venues. It seems to be an opportunity to boost the city brand because people are starting to perceive Porto as a city with interesting places and events. Another class on the rise is the entrepreneurial class. University of Porto is, arguably, the best University of the Country and puts effort into fostering innovation e value creation. An example of that was the creation of UPTEC, an incubator for startups coming out of the University with modern facilities, ambitious goals and community support. Currently it is fashionable to be an entrepreneur Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 40 from Porto and there is a growing network of interesting people starting up their own ideas, sharing their experience and dreaming about new ventures. 5.2. SWOT ANALYSIS 5.2.1. STRENGTHS Porto is a city with an ancient tradition, which has left an enormous heritage susceptible to be observed and experienced today. It is not common to find a city with such a coherent and traditional architecture exhibiting many stages of history. Recognizing such facts, UNESCO attributed the status of World Heritage to the Historic Center of Porto. Besides physical attributes, cultural attributes like food and wine represent Porto worldwide. Port wine attracts thousands of tourists every year and it is subject of conversations every time someone lists the most famous wines in the world. Portuguese people are known as people who enjoy a good life with European standards, which puts it in the list of the most desirable and safe places to live. This status is supported by the high quality public infrastructure and health system, confirming it is a city of the developed world. Another strength of Porto lies on its inhabitants, who are very proud of the city and welcoming to strangers. They have a strong sense of community which creates a very exciting environment not easily forgettable. 5.2.2. WEAKNESSES Unfortunately Portugal is facing a difficult period on the economic side. Besides the slow turnover, investment has shrunk and became highly risk adverse. Unemployment skyrocketed and austerity from the government paints a dark scene. Contrary to other cities of the world where there is a high population and economies of scale happen easily, Porto is limited in size with only one million people in its metropolitan area, therefore customers targeted in this city should provide their profit through quality instead of quantity. If we narrow the scope of population analysis to the downtown it is even scarier since it is scarcely populated and most of the residents are of old age with low resources. Another challenge Porto faces, shared with entire Portugal, it’s the geographical location that sets it apart from the rest of Europe and makes more difficult the spontaneous income of tourists or business people. A counter example is Milan, situated in a logistically strategic place where many people have to pass and easily accessible from everywhere. There is another factor diminishing the importance of this city in the world and calling for innovation, which is the inexistence of a strong, recognizable and worldwide successful Portuguese brand. 5.2.3. OPPORTUNITIES Portugal is part of the European Union, which despite eventual criticism had a good influence on its development and international exposure. Now it is one of the most sophisticated countries in the world targeted by cutting edge political programs designed to bring European countries to the next Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 41 level of civilization. Belonging to the euro zone, it is very well connected both physically and economically to other European countries, constituting a great potential to exploit. Keeping pace with the European civilization development, Portugal has well educated people with valuable human capital. Portuguese universities rank among the best in Europe in terms of research and Portuguese professionals are appreciated worldwide. Unlike Spanish and Italian counterparts, known for their language barrier, Portuguese people are actually good with languages. They easily communicate with Spanish and Italian people using their own versions of those romantic languages. At the same time, English is widely spoken even between some of the older people living in cities. Some say that the Portuguese skills towards languages is a reflex of the curious an open culture. All these traits facilitate international communication, essential to the enhancement of a city brand. The opportunity for launching new initiatives arises from the growing interest in the city from the younger population, which is following trends very rapidly. The number of international students in Porto increases every year, bringing life to downtown and exposing it to their friends, families and communities. In this dynamic environment the entrepreneurial class is growing and creating a certain buzz around itself. This can impact and benefit from the recovery of the Portuguese industry, which is showing signs of positive reaction. There has been an effort to promote the label “Made in Portugal” and nowadays it is very common to see small and ambitious Portuguese brands, many of them from Porto, trying their luck on international markets. Given these arguments, it is legitimate to affirm that the critical mass is growing; the spotlight is turning to Porto following the tourists that seek an affordable destination presented by the low cost airlines. The low cost extends itself to the properties which, combined with the high national and European incentives for urban rehabilitation, is bringing some attractiveness to the sector with a positive impact on the urban fabric. 5.2.4. THREATS Despite all these opportunities, the success of this city is threatened by economic issues. The population has a low power of purchase, which blocks consumption and slows down the system being able to jeopardize it. Also, as local residents always complain, relevant investment is constantly diverted to Lisbon, the capital. The last challenge is the ageing population which, besides making the social system unsustainable, slows down the pace of the city making it less appealing to the youngsters. However it is essential to prepare the cities to the ageing population, making them friendly to that target group and integrating it with the younger ones. 5.3. GOAL The goal of this research has been to explore opportunities for development of Porto’s City Brand. The proposal is to use the growing critical mass, especially along a younger population with a tendency for innovation and new experiences to create a place with perceived value attracting people and tackling emerging issues such as ageing population and economic stagnation. There is a growing trend of a lifestyle taking place in the downtown, where new entertainment venues open every month, where cultural events aim to occupy and where young people wish to live. During the development of this research, some hints were found pointing to the business innovation as Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 48 Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 49 6 CONCLUSIONS AND FURTHER RESEARCH PERSPECTIVES 6.1. CONCLUSIONS Pop-up retail, indeed, has the potential to enhance a city brand such as Porto’s and raise its competitiveness level enough to face other European cities. The plan proposed here was made for illustrative purposes only to demonstrate a way this thesis could be implemented. Therefore there is room for a continuous work improving the brand of Porto using pop-up retail as the catalyzing force. Marketing strategies targeting specific groups within a population also apply to city management and prove to be essential when pursuing a goal such as achieving change in a city brand. Other opportunities for research development may lie in the cultural differences between countries and which marketing techniques work better in one place than another, specifically the different impact of pop-up retail on it. Lastly it would be an enriching experience to observe how the implementation of a project like this turns out and test its efficiency. Pop-up retail as an enhancer of the city brand – a marketing plan for Porto 50 7 BIBLIOGRAPHY AND REFERENCES 7.1. BIBLIOGRAPHY [1] Anholt, S. (2004). Nation-brands and the value of provenance. In N. Morgan, A. Pritchard, R. Pride, Destination branding. Burlington: Elsevier Butterworth-Heinemann. pp. 26-39. [2] Appleyard, D. (1979). The Environment as a Social Symbol. Journal of the American Planning [3] Ashworth, G. J. & Voogd, H. (1990). 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