News for the Hospitality Executive
|by Dietmar Kielnhofer, General Manager, Le Meridien
Nirwana Golf and Spa Resort, Bali
In a market and industry where products and services are all too undifferentiated - and even boring - successful branding can have a significant impact on current profit margins and future buying behavior of what services and products customers will buy. Consumers essentially buy a branded product because it promises reliability and consistency for its intended purpose and application – service features non branded products not necessarily provide. Brand conscious behavior determines the purchasing behavior of our customers and having access to a powerful brand and the consequent distribution channels determine one’s commercial survival.
Hotel companies are not selling heads in the beds and anonymous service –they are priding themselves on selling high levels of customized or even bespoke service. Consumers in the 21st. century want a hotel with a soul and a character; they want personality and not residing in a box. Brand management is a very time consuming and expensive effort. It costs money to communicate the values a brand conveys to a larger audience; it is an evolutionary process. Brand management is not a static undertaking once successfully launched it is better left alone; it is a rather dynamic activity that requires constant attention. Failure to innovate a brand strategy will lead to obliteration that is tantamount to corporate suicide. The value proposition and pervasiveness of a brand’s perception changes over time and skillful marketers know when the time comes to revitalize an ageing brand. The old saying still goes, a good product sells itself - a not so good one needs a lot of efforts. Successful product branding is more then just the sum of its logo and name, it is the intrinsic values that the brand conveys that counts - it is the values and benefits that the consumer remembers not only the functional purpose. Hotels are moving away from generic advertising campaigns and focusing increasingly on their target markets evoking strong emotional feelings by being deliberately subliminal. They realize the importance of selling memories and emotions that, partially, elicit childhood memories of a time long gone – the baby boomer generation is particular susceptible to this form of marketing.
The ultimate question thus arises where do consumers get the best deal? Differently expressed, brands provide economic value, possess significant competitive advantage and they leverage their size that smaller unbranded companies cannot offer. With rate parity frequently proclaimed it is imperative to have an equitable system in place that promises, and guarantees, best rates across the entire spectrum of distribution channels thereby balancing web-based and third party rates with those distributed by hotels. It is brand specific “know how” and proprietary knowledge that provide the competitive edge developers and franchisers want. Where would Mal Wart be if not for their all encompassing distribution network? It is proprietary knowledge that is the differential factor.
A company’s true identity lies undoubtedly in its cultural DNA. That DNA is part of an inextricable culture that cannot and should not be changed. It creates “uniqueness” in a world of brand obsessed consumer behavior where product and service commodisation is prevalent. Once uniqueness is created it has to be leveraged to optimize the earning potential of the brand. A case in point is Le Meridien. It is the intrinsic brand equity that made Le Meridien a sought after company in the 90’s. With double digit growth, year after year, customers stayed with the brand for delivering exceptional value for money and investors acquired the company for its future earning potential.
Being aligned with a multi branded company, like Starwood for instance, puts shareholders / investors in a strong position to show brand conscious behavior and savvy decision making. They are affiliated with a company that promote their core values and in return have an implicit performance guarantee on their investment as access to powerful reservation systems is pivotal. International brands have another significant advantage, they generate above average returns for their bookings and managing the complexity of distribution platforms better then stand alone operators. The hospitality industry is largely dominated by American brands. They have the marketing muscle, the brand power, the money and they leverage their sheer size to achieve better economies of scale and market penetration. Small hotel operators, unless they are niche players, will not attain sufficient brand awareness and critical mass to compete with these giants. We live in a world that is infatuated with brands - they literally permeate every level of society and decision making.
Product commodization, irrespective of what the customer wants, are the salient features of our industry unfortunately. Successful differentiation begins with providing service with style and substance. The battle for mindshare is not won in the architect’s or the interior designer’s office, it is won in the hearts and minds of customers. Companies have to diverge from a system proven “cookie cutter” approach and differentiate their styles. In the past the key question successful marketers asked what is our USP? Successful marketer used this acronym all the time to determine their competitive position. It was the classical marketing language of the 70’s and 80’s. Branding however is not all about differentiation. It is also a question of strategic fit within the environment, the core values and the brand positioning. Finally, it is employees who create enduring loyalty; they are at the frontline delivering the brand promises. Successful marketing, respective brand management is tangibilising the intangibility.
It is a combination of all of the above that creates the right brand
equity, recognition and image which in return determines the positioning
statement –it is about creating a clear discernable identity and strategic
direction. It is about being trend setters and not followers; it is about
market leadership and determining where future benchmarks will be. The
value proposition of a company will not be immediately known - it will
be defined in the years to come as a company that redefined industry standards
and norms for future generations. The new buzzword to successfully compete
in an internet dominated world is differentiation. Companies are redefining
their positioning and moving away from the service and product driven environment
to positioning themselves as lifestyle brands thereby diversifying their
offering range. These intangible features along with high levels of privacy
and comfort will be at the forefront of what customers of the future desire…and
that future has already arrived.
© Dietmar Kielnhofer
|Also See:||Hotel Operators Can Gain Market Share Through Distinctive Brand Images; A 100-room boutique hotel can develop more identity within a market than its 1,000-room competitor through customer impact points / Rick Swig / RSBA Associates / May 2004|
|The Hospitality Industry Facing Four Transformative Issues Over the Next Five Years, Including Brand, Emerging Markets, Human Assets and Technology / June 2006|
|Branding is Buzz Word for Quality and Service / Hospitality Column / Carol Ruddick / May 2005|
|The Power and Potential of Branding Explored by HSMAI / May 2000|
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