The Flip Side of “Problem” Presents Opportunity!

This post is meant to show how a serious marketing problem often can be turned into a distinctive marketing advantage…provided one is Thinking Big, Out-of-the-Box & Strategically.

Eight years ago I was speaking at an industry conference in Barcelona. At the break following I was approached by two Portuguese partners and invited to visit their proposed project in the eastern Alentejo. What little I knew about Portugal at the time was limited to Lisbon and the Algarve. Their project was inland, on a lake that was in the process of being formed by a new dam. When I arrived, I found the landscape unique and beautiful, the people warm and friendly and the food delicious. However, the location was clearly a challenge; one of the least visited areas of Portugal, even by the Portuguese. The land to be developed was in three large separate parcels, one of which was not on the water. The lake itself was large, 250/km2 of surface, the largest in Western Europe, but at the time it didn’t exist on most maps. And, it certainly didn’t exist in the minds of tourists and potential buyers of resort real estate.

The project was named Parque Algueva after the lake, though each of the 3 parcels retained historic quinta names. The best of the three in terms of waterfront access, natural views and history was a former royal hunting lodge and farm, now much run-down, named Roncâo d’el Rei. It had been acquired on long-term lease, thereby problematic for traditional real estate sales.

The development company was being run by its investors, none of who had any experience in resort development. This had some advantage, at least from my point-of-view, as they were not burdened with institutional prejudices and were open to new ideas. They had recognized an extraordinary opportunity. Most of the land surrounding the lake was zoned agricultural. They had secured 3 sizable parcels zoned for touristic development in the best area at good prices, and were well along in getting the parcels fully entitled. And, while the region was the least developed and visited part of Portugal, it evoked mystical attraction, much like the frontier West does for Americans, as if it was emblematic of the old and dear Portugal. In a phrase, you could say the project had “good DNA”.

Good genes are an excellent start. They provide a fertile environment in which to craft a highly successful story, in this case for resort development, but the crafting requires a sound strategic approach. The developers spared no expense in bringing in experts to contribute ideas and designs.  When completed there would be world-class golf (4 top courses), luxury boutique hotels (7), spas (2 plus cutting-edge “Wellness Center”), water sports (2 marinas), equestrian (stables and riding paths), state-of-the-art active sports complex, kids summer camp (focusing on nature), and fine wine experience (the principal investor owned a very large vineyard and winery nearby). “Wow! Sounds great!” And, I suppose if someone were willing to write out a check for several hundred million Euros to make it happen all at once, and to wait for years before it paid out, that it might. But, none of us live in that world, and really never have.

Establishing a large mixed-use resort under the best of circumstances takes years, successfully executing a complex strategy in stages, each “win” empowering the next stage in the plan. In this case, the problems were aggravated by the very real drawbacks of an unknown location little trafficked by tourists, away from beach and ocean the preferred destinations of both internal and external tourism. Several Portuguese developers I became friendly with told me: “You’re crazy. The Alentejo is the least populated part of Portugal. There has been no development there. The villages are inhabited with old poorly educated people; their children have all left for the big cities. The Brits and Irish (Portugal’s biggest tourist markets are the U.K. and Ireland) all want to go to the Algarve, and the Portuguese prefer to be near the Ocean.”

Over the years I’ve learned that the “flip-side” of every problem usually presents an opportunity. If you read one of my first articles “What Would Alejandro The Nobody Do?” you will recognize why I believe this. Conventional wisdom usually has blind spots. In Alejandro’s case he was expected to fight Darius’ massive army the way Darius anticipated. But Alejandro knew this, looked deeper and saw the weaknesses in Darius’ tactics, which he exploited brilliantly to overcome conventional wisdom of his day. In this case, conventional thinking dictated that this project did not have much chance, because it didn’t fit the demands of the market. But what market? If one looked at the existing market overall (“from 30,000 meters”) it appeared that only a location on the coast of Portugal, preferably close by Faro airport made sense. However, viewed more closely under magnification markets evidence distinct preferences and behavior that offer opportunities. The Algarve’s success has led to it being over-built and over-crowded for some, “old hat” to others, not very new and interesting for the adventurous. Beach resorts tend to look alike whether they are on the Mayan Coast, in Cabo, on the Costa del Sol or the Algarve. While many, even the majority, may prefer this, there is a sizeable number that do not. They are looking for new experiences. And, these people fit the likely profile of “early-adopters” not only open to new ventures but unusually willing to cooperate and provide invaluable “intelligence” and “advocacy” to others. This from Wikipedia: Early-Adopter

Typically this will be a customer who, in addition to using the vendor’s product or technology, will also provide considerable and candid feedback to help the vendor refine its future product releases, as well as the associated means of distribution, service, and support. The relationship is synergistic, with the customer having early (and sometimes unique, or at least uniquely early) access to an advantageous new product or technology, but he also serves as a kind of guinea pig.

Perfect! The very target that would be most receptive to a new resort in an unheard of location was the best to help us create something truly special and serve as our missionaries to bring in others. This is “word-of-mouth” leverage, the most powerful force in marketing.

So, from the strategic point-of-view can this be turned into a competitive edge capable of overcoming the perceived inertia of the marketplace? Perhaps, but we are not done yet. Looking still deeper into the inherent assets of the project, I mentioned earlier the mystical quality the Alentejo. As I made my way around Portugal, being introduced to new people, they would ask what I was doing; and I would mention my involvement with a new resort “…in the Alentejo”. Their eyes would light up and they would usually respond: “Ah, the Alentejo, that’s my very favorite place…” The people that knew the Alentejo thought it special, and therein lay another opportunity.

Also, the Alentejo is Portugal’s largest province; it stretches from the Atlantic coast below Lisboa to the Spanish border, the driest and least developed region where the project was located. Lake Alqueva was designed to bring water and inexpensive electric power to the area and bring it into the 21st century. Figuratively and effectively the lake was shifting the epicenter of the province far to the east to where the new resort was located. Herein lay another “opportunity”.

The name “Parque Alqueva” had evolved from the lake, which was named after the tiny village where the dam was built. It contributed no particular cachet. On the other hand, the principal parcel, Roncâo d’el Rei, was associated with Portugal’s last monarch, Dom Carlos, who was well thought of by most Portuguese, and of course contributed the cachet of royalty. Notwithstanding the “long-term lease” drawback, most resorts prove successful within 20 or so years, well within the term of the lease even in the event that new and better terms could not be negotiated beforehand. (As an aside, when I asked if “Roncâo d’el Rei” meant anything in Portuguese, I was told that it roughly could be translated as: “The king’s biggest snore”. No copywriter could ever be expected to come up with a more original and better line for a resort.

Finally, the investor most associated with the project’s “vision” from the beginning was uncompromising in his attention to a culturally authentic, natural and environmentally sound development, which was outlined in detail in the project’s Design Guidelines. Taken all together then the “strategy” we developed emerged as follows:

The Alentejo is Western Europe’s last untouched region…And, Roncâo d’el Rei is its heart and soul.

Let’s examine this strategy closely. To begin with, we singled out the province, the Alentejo, which many Europeans knew little, if anything, about. Conventional wisdom would have dictated “Portugal” not its unknown “Alentejo”.

And, we made a strong rather unusual claim: “…Western Europe’s last untouched region”. This is in fact supportable; if you view a satellite night photo of Western Europe the Alentejo is the darkest area, having no large cities and only a scattering of towns and villages. So, we have the fundamental building block of marketing: a meaningful point of differentiation that no one else could lay claim to! Further, it leads into the very attractive storyline, especially for early-adopter, of the Alentejo being “like Tuscany 50 years ago”. (And, being astute marketers, we also identified a very passionate sub-market of northern European stargazers and secured the cooperation of nearby Evora University to make Roncâo a center for astro-tourism).

The branding strategy of Roncâo d’el Rei of course imparts the cachet of royalty; and will default very nicely one would think to the unique and memorable “Roncâo”, as in “I’m going to Roncâo for the weekend” or “I have a place at Roncâo”. Compare this branding to “Parque Alqueva”.

Roncao Logo

And finally, the resort is characterized and romanced as the “heart and soul” of an ancient region, rich in history, cuisine and wine going back to the Romans and beyond. This is supportable by the fact that this parcel, chosen by a king, for its commanding position overlooking the region and providing the best views of the lake and distant vistas (you can see 40km into Spain), is also in the lake region’s largest municipality. Stick a shovel into the ground almost anywhere and you could find Neolithic artifacts. A short drive away stands the well-preserved medieval castle town of Monsaraz. Evora about 45 minutes away is a World Heritage walled city topped by the ruins of a Roman temple. I get all excited every time I tell the story. (Having a good story to tell is far far better than creating a “sales pitch”.)

Roncao Position

Oh, and by the way, that it will have 4 superb golf courses, private marinas, stables and riding paths, excellent restaurants emphasizing Alentejo cuisine, etc., etc.…connoting a world-class resort, in the context of a good story becomes unique and special, meaningfully differentiated from other world-class resorts located throughout the Mediterranean.

This is what I would suggest is sound strategic approach. It takes the “good DNA” and turns it into a compelling vision. By no means does it guarantee success, but it does establish a viable strategic approach. From this foundation one can begin to flesh out specific strategies and tactics. Companies that do not approach their challenges strategically and establish a firm foundation to build their plans upon inevitably spend far more time and expend far more money accomplishing their goals, if they don’t fail along the way! (Of course, many do not see this because they do not have the metrics in place to inform them. The subject of Performance Accountability to be covered in a future Len’s LENS post.)

NB: Unfortunately, Roncão d’el Rei succumbed to the Euro crisis that hit Portugal extremely hard, and is only now several years later slowly abating. Development is fueled by credit, which froze in Portugal 2010-2012. Nonetheless, the strategic thinking and approach presents an excellent example of The Flip Side of “Problem” Presents Opportunity!

 

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