HERITAGE &

MARKETPLACE
A Delicate Equilibrium
Agenda

Product orientation versus Market orientation

The concept of quality
Customer value and Value Proposition
Understanding different types of audiences and visitors
Targeting and Segmenting
Organization Culture

There are two main

The organizational culture is a set of values management philosophies:
and beliefs that translates into management
philosophies, which in turn give individuals a
sense of membership in the organization and PRODUCT
help guide their behaviors. ORIENTATION MARKET
Artistic ORIENTATION
Each company has its own specific and Orientation
peculiar organizational culture.
Product Orientation

Product orientation is a management philosophy that

states that the primary goal of the organization is to
make products and services with excellent intrinsic
quality which can be measured against standards set
by a community of experts.

Companies that are product-oriented put a huge

emphasis on innovation.

Their aim is to keep innovating in order to keep

producing the most excellent products over time.
Market Orientation

Market orientation is the management philosophy

based on the belief that the main goal of the
organization must be customer satisfaction with
respect to the organization’s performance targets.

Market orientation is anchored by the assumption that

whatever performance targets there be, if an
organization obtains resources from exchanges in a
market context, it is fundamental for it to establish and
reinforce relationships with the main actors in the
market: customers.

Satisfying their needs is the proper way to reinforce

these relations.
The Dilemma of Cultural Institutions
Product Orientation
(Artistic Orientation)
“We do not sell. We protect and we
preserve, and this is not a market
function, we do not sell anything.
There is no market here. We offer a
service. We protect and restore works
so that they can then be enjoyed.”
Assistant Director, Museum
VS Market Orientation
“Paying attention to the needs
of the public leads to a better offer
of services, to greater speed
of renewal, to greater variety
in the offer, and to greater
cultural production.”
Curator, Museum
Short Coming
Product Orientation
(Artistic Orientation)
The value offered to the customers is essentially
equivalent to the intrinsic quality of the product.
RISKS
1. It is not necessarily true that customers will
recognize the intrinsic quality, so they will buy it.
2. It is not necessarily true that consumers buy
products for their intrinsic quality, rather their
motivation to buy may be more influenced by
symbolic values.
Market Orientation
The main focus is to satisfy the needs of the
market segments.
RISKS
1. Consumers are inertial: once they found a
product they like, they tend to repeat the
same purchase.
2. A company which is too aligned with the
market runs the risk of losing its ability to
innovate.
A Good Balance…

A good balance between artistic and marketing orientation

makes the art organization able to:

• Create and promote cultural projects which are able to

educate, arouse emotions and excite its target;
• Make the projects and/or products accessible;
• Generate market intelligence pertaining to present and
future customers, competitors, sponsors, and every
component of the market environment systematically;
• Disseminate intelligence across departments;
• Monitor and control market performance.
The Concept of Quality

Quality is an important concept, but at the same time ambiguous.

We can differentiate among:

INSTRINSIC PERCEIVED
QUALITY QUALITY
Quality

Intrinsic Quality VS Perceived Quality

It refers to the intrinsic quality of It refers to the quality

a product. A cultural institution or perceived by consumers
a piece of art has an intrinsic when they buy or consume a
value that is shared by the product (enter a museum,
general public. listen to a concert, etc.).

Intrinsic value is set Perceived quality is

by the public. subjective.
Quality

Visitors are not always able to recognize the quality of an

art product therefore it is important that cultural institutions:

• Understand the drivers of the perceived quality;

• Align the intrinsic quality with the perceived quality.

TEDxPolverigi - Mary Ann DeVlieg - Art for Arts Sake?

Customer Value

The customer value is composed of a set of

benefits that the institution’s offering can provide
and the set of sacrifices that the consumer/visitor
has to make in order to enjoy the benefits
provided by the organization’s offering.
Benefits

Functional benefits (eating, sleeping)

Social benefits (referring to the need of communicating

to peers; i.e. the belonging–or not–to a specific group)

Psychological benefits (happiness, laxity)

Experiential benefits (mainly linked to the five senses)

Symbolical benefits (represent something for Hedonic

a specific target of visitors) Consumption
Sacrifices

Opportunity
costs
Sacrifices deal with the effort (cost) that
visitors/consumers have to make in order
Money
to gain a benefit.
Emotions
Knowledge
Sacrifices are linked to a consumer’s
decision making process and change Time Culture
along the customer experience.
Risks
Value Proposition

It is the specific combination of benefits The value proposition of each cultural

and sacrifices (costs) that the cultural institution should be unique therefore
institution wants to offer its visitors. different from its competitors’ value
proposition. This will ensure a
competitive advantage.

The value proposition is the source of competition among companies and not their
products.
Value Proposition

Consumers deal with two different concept of values:

EXPECTED VALUE:
The value they expect from the
consumption experience. EXPECTED VALUE -
PERCEIVED VALUE =
PERCEIVED VALUE: (DIS)SATISFACTION
The actual value of the
consumption experience.
Audience Engagement

It's commonplace to talk about the need for

"audience engagement."
However, what does the term actually mean,
and how does an arts/cultural organization
know if it is succeeding?

A reasonable answer is given by the RAND Institute

and the Wallace Foundation:

The-Road-to-Results-Effective-Practices-for-Building-Arts-
Audiences.pdf
Audience Engagement

A new framework for building participation in the arts

suggested a systematic approach based on two
precepts:

• The alignment of audience-building efforts with an

arts organization’s mission, resources and work;
• The removal of relevant barriers between an
organization and its target audience.
Audience Engagement

Nine practices that contribute

to an organization’s success

Source: The Road to Results.

Effective Practices for Building Arts Audiences, Harlow, B.
The Market and the Customers

Mapping the borders of a

market is a critical task
A market consists of:

• A set of actors who interact to exchange

goods, services, reputation, and information;
• The activities that form the basis for this
interaction;
In every market, customers are different
• And additional actors who exert their because they expect different things.
influence. How can companies deal with this issue?

MARKET SEGMENTATION
Market Segmentation

Segmentation is based on the realization that as

different as customers are, they can be grouped
together by similar value expectations.
This equates to subdividing the market into groups
of customers who are homogeneous with respect to
customers who belong to other groups.

Each group is a market segment, and every

segment is defined by a preference for a different
combination of benefits that customers expect to
obtain and sacrifices that they expect to make.
Market Segmentation

Segmentation is a way to "see" a market as

if it were made up of smaller "submarkets."
Various organizations operating on the
same market "see" the market from
diverging point of views, because they
segment it in different ways.

The segmentation process 1 2

consists of three stages: Identifying Building and 3
segmentation Profiling the Targeting
criteria segments
Criteria for Segmenting

There are two main types of segmentation criteria

Segmentation by Segmentation by
Individual Characteristics: Benefits:

The segmentation is based on the With this type of segmentation, the

characteristics that qualify either direct question the organization has
individuals in general or their to ask is, "What are the benefits
relationships with the product and sacrifices that customers
categories that constitutes the market. are looking for?"
Segmentation by Individual Characteristics

Measurable characteristics of target audiences include

Demographics Psychographics
measurable population characteristics consumer’s psychological makeup

Geo-demographics Behavior-graphics
demographic characteristics of audience’s behavior
consumers who reside within
geographic clusters
Segmentation by Individual Characteristics

Segmenting is therefore important to

address different customers in different
ways, based on the different segment they
are part of (i.e. children, adults, educated
customers, novice customers, etc.).

Managers will implement different choices

based on the segmentation with the aim
of conveying a proper customer value
proposition.
From SEGMENTING to TARGETING

Market segmentation is important to identify the

different groups of customers who share a similar set
of needs and wants (market segment).

Targeting is important to identify the best group of

consumers that a cultural institution wants to address
and refer to. Targeting can be done multiple times for
different products and/or projects.
From TARGETING to POSITIONING

Once segmentation and targeting have been

implemented, a cultural institution must POSITION
its product or service.

Positioning is important to convey the message

of the institution's customer value proposition to
the target group.

Positioning includes emphasizing the unique

characteristics of a product or services and its
intrinsic value for the customers.
From TARGETING to POSITIONING

Market Segmentation Market targeting Market Positioning

Identify bases to Develop measures of Develop positioning for

segment the market segment attractiveness each target segment

Develop profiles of Select the target Develop marketing mix

resulting segments Segments for each target segment