The Role of Location in the Marketing Strategy of Performing Arts Organizations By Christine A. Lai October, 2006 A dissertation submitted to the Faculty of the Graduate School of the State University of New York at Buffalo in partial fulfillment of the requirements for the degree of Doctor of Philosophy Department of Geography UMI Number: 3244223 3244223 2007 Copyright 2007 by Lai, Christine A. UMI Microform Copyright All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. ProQuest Information and Learning Company 300 North Zeeb Road P.O. Box 1346 Ann Arbor, MI 48106-1346 All rights reserved. by ProQuest Information and Learning Company. ii Acknowledgements This dissertation is the result of the contributions of many extremely creative and valued professionals. The number of individuals who have contributed to this dissertation study, both intellectually and emotionally, are numerous, and it would be impossible to thank them all. However, I would like to especially thank Dr. Jessie Poon, who agreed to act as my dissertation advisor, and whose patience, enthusiastic support, and expertise inspired me to persevere. She was integral to the development of this study from its inception, and her efforts constitute the primary reason that I received funding for this research. The exceedingly generous amount of time and work she contributed to guiding me along every step of my degree program is a testament to her superior professionalism. I am forever grateful. My thanks to my committee members, Dr. James McConnell and Dr. Alan MacPherson who contributed insight to my research by offering useful comments at the preliminary stage of my research and for the knowledge they imparted during the coursework stage of my studies. The following professionals provided invaluable guidance. The insight and knowledge of the performance arts industry of Randall Kramer played a key role in the development of my survey instrument, the foundation of my study. Dr. Peter Rogerson’s assistance with statistical testing subject matter is significantly valued. I would also like to thank my friend and colleague Dr. William DiPietro for his support and for serving as my sounding board as I verbally organized ideas. On the personal level, I would like to express my sincere gratitude to my family for their patience and support throughout this entire process. I dedicate this work to them: to my children Daniel, Kimberly, and William, whose drive for academic excellence inspired me to continue with my studies, and my supportive husband Sek Hong for his love and encouragement. iii Table of Contents Page Abstract x 1 Introduction 1 1.1 Introduction and Motivation 1 1.2 Purpose of Dissertation Research 4 1.3 Overview of Dissertation 9 2 Theoretical Background 11 2.1 Traditional Regional Development Theories 11 2.2 More Recent Development Theories 19 2.2.1 Agglomeration economies and clusters 19 2.2.2 Localization and urbanization economies 22 2.2.3 Creative economies and human capital theory 28 2.3 Summary 32 3 Marketing and Nonprofit Performance Arts Organizations: Some Background 34 3.1 Marketing Defined 34 3.2 Marketing Nonprofit Organizations 36 iv 3.3 Background of Nonprofit Performance Arts Organizations 37 3.4 Location Preferences of Nonprofit Organizations 39 3.5 Summary 48 4 Data Collection Technique and Respondents Profile 50 4.1 Research Questions 50 4.2 Data 51 4.3 Variables and Constructs 59 4.4 Summary 65 5 Respondents’ Profile, Analysis, and Discussion 66 5.1 Characteristics of Nonprofit Performing Arts 66 5.2 Locational Factors 79 5.2.1 Summary of Results from Research Question #1 95 5.3 The Marketing Mix 97 5.3.1 Regression Variables 97 5.3.1.1 Dependent Variable: Revenue Concentration Index (REVCON) 97 5.3.1.2 Independent Variables 99 5.3.1.3 Variable Summary 110 5.3.2 Statistical Analysis 110 5.3.3 Summary of Regression Analysis 115 v 5.4 The Arts and Regional Development 116 5.4.1 Summary of Results from Research Question #3 128 6 Conclusion 130 6.1 Summary of Dissertation 131 6.2 Policy Implications 137 6.3 Limitations of Study and Future Directions 139 References 141 Appendix I Survey Instrument 152 vi List of Tables Title Page Table 1.1: Industrial Employment Statistics among cities in Northeastern and Midwestern United States 7 Table 1.2: Occupational Employment Statistics among cities in Northeastern and Midwestern United States 8 Table 4.1: Population Size of Performance Arts Organizations 52 Table 4.2: Survey Response Results 56 Table 4.3: Pearson Chi-square Test for Non-response Bias 57 Table 4.4: Independent Samples Test for Non-response Bias 57 Table 5.1: Response rate distributed over 63 Organizations 67 Table 5.2: Response Rate by SMA Location 68 Table 5.3: Years Organization had been established 69 Table 5.4: Description of Types of Organizations 70 Table 5.5: Organization’s Activities 71 Table 5.6: Distribution of Organization’s Mission 72 Table 5.7: Distribution of Ranked Organizational Activities 74 Table 5.8: Distribution of Annual Attendance 75 Table 5.9: Total Annual Subscribers 76 Table 5.10: Full-Time paid Organization Staff 77 vii Table 5.11: Part-Time paid Organization Staff 77 Table 5.12: Volunteer Staff in Organization 78 Table 5.13: Importance of Metropolitan Area Location Factors 81 Table 5.14: Factor Analysis: Component 1 (Localization Economies) 83 Table 5.15: Factor Analysis: Component 2 (Urbanization Economies) 85 Table 5.16: Factor Analysis: Component 3 (Institutional Support) 86 Table 5.17: Factor Analysis: Component 4 (Local Talent) 88 Table 5.18: Factor Analysis: Component 5 (Market Conditions) 89 Table 5.19: Location of Organization Performance Facility 93 Table 5.20: Types of Facilities 94 Table 5.21: Accessibility to Organization 95 Table 5.22: Cronbach’s Alpha for Locational Factor Analysis Components 101 Table 5.23: Location Variables and Revenue Concentration Index 102 Table 5.24: Organization Single Performance Ticket Price 103 Table 5.25: Organization Season Performance Ticket Price 104 Table 5.26: Organization Purchasing Options Offered 104 Table 5.27: Factor Analysis on Product 106 Table 5.28: Product Variables and Revenue Concentration Index 107 Table 5.29: Most Effective Adverting Media for Organizations 107 viii Table 5.30: Source of Reputation 109 Table 5.31: Advertising & Promotion and Revenue Concentration Index 110 Table 5.32: Summary of Variables 111 Table 5.33: Regression Results 113 Table 5.34: Regression Results of Reduced Model 115 Table 5.35: Share of Inter-organizational Relationships Among PAOs 117 Table 5.36: Organization Patrons that are Residents of SMA 121 Table 5.37: Organization Performers that are Residents of SMA 122 Table 5.38: Organization Technical Staff that are Residents of SMA 123 Table 5.39: Organization Administrative Staff that are Residents of SMA 124 Table 5.40: Percentage of Organizations Hiring/Receiving Producer Services 125 Table 5.41: Total Local Donated Services versus Total Local Paid Services 127 Table 5.42: Total Local Paid Services versus Non-local Paid Services 127 ix List of Figures Figure 5.1 Location Variable Factor Analysis Scree Plot 83 [...]... and their movement from the manufacturing sector and application to the service sector Chapter 3 provides an overview of the marketing process, and the marketing and locational motivations of non-profit organizations The first and second sections of Chapter three focus on the generalities of marketing and nonprofit marketing The third section of presents the background of nonprofit performance arts organizations. .. donors, and foundations These cut-backs have forced the arts industry to examine its marketing practices in order to survive According to Hardy (1981), UK theaters have been slow to adopt professional marketing practices In the US in 1987, while ticket sales to nonprofit arts organizations exceeded ticket sales to sporting events, the performing arts industry was experiencing declining financial support from... determine the relative importance of location in the marketing strategy More specifically the research seeks to investigate the following themes: (i) the attributes that explain the location of theaters in second tier metropolitan areas, namely, Buffalo, Cincinnati, Cleveland, Columbus, Milwaukee, and Pittsburgh, and (ii) the extent to which location influences the success of the organization Market demand,... sponsorship of the arts, with people in higher income brackets being less likely to be influenced than those in lower income brackets This is not good news for sponsors of arts events as the majority of arts patrons are members of the high income bracket (DiMaggio, Useem and Brown, 1978; Garbarino and Johnson, 1999; Americans for the Arts, 2002) These events have led to 3 increased studies in the marketing of. .. movies and sporting events, and more diverse in demographic characteristics than initially believed Such information should be useful to a variety of stakeholders, including policymakers evaluating the role of government in supporting the arts; funders who need hard data on which to base their financial support of the arts; and managers of arts organization attempting to increase and diversify their audiences... results indicate that agglomeration economies play a role in the location decision of the studied manufacturing sectors while urbanization economies play a significant role in the location decision of the office and computing machinery sector while localization economies play a significant role in the location decision of the leather and footwear and textiles sectors An urban area presents several location. .. second tier cities in the Northeastern and Midwestern United States from 1990 to 2000 Table 1.1 5 reports the change in employment of US manufacturing industry from 1990 to 2000 among cities in the Northeast and Northern Midwest of the United States (US) It reveals negative percentage changes in persons employed in the manufacturing industry in all of the six selected cities, while Cincinnati, Cleveland,... dissertation seeks to determine the relative importance of location in the marketing strategy of non-profit performing arts organizations (PAOs) Recent marketing and arts organizational research has shown that PAOs' marketing practices are shifting from product development to audience development While product development and promotional strategies are important marketing variables, location selection has... industrial location theory Weber (1909) formulated a theory of industrial 11 location in which an industry is located where the transportation costs of raw materials and final product is a minimum The point for locating an industry that minimizes costs of transportation and labor requires analysis of three factors: i) the weight of the raw materials or final products, ii) availability and cost of unskilled... Rickard, 2002; and Garbarino and Johnson, 1999) The Performing Arts Research Coalition conducted research to provide a detailed picture of the value of the performing arts to individuals and their communities, and to obtain a greater understanding of the perceived obstacles to greater attendance (Kopczynski and Hager, 2002) The findings revealed that the arts audience was comparable in size to audiences . The Role of Location in the Marketing Strategy of Performing Arts Organizations By Christine A. Lai October, 2006 A dissertation submitted to the Faculty of the Graduate School of the. motivations of the industry and to determine the relative importance of location in the marketing strategy. More specifically the research seeks to investigate the following themes: (i) the attributes. studies in the marketing of the arts in the areas of audience development (Samuels and Tonsic, 1996; and Rentschler, Radbourne, Carr, and Rickard 2002) including target marketing to increase the