1. Introduction

This study is part of wider research into the nature and effectiveness of local economic development across Australia. The first output from this study (Beer and Maude 1996) examined the framework for local economic development in each of the states and territories and discussed each with reference to a number of assessment criteria. This first report was written on the basis of a substantial number of interviews with economic development practitioners across Australia (approximately 100 interviews) and the discussions canvassed a wide range of topics, including how economic development authorities market themselves and their regions. The current report draws on that earlier work but relies in large part on the results of a postal questionnaire sent to local economic development agencies throughout the nation. This document first considers the way in which data was collected through this survey and the implications for the robustness of the results. The report then goes on to consider the nature and effectiveness of local economic development strategies used across Australia as measured by the questionnaire. The next phase of the report then considers the equivalent data for South Australia, and where possible, draws out the differences between the strategies used in this State and those embraced nationally. The final section of the report covers the policy implications to arise out of this study and includes suggestions on how local economic development bodies could improve their marketing. It attempts to draw together the lessons inherent within the data on how local development bodies should market their activities and regions.

2. The Local Economic Development Questionnaire

A 16 page questionnaire was sent to 460 identified local economic development bodies in March 1996. A follow up questionnaire was sent in May to agencies that had not responded. The questionnaire was first developed in January 1996 and a pilot survey with the draft questionnaire was applied in January and February 1996. The survey form was amended to incorporate the comments of respondents to the pilot survey prior to the major mail out.

The names of the local economic development bodies to whom the questionnaire was sent were drawn from a number of sources. The largest proportion came from a listing compiled by the (then) Department of Housing and Regional Development in 1994. Most of the names on that list had been collated from responses to newspaper advertisements associated with the inquiry leading to the Kelty Report. This listing contained the names of nearly 300 organisations who identified themselves as being interested in local economic development and/or regional economic development. There was considerable diversity within this listing: it included local governments, regional development boards, business enterprise centres, community groups, as well as other organisations. Lists of all the business enterprise centres in NSW and Western Australia were a second and third source for the questionnaire mail out. All local governments in Victoria were also sent a questionnaire because recent reforms have given that tier of government primary responsibility for economic development at the local level. All of the Federal Governmentís Regional Development Organisations (RDOs) were sent a questionnaire, but Area Consultative Committees (ACCs) were excluded from the survey as they lacked both a general "development" function and a public role. Finally, a locally produced census of local economic development organisations in Tasmania was used to cover the diverse bodies active in that state. The disparate sources used in this survey produced a number of overlaps which were eliminated prior to the dispatch of the questionnaire.

Some 187 questionnaire were returned by economic development organisations. We consider this to be roughly equal to a fifty per cent response rate as a considerable number of the organisations to whom we sent questionnaires no longer exist. Approximately 25 questionnaires were returned because of the closure of the intended recipient. We were also aware in sending out the questionnaires that many of the regional development authorities operating in 1994 no longer exist. Many were wound up in Victoria when local governments took on primary responsibility for local and regional economic development, but some have continued to operate and we felt it was necessary to give all organisations extant in 1994 an opportunity to respond. The estimated response rate of fifty per cent is very high for a postal questionnaire and reflects the commitment of local economic development practitioners to their field.

The conduct of the postal questionnaire has a number of implications for the interpretation of the results. First, it is important to recognise that the data are not drawn from a random sample of local development organisations and they may not be truly representative of this sector. However, we consider the results provide a reasonably robust picture of developments and conditions within the sector, particularly given the large number of responses. Secondly, it is important to recognise that the source of the names of economic development bodies are imperfect and that some types of organisations might have been improperly excluded. For example, questionnaires were not sent to all local governments in South Australia because while some are active in this field, many are either not active or play only a minor role.

3. The Respondents

The respondents also reflected the diversity within economic development agencies across Australia. The single largest group of respondents were Business Enterprise Centres (BECs) with a total of 53, followed by 46 responses from local governments, 35 returns from regional development boards and 20 from "other" agencies (Table 2). Six of the nine Regional Development Commissions operating in Western Australia responded to the survey, and there were six responses from Voluntary Regional Organisations of Councils (VROCs).

Respondents were also asked to provide information on the year in which they were established. Figure 1. shows that most agencies were established relatively recently, although some trace their roots back to the nineteenth century. In the main this latter group is comprised of local governments. Overall, however, one is struck by the relative recency of most of these organisations with 131 of the 187 respondent organisations established since 1990, and 73 (or almost one half) were established since 1993.

Table 1. Respondents by State

Table 2. Respondents by Type of Organisation

Figure 1. Regional Development Bodies, Year of Establishment, Australia

4. Marketing Strategies Across Australia

4.1 The Strategies Used

"How are the activities and services of the agency marketed? Please tick all methods used."

Thirty seven agencies (almost 20 per cent of the total) stated that they do not engage in active marketing and that they rely on word-of-mouth only to advertise their services. This is a reasonably high percentage given that most local development bodies accept that promoting their activities is important and, as indicated above, most agencies use some form of promotion. One reason one in five agencies rely on word-of-mouth advertising will be discussed below.

It is important to recognise that most local development bodies use a number of strategies to promote their role and functions. Not all approaches are used at all times, but commonly an agency will run advertisements in the local press or radio, distribute brochures through the CES office or at the council chambers and have an active program of networking with local business associations.

Just over one third of respondents (64 responses) used the CES to advertise their activities and it is therefore one of the more commonly used strategies within local economic development. The apparently strong linkages between the CES and local development agencies are not surprising given the large number of BECs amongst the respondents. Many BECs are co-located with CES offices and their services are presented as one of the options available to the unemployed and those seeking small business assistance. Other types of agencies work closely with DEETYA on labour market programs, with many using DEETYA funds to supplement other sources of income.

Over two thirds of respondents (127 responses) marketed their activities and services through industry associations and business associations. It is the most popular strategy used by local development agencies across Australia and its popularity reflects both its relatively low cost to the agencies involved and the ability to target industries and groups relevant to the region. By contrast, only six local development agencies promoted their activities through a broker. This represented only 3.2 per cent of responses. This very low response rate reflects the highly localised work of most agencies. Most development boards, business enterprise centres and economic development units within local governments are strongly focussed on encouraging growth within their region. It appears that many give the attraction of capital or marketing opportunities from outside the region less attention and this is reflected in the "hands on" approach to marketing used by most agencies.

Only 21 local development agencies used private providers to market their activities and services (11.2 per cent of the total). One hundred and twenty six development bodies marketed their services through local government. This reflects both the fact that local governments are an important part of the local economic development framework in most states and the close links between many agencies and their constituent councils. Community associations were also commonly used by economic development authorities, with almost 60 per cent of respondents using this avenue for marketing. Roughly one third of local or regional development bodies took advantage of referrals from other agencies to promote their activities. The referral agencies included a group of other government agencies, usually state or local government bodies but also Commonwealth Government organisations.

Most of the marketing strategies discussed to date reflect the special nature of local economic development: they are strategies that make use of working relationships within the public sector, the need to target specific industries or the nature of local economic development. There are, however, a range of marketing strategies that are used in all areas of business and their application to local or regional economic development is discussed here. Just over half of all respondents advertise their services and role through the distribution of brochures. In our experience, brochures are usually posted out in response to inquiries or made available at council offices and other places which are potential points of contact for potential investors or persons seeking assistance with business planning.

Table 3. Frequency of Use of Marketing Strategies, Australia

Fifty three local development bodies (28.3 per cent) used a field worker to promote their activities and functions and 33 (17.6 per cent) used an officer assigned to work with a particular industry. In our earlier research we found that many agencies were able to gain resources to engage field workers through Commonwealth or State Government programs. In non-metropolitan areas the BARA program funds a number of staff who often perform a dual role of providing advice and promoting the activities of their local development body. DEETYA funding has been important in a number of areas with staff employed to work with depressed industries or to liaise with potential employers.

The final question in this segment of the questionnaire asked the agencies to indicate if they used other approaches to promoting their activities. Thirty one agencies used one other technique and five used two additional techniques.

4.2 Effectiveness

"In your experience, which is the most effective method of marketing the activities and services of your agency?"

Table Five shows the attitudes of local development practitioners on which strategies are most effective for marketing their services. In examining this table it is important to remember that the raw numbers are a relatively crude measure of effectiveness as some strategies are used relatively infrequently (because of cost or other factors) but are considered very effective by those who use them. For example, only 30 agencies used television advertising but this medium was nominated as a most effective strategy on nine occasions, compared with advertising in business magazines which received only one mention from the 45 agencies using this technique. To overcome this problem Table Six presents a standardised score or indicator of effectiveness based on the number of times each strategy was indicated by a respondent and divided by the number of agencies using this strategy.

Some clear conclusions emerge from the data presented in Table Five and Table Six. There is no doubt that word-of-mouth advertising is considered the most effective form of agency promotion . This reflects practices in many agencies we have visited where the development of networks between the staff of the agency and potential clients is considered a paramount activity. Importantly, word-of-mouth advertising is dependent upon a record of success and this highlights the difficulties faced by new agencies or organisations. The importance given to business or industry networks is also reflected in Table Five with this strategy nominated in the first instance on 19 occasions and on 27 instances in total.

Table 5. Most Effective Marketing Strategy - First, Second and Third Strategies Mentioned, Australia

Interestingly, some approaches to agency promotion appear to be remarkably unsuccessful. The production of videos, advertising in business magazines, referrals from the CES, local government and community associations appear to be relatively poor channels for marketing the services of local development agencies. No agency saw private providers as an important avenue for promoting their activities. It should be noted that many of the strategies that fared poorly in the standardised score in Table Six (such as the distribution of brochures and referrals through community associations) would have little or no cost for the agency. In most instances they would be one of a number of marketing techniques used by the agency, and may be associated with the organisations direct or indirect association with local government, a community group or state government.

Although the number of cases is small, brokers appear to be relatively well regarded by those who use them. The data in Tables Five and Six suggest that newsletters are one of the most effective marketing outputs produced by agencies, being roughly twice as effective as brochures. Somewhat surprisingly, field workers and officers working with a particularly industry did not rate particularly highly against this indicator but this score may be clouded by the related question on word-of-mouth advertising. Those who use "other" strategies clearly do so because they consider them to be effective, a fact reflected in the relatively high score associated with this group of strategies.

Table 6. Standardised Score of Marketing Strategy Effectiveness, Australia

4.3 Marketing the Region

"Does the agency market its region as a location for business?"

"Please list below the methods used by the agency to market the region."

Up to three methods of marketing were coded and analysed for each questionnaire and the results are set out in Table 7.

Table 7. Methods Used by Development Agencies to Market their Region, Australia

Brochures and newsletters are reasonably prominent among the marketing techniques employed to promote agencies, but most forms of the media are seen to be relatively ineffective in promoting the region. Some 14 agencies gave local newspapers as an effective strategy, but television was mentioned only once and radio twice.

4.4 Conclusion

• a large majority of agencies advertise their services. They do so even though wordof-mouth advertising is considered the most effective and powerful mechanism for attracting interest within the region. Newly-established agencies are confronted by the need to set down a record of achievement as quickly as possible in order to take advantage of this most powerful form of promotion. This is one reason many newly-established agencies find it necessary to use other marketing strategies as this most effective technique cannot be "turned on" overnight;
• most agencies use a number of promotional strategies, many of which are tied to kindred or parent organisations - such as local government, state government or community associations;
• the distribution of newsletters, and advertising in local radio and newspapers are seen to be highly effective strategies within the region, the production of videos, advertising in business magazines and private providers of business advice are not;
• only a small number of agencies use brokers to market their services, but those that do regard them as a very effective strategy.

• less than half of all agencies market their region, and we would argue that this is indicative both of the inward focus of many agencies and the realisation by many agencies that their greatest chance to encourage business growth is through the development of existing enterprises and resources;
• the effective marketing strategies used to promote the region are very different from those used to advance the agency, they include the use of brokers, the distribution of videos and advertising in business and industry magazines. Strategies based on personal contact appear to be less effective in this context than in promoting the agency within the region. Networking through business and industry links is the notable exception here, as it is seen to be effective in both areas.

5. Marketing Strategies in South Australia

Figure 2. Regional Development Bodies, Year of Establishment, South Australia

The year of establishment for the development agencies in South Australia who responded to this survey is shown in Figure 2.

5.1 The Strategies Used

Table 8. sets our the marketing strategies used by local economic development bodies in South Australia. In reading this table it is important to bear in mind the relatively low number of responses which can result in some volatility in both the number, and most especially, the percentage of use of each category. Overall South Australian practices bear a remarkable similarity to those used nationally. There are relatively few strategies where usage in South Australia differs markedly from practice across the nation. Some points to stand out include:

• a higher proportion of South Australian agencies rely on word-of-mouth only;
• there is proportionately less use in this state of business and industry networks;
• South Australian agencies are more likely to use a private provider to market their activities;
• agencies in this state are twice as likely as nationally to produce and distribute videos;
• there is a proportionately greater use of the Internet in this State than nationally. This probably reflects the leadership of the Local Government Association of South Australia in this area;
• South Australian agencies make greater use of field workers and officers assigned to specific industries. Once again this is a function of how local economic development is organised in this State (see Beer and Maude 1996) with the Kickstart program and other State Government programs associated with regional development boards.

Table 8. Frequency of Use of Marketing Strategies, South Australia

5.2 Effectiveness

Table 9. Methods Used by Development Agencies to Market their Region, South Australia

5.3 Marketing the Region

Table 10. Methods Used by Development Agencies to Market their Region, South Australia

5.4 Conclusion

6. Lessons

6.1 Scenario One: Newly-Established Agency or Agency Reforming its Approach to Promotion

• develop a marketing or promotional plan. Most development agencies use ad hoc or adventitious strategies to market themselves and their region. Greater consideration of marketing opportunities will have benefits for the organisation and the region;
• the most important strategies for promoting the agency appear to be word-of-mouth knowledge, business networks, employees working in the field, and advertising in the local media. Each of these avenues should be considered. Success in the agencies core business of economic development and the careful management of client relationships can encourage word-of-mouth advertising. Similarly business links can be developed by establishing a presence in the field and by seeking out business people and organisations. Best use can be made of newspapers, radio and television by managing media opportunities or using the advertising budget most effectively. The survey data suggests that on a number of grounds newspapers appear to be the most effective way of reaching both the clients of the agency and potential investors in the region;
• market your region. It is one way you can give your region a comparative advantage as less than half of development agencies across Australia take up this challenge. Only one third of agencies in South Australia do so;
• investigate the use of brokers to promote both the agency and your region. Only six respondents indicated that they used a broker, but those that did appeared to hold them in high regard;
• to varying degrees, brochures, videos and newsletters all appear to be valuable ways both of making contact with potential clients within the region and of marketing the region. Newsletters appear to be valuable in both areas, while videos and to a lesser extent brochures are highly regarded in marketing the region.
• get on the Internet. At this stage it does not appear to be highly effective but the expected growth in the use of this form of communication is likely to add considerably to its efficacy.
• seek out the patronage of television and radio stations. Many regional television stations are willing to meet their community obligations by assisting local economic development bodies. Regional stations recognise that in the medium to long-term economic growth in their broadcast area will result in more listeners or views for their programs.

Scenario Two: How State Governments Can Facilitate Better Promotional Activities by Local Development Agencies

• encouraging local development bodies of all types to develop marketing strategies. There are a number of ways this goal could be pursued: agencies could be formally required to develop a marketing strategy in order to receive further funding. However, such approaches are unattractive as they are unlikely to result in fundamental change (instead producing yet another document that is not used). Alternatives could include providing funding for advertising strategies or conducting a competition or series of awards for the best marketing strategy amongst development bodies. Wherever possible it is important to include economic development units established in, and supported by, local governments, as well as those funded by the State or Federal Government. It is worth remembering that there are more people working on local or regional economic development for councils across Australia than for State or Federal Government agencies and that this tier of government is the single biggest investor in local development;
• assist local development bodies to get on the Internet through funding, technical advice or by demonstrating the effectiveness of this medium. The Internet is a relatively inexpensive marketing strategy once a system has been established but it requires some technical knowledge and an awareness of its potential. The Australian Local Government Association has already established RegionLink;
• providing local development agencies with information on alternative marketing and promotional activities (such as the use of brokers or private providers);
• encouraging regional development bodies to market their region. It may be that many agencies (such as BECs or those based in local governments or even a small region within a state-sponsored network) are too small to seek out international or national markets and investors. However, a number of agencies could act together to promote their location. State governments or local government associations should facilitate this process. It should be noted that placing regions on the world stage was one of the goals of the Federal Governmentís Regional Development Program (Keating 1994; DHRD 1994). The demise of that program will create a gap that needs to be filled.

References

Department of Housing and Regional Development (1994) Guidelines for the Regional Development Program, DHRD, Canberra.

Keating, P. (1994) Working Nation, The White Paper on Employment Growth, AGPS, Canberra.

McKinsey and Company (1994) Lead Local Compete Global, Unlocking the Growth Potential of Australia's Regions, McKinsey and Company, Sydney.

Taskforce on Regional Development (1993) Developing Australia: A Regional Perspective (Kelty Report), Vols 1-3, AGPS, Canberra.