The Potential of Cross-Marketing for the Destination Management Organizations of New York City and New York State

Table of contents

List of figures

List of abbreviations

1 New York – more than a city that never sleeps
1.1 Problem situation
1.2 Purpose and conception of the thesis

2 Basics and differentiation
2.1 City-Marketing
2.2 Destination Management
2.3 Cross-Marketing

3 Typology of tourism types
3.1 City tourism
3.1.1 Definition
3.1.2 Customer type
3.1.3 Trends
3.2 Nature tourism
3.2.1 Definition
3.2.2 Customer type
3.2.3 Trends

4 Destination New York City
4.1 Visitor statistics development and tourist characteristics
4.2 Image
4.3 New York City Marketing

5 Destination New York State
5.1 Visitor statistics development and tourist characteristics
5.2 Image
5.3 New York State Marketing

6 Empirical ascertainment of the customer perception
6.1 Character and objective of the customer survey
6.2 Results of the census
6.3 Analysis of results

7 Cross-Marketing both destinations
7.1 Interfaces of New York City and State Marketing
7.2 Possible synergy effects 34
7.2.1 Cross-Advertising and Cross-Referencing as part of the communication policy
7.2.2 Cross-Selling as part of the distribution policy

8 Assessment of the formulated hypothesis and recommendation of action

9 Conclusion and future prospect

Bibliography

Appendix

Appendix 1: Advertisement prints of New York City

Appendix 2: Advert to promote NYC as a LGBT destination

Appendix 3: Advertisement print of New York State

Appendix 4: Survey of the empirical ascertainment Affidavit

List of figures

Figure 1: New York State Map

Figure 2: Overseas visitors to NYC (in millions)

Figure 3: New New York City logo

Figure 4: Overseas Visitors to NYS (in thousand)

Figure 5: Modified ‘I Love NY’ logo

Figure 6: Possible reasons for shopping trip to NYC

Figure 7: Possible distance of travel outside of NYC

Figure 8: Estimated distance of the Adirondacks from NYC

List of abbreviations

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1 New York – more than a city that never sleeps

1.1 Problem situation

In spite of the financial crisis, the United States of America is one of the most popular countries to visit for Germans, in the past and present. Several reasons account for this positive effect. First of all, the consistently weak U.S. Dollar compared to the strong Euro is a tourist magnet. The new political image in the person of President Obama should not be underestimated, either. Another reason is the dropping of airline prices to popular destinations within the United States (Fischer, 2009).

Clearly in the lead is the destination New York City (NYC), as number one visited destination in the country. This is especially true with the explosion of the phenomenon known as ‘shopping tourism’, which is captured in the growing amount of visitors’ spending. After having surpassed Orlando and Las Vegas in 2007, in terms of visitors’ spending, New York City set a new record in 2008 by recording $30 billion dollars spent only by visitors (Heywood & Spell, 2008a). The importance of this industry is emphasized by Michael R. Bloomberg, Mayor of New York City: “Despite the economic challenges all cities are facing, tourism remains a bright spot for New York City, with 47 million visitors spending $30 billion here in 2008, the highest totals we’ve ever achieved. (...) The number of overseas travelers coming to New York City continues to rise, and now roughly a third of all who come to the United States (U.S.) come to New York.” (Heywood & Spell, 2008a). Not all destinations can register overseas visitor numbers in the dimensions that New York City can. Reflecting the media image and the author’s own perception, in Germany, New York is perceived as ‘the city that never sleeps’. New York State (NYS), however, might not notice much of the tourist boom taking place in its largest city. It might be difficult to say at this point that New York State is not recognized as a travel destination in Germany, but it is a fact that the State’s overseas visitor numbers are far from the statistics for New York City. Thus the question arises, whether the State can jump onto the train the City is driving. To exemplify the geographical situation of both destinations, the map of Figure 1 gives a vivid impression of the location of New York City within the State and its dimensions.¹

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1.2 Purpose and conception of the thesis

This thesis is concerned with the tourism destinations of New York City and New York State for the German market. The objective is to expose possible potential to achieve positive synergy effects for both destinations by the means of Cross-Marketing. Whether the different tourist types can be interested in visiting both destinations will be analyzed.

With special attention to Germany as incoming market the following hypothesis serves as the basis for the evaluation and will be scrutinized: ‘Germans are mostly unaware of New York State and the tourist resources it offers. The metropolis, New York City, its sights and shopping come to ones mind when asked about New York.’

To achieve these objectives, some introductory remarks on the terminology used will be given and distinguished in what depths they will be applied in the thesis. In the subsequent theoretical part the two different tourism and travel types that form the basis will be illustrated and their future development will be assessed.

In the following, the two central destinations of the analysis will be introduced. The history in visitor numbers will be depicted and the tourists that visit both destinations analyzed. In the next step, the image that the destinations want to be conveyed will be explained and the image that is perceived will be named. The description of the different marketing campaigns that are implemented at the moment by both Destination Management Organizations will serve as a cornerstone for the later analysis.

Section 6 will transport the thesis to the practical part. In order to verify the hypothesis and to develop a premise for the following argument, the author conducted an empirical ascertainment in different regions of Germany during the first quarter of 2009. First, the survey will be presented. Second, the results will be evaluated. Finally, the received responses will be interpreted.

By looking at the descriptions of the marketing campaigns of the destinations and the capture of the German perception through the survey, the already existing interfaces of the City and State marketing will be accentuated to then focus on further possible synergies that can be achieved and how it is possible for New York State to enter the German market through potential in Cross-Marketing with New York City. This will be discussed by taking a look at the communication and distribution policies in Germany and on site.

A recommendation of action and ideas of designs for possible products will be given to benefit from identified potential. The formulated hypothesis will be assessed to show how to achieve the formulated objectives.

The thesis will close with a conclusion and a prospect on the future.

2 Basics and differentiation

2.1 City-Marketing

City-Marketing combines many different marketing activities for the city as a general destination. Among these marketing activities one can find municipal-, tourism-, cultural-, congress- and event marketing as well as the promotion of the location. All these different types also have different target groups, products and sponsorships; however, they all try to sell their product or part of the city.

City-Marketing as a holistic and comprehensive understanding:

- views the city as a complex phenomenon and system, which consists of people, institutions, cultures and relationships and is determined by them,
- is a dynamic process of urban development, which leans on the Marketing-Management method,
- regards the city as a product within the interplay of market demand and supply, - considers and defines the city in its spacious components and distinguishes the city as a whole downwards as downtown, city and districts and upwards as region,
- sees the city as an open system, which is determined and developed through the interaction with other systems such as economic-, value-, cultural-, law- and ecosystems (Freyer, 2005).

As is already known, different players and institutions are involved in marketing a city, but the purpose behind the ‘selling’ is not always the same. The purpose can be, to promote the city as a domicile and home for inhabitants, citizens and residents in terms of leisure, or as a location for organizations and investments as well as a workplace for employees or as an attraction and temporary residence for tourists (Freyer, 2005).

This analysis focuses on the tourist aspect. The fact that New York City is not only a tourist attraction, but also a home for millions of people is of great importance.

2.2 Destination Management

In order to describe Destination Management, the term ‘destination’ must be defined. According to literature, a destination can be seen as a tourist place as well as a tourist product. Referring to Keller (2006 cited in Buhalis & Costa, 2006, p.229), both attributes cannot be separated since “tourists perceive a destination or the service offered in the context of a destination, as a whole. The package of services is often impossible to separate from the geographical place. Destination and product are thus identical.”

Throughout the literature for business studies, ‘management’ is widely known “as the composition and control of purpose oriented social systems”² (Ulrich, 1990 cited in Becker et al., 2007, p.464). These two terms, destination and management, are nowadays often linked together. Destination Management includes governmental as well as functional competences, best executed by the public sector. Its main function is to combine and integrate all the different resources and stakeholders involved, to guarantee sustainable growth, while preserving the local identity and quality of life (Manente & Minghetti, 2006).

This thesis will take into account the Destination Management of New York City and New York State.

2.3 Cross-Marketing

Cross-Marketing appears in many different forms pursuing different objectives. This is one reason why no adequate definition can be found in literature. Basically, it is the cooperation of two or more organizations or partners in the field of marketing. A sound definition is given by the managing director of the Ufer & Compagnie marketing agency in Frankfurt, Germany, Hermann Ufer (2003 cited in Wieczorek & Lachmann, 2005, p. 21), who states that “Cross Marketing is a greater expression for the utilization of all factors of the Marketing-Mix and respectively all instruments in cooperation with one or multiple cross partners.”³

The basic strategy behind Cross-Marketing is simply that both partners benefit reciprocally from the strength of the other to achieve objectives faster and more efficiently. It is common to use the formula ‘one plus one equals three’, when referring to Cross-Marketing.

It has become more and more popular in the past decade, as the organic growth for organizations is limited, while customer needs are addressed by many sub-markets and confronted with hundreds of advertising messages in all existing media each day. Brands become compatible and organizations have to focus on creating an intangible asset that cannot easily be copied. This situation calls for innovative marketing ideas and Cross-Marketing helps companies to reach their goals and objectives faster, more effectively and efficiently. It is important to mention that Cross-Marketing functions best, when the brand equity of both partners has the same strength and one partner does not pull the other upwards or downwards.

Cross-Marketing in tourism started out as alliances between regional and state and national marketing associations. Today it is a common tool between the tourism and consumer goods industry, as the influence of the tourism industry on other industries is steadily growing. As Ufer remarked that it can be applied to all instruments of the Marketing-Mix, it will be limited to the communication and distribution policies of the two destinations of New York City and State, thus the consumer goods industry will not be reflected in this thesis.

Popular instruments for Cross-Marketing are Cross-Promotions, Co-Branding, Cross-Selling, Cross-Advertising and Co-Sponsoring. Cross-Promotion is one of the most performed practices and it can involve any public-oriented activities that involve two different brands. It encompasses diverse arrangements, among others raffles, sampling activities, events, road shows and joint fair presentations (Wieczorek & Lachmann, 2005).

3 Typology of tourism types

3.1 City tourism

3.1.1 Definition

City tourism is a highly complex tourism segment, which is one reason why there is a pool of definitions, but no widely accepted general one. The main differentiation lies in the motives to visit the city as well as in the city itself. Each city has different characteristics, attractions and inhabitants, which impacts the incoming tourism.

Thus, no definition would “master the many different city types” as well as “allow a clear separation of space, time and motive in relation to the city’s leisure travel and tourism”⁴ (Meier, 1994 cited in Landgrebe & Schnell, 2005, p.10).

However, the basis for a definition is given by Eberhard (1974 cited in Becker, 2007, p.194), who says that “one can comprehend (...) the relationship and appearance, which results from the temporary residing of aliens in cities.”⁵

Attractions of the destination are the biggest tourist magnet. They “stimulate interest in travel to a destination and they provide visitor satisfaction” (Gunn, 1994 cited in Buhalis & Costa, 2006, p.200). In terms of city tourism, these attractions can mostly be identified within the cultural-permanent dimension, although temporary attractions can be created to endorse a special season (Benckendorff, 2006).

New York City offers an especially wide lineup with motives for visitation. There is extensive sight seeing, shopping, dining out, entertainment, cultural and historical possibilities to experience, but also business meetings, conventions and congresses, as well as sport events, such as the US Open and the New York City Marathon. The affect of this high concentration of possible activities will be discussed in the next sub-section. Since the thesis is concerned with the marketing possibilities for New York City as a tourist destination especially within Germany, the motive of leisure travel will be paid most attention to, when considering city tourism in New York City.

3.1.2 Customer type

To differentiate urban visitors, the motives of city travel have to be distinguished. Such motives can be business, conferences and exhibitions, educational purposes, visitation of friends and relatives, cultural and heritage sights, religious and other events, shopping and day trips (Thompson, 2007). Sometimes though, motives can be blurry as there might be several reasons to visit the city.

The typical city tourist uses the weekend to discover new cities, taking part in activities from sight-seeing to shopping and dining out. It is hard to define an age group for the typical customer for city tourism, since diverse activities can be followed, while still experiencing the full satisfaction from the vacation.

Sight-seeing means indulging in history and culture. Shopping is more than just the act of purchasing goods, it is a complex social and cultural interaction and it functions as a symbolic consumption. For some people it is more about spending time rather than spending money, however, a piece of cloth or anything other than the typical souvenir, keeps the visit and the experience in the city alive, after having returned to the hometown (Reisinger, 2006).

As above mentioned, New York City holds attractions for many different interests, thus this city welcomes a particularly diverse type of tourists.

This thesis will disregard business travel and will only concentrate on the leisure segment. More precisely, tourists, whose main motive is shopping, will be considered the target group for the further discussion.

3.1.3 Trends

Blank (1994, p.181) states that “every city has a tourism industry” and Law (2002, p.48) notes that “every city faces increased competition from other cities and has been forced to become more entrepreneurial”. This new development and the perceived benefits of welcoming more tourists have created the phenomenon of ‘selling the city’ (Ashworth & Voogd, 1990). Furthermore, it is commonly known that in the past years the consumer behavior in terms of traveling has changed from one long vacation per year to several short (weekend) trips, preferably to cities. This has also been encouraged through the rise of the low cost carriers. Their breakthrough in the market has increased the popularity of cities as destinations, as they can be reached for less money in a much shorter period of time. This nurtures the shopping tourism. Given the possibility to easily discover new shops and boutiques, allegedly from foreign designers, sparks the interest of traveling to shop.

Another factor that will continue to attract tourists to cities is the explosion of events accompanying every possible occasion. Together with the tourism industry, events form a booming sector, since the after post-war generations realize that life offers more than work and thus a new longing for having unique experiences in life is developed.

Although not part of this thesis, the Meetings, Incentives, Conferences (or Conventions) and Exhibitions (MICE) industry is a rapidly growing segment in the business travel industry that is and will be responsible for quite a large amount of travelers coming to cities. The United States hold the most meetings per year, however, Europe as a region and European cities all together are in the lead concerning the quantity of held meetings and venues (Ladkin, 2006).

3.2 Nature tourism

3.2.1 Definition

Nature tourism can function as an umbrella term for Eco-tourism, of which an important element is the caring for the environment and the learning effect; for Wildlife tourism and Soft and Hard Adventure tourism, depending on the physical challenge involved. The aspect of nature is vital for the anticipated experience. Thus “nature in tourism embraces what is commonly termed ‘nature tourism’ and its various subsets, plus the wider visitor benefits provided by nature.” (Tourism New South Wales, 2006, p.4)

Nature tourism is also part of NEAT tourism, representing Nature, Eco and Adventure Tourism. These different forms can all be realized traveling through New York State, as will be discussed further on in this paper.

“In its broadest sense, nature in tourism involves experiencing natural places, typically through outdoor activities that are sustainable in terms of their impact on the environment.” (Tourism New South Wales, 2006, p.1) The attractions of nature tourism can be identified clearly in the natural dimension. Considering permanent or temporary access to the attractions, both dimensions are equally prevalent. On the one hand, the State Parks, landscape, flora and fauna can be visited permanently, on the other hand, temporary phenomena, like wildlife migration, coral spawning, bird watching and seasonal flora and fauna further increase the value of the attraction (Benckendorff, 2006). For New York State, two examples would be the Indian Summer and the wine harvest season.

3.2.2 Customer type

The analysis of this tourist type is based on the research of INVENT (2005).

The nature and outdoor tourist shows cultural interest and social commitment. He has a strong sense of responsibility for himself, his family and his environment. He knows the importance of a healthy environment that will allow him to pursue his own interests. Being strongly committed to the environment does not mean that he avoids modern technology and communication. On the contrary, it forms an important part of his every day life. He has a strong orientation toward (adventure) experiences and his family. This is one reason why he enjoys having authentic experiences in untouched nature. Because he does not mind spending more money on such experiences, he can be characterized as a conscious traveler.

One third of the researched group goes on a longer vacation more than once a year and in spite of their high environmental commitment, their favorite means of transportation are airplanes and cars, even for long rides. During their vacation, they enjoy being active as well as relaxing in a highly qualitative environment. Furthermore, they show their appreciation for wellness and a healthy regional cuisine.

3.2.3 Trends

Nature tourism becomes more popular, as it becomes obvious that “mainstream mass tourism, largely being either urbanized summer sun-sea-sand tourism or technically-supported concentrated winter ski tourism, gradually become ethically, politically and ideologically intolerable. Concentrated, large-scale industrial travel is labeled ‘mass’ or ‘hard’ tourism, and is blamed for all kinds of damage to the natural environment, and for socio-cultural ignorance and destruction” (Mihalič, 2006).

Nature tourism, especially eco-tourism, has received global awareness, because of the damage and destruction of the world’s natural habitat. There is greater discussion that global warming is beginning to have negative consequences on the world’s environment and population, along with natural catastrophes and the shrinking oil and water supply. The general motives, underlined by research of why nature tourism is one of the fastest growing segments in tourism worldwide are the widespread changing environmental attitude and the development of environmental education and mass media. (Lindberg et al., 1998)

Pearce, et al. (1998) present ten trends, which describe important elements of tourist motives for traveling. Four of these focus on nature based tourism, such as:

- to experience the environment
- to rest and relax in pleasant settings
- to pursue special interests and skills, such as scuba-diving, fishing, hiking etc.
- to be healthy and fit.

Theorists fear, however, that the nature and eco tourism will take a development akin to one of the traditional mass tourism and will eventually do more harm to the natural habitat than ever before (Mihalič, 2006).

Thus, it will be interesting to observe, how the destinations will manage the increasing popularity of nature tourism, while preserving the natural habitat.

4 Destination New York City

4.1 Visitor statistics development and tourist characteristics

New York City is one of the most popular destinations in the world and the number one visited city of the United States of America. For 2008, a new visitor record was announced, having welcomed 47 million visitors in total (Heywood & Spell, 2008a).

However, the tourism of New York City had to face a great decline, especially in terms of international visitors, after the terrorist attacks of September 11, 2001. The international visitor numbers dropped from 6.78 million visitors in 2000 to 4.81 million in 2003. Since then the statistics have shown a gradual increase of a good one million visitors from 2004 to 2006. In the year of 2007 however, previous records were broken as international visitation grew to 8.76 million, a 1.5 million or 21% increase in just one year (NYC & Company, 2008a). This development can also be seen in Figure 2.

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Figure 2: International visitors to NYC (in millions)

Source: NYC & Company, 2008a⁶

This gives the City a 32% market share of overseas visitors to the US, excluding Canada and Mexico from the international visitors, an increase of three percentage points from 2006 and this is nearly three times as high as Los Angeles, the number two destination in the country (U.S. Department of Commerce, 2008a). This progression continues as the City welcomed as many as 9.8 million international visitors in 2008 (Heywood & Spell, 2008a).

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¹ The National Atlas of the United States of America, 2004. New York. 0:80 miles. Reston, Virginia: The National Atlas of the United States of America. Available at: http://nationalatlas.gov/printable/images/pdf/reference/pagegen_ny.pdf [Accessed 25 May 2009].

² Translated from the German original by the author: Management als „Gestaltung und Lenkung zweckorientierter sozialer Systeme.“

³ Translated from the German original by the author: „Cross Marketing ist ein übergeordneter Begriff für die Nutzung aller Marketing-Mix Faktoren bzw. Instrumente in Kooperation mit einem oder mehreren Cross Partnern.“

⁴ Translated from the German original by the author: Die Komplexität des Segments Städtetourismus spiegelt sich auch in den zahlreichen Definitionen wider, von denen keine allgemein gültig und anerkannt ist und "den verschiedenen Stadttypen gerecht wird" sowie "eine klare Abgrenzung des Städtetourismus - in räumlicher, zeitlicher und motivationaler Hinsicht - im Rahmen der des städtischen Freizeit- und Fremdenverkehrs erlaubt."

⁵ Translated from the German original by the author: „Wir können darunter (...) die Beziehungen und Erscheinungen verstehen, die sich aus dem vorübergehenden Aufenthalt Ortsfremder in Städten ergeben."

⁶ NYC & Company, 2008a. History of International travel: New York City 2000-2007. [pdf] New York: NYC & Company. Available at: http://nycgo.com/cms/uploadedFiles/thricenycvisitcom/assets/pdf/History%20of%20International%20Tra vel_2007.pdf [Accessed 27 April 2009].