Module 5: Image
In the process of investor decision-making, perception is equivalent to reality. Because no investor has access to all the information needed to make a decision, they fill in the gaps by making assumptions, extrapolating based on known information and relying on the advice and opinions of others (including the media, consultants, and competitors). In other words, when an investor chooses one location out of many options, he or she has arrived at the best perceived option. Since investors have incomplete information, they may arrive at incorrect conclusions about a location. A central task of the investment promotion intermediary (IPI) is to facilitate the flow of information to the investor as best it can, considering the limitations of staffing, budget and data resources.
IPIs and governments around the world employ image-building techniques to improve investor perceptions of their locations. For many countries, a gap frequently exists between how investors view the locations, and how the IPIs and the host governments would like the locations to be perceived. This is particularly true for smaller countries that receive little coverage in the international media, or that are undergoing rapid political and/or economic reform. For these countries, image building is a necessary first step that must be completed before investment-generation activities can be fully effective, as discussed below.
| IMAGE BUILDING VS. INVESTMENT GENERATION
Q. How do I know whether to conduct image-building activities or investment-generation activities?
A. Your approach depends on how investors view your location and whether or not the government's investment policies are newly introduced. If the IPI is well established, government policy for attracting FDI is clear, and a favorable image has been formed in the minds of the prospective investors, then the focus should be on investment generation.
Some respected investment promotion agencies, such as the Malaysian Industrial Development Authority (MIDA), Singapore Economic Development Board (EDB), and Locate in Scotland (LIS) skipped the image-building phase and focused on investment generation. These cases, however, are exceptional. Image-building activities are essential if your location is characterized by any of the following:
Government policy to attract FDI is changing.
The economic and investment climate is changing.
Negative perceptions of the location need to be countered.
There is an overall lack of information, either positive or negative, about the location.
An image-building strategy outlines the steps that need to be undertaken by the IPI to bridge the gap between perception and reality and to change the image of the location as a place to invest. It establishes the rationale, approach, and objectives that the IPI will use to deliver a favorable message about the location to a target audience at a chosen time and in a chosen way. Developing an effective communications strategy entails three separate steps:
Step 1. Identify investor perceptions and establish image-building objectives.
Step 2. Develop marketing themes.
Step 3. Select and develop promotional tools and integrate the marketing mix.
As with commercial advertising, the purpose of the marketing strategy is to convince the investor to "buy" the concept of your location as an investment site. Image-building activities alone will not persuade an investor to invest, but they will help to overcome negative perceptions and focus the investor on your location. In this way, image building is an essential beginning of the sequential process of activities used by the IPI to generate and service FDI.