Brand Equity for Hotels in Focus - Essay Example

Brand equity for Hotels in Focus Hotel Management encompasses wide range of concepts. All are considered vital for better management of hotel chains;however, in the view of stockholders and hotel owners or management itself; the most important concept in hotel management leads to the development of tools of determining factors that can contribute to the Hotel’s progress. One way is to measure brand equity as a means of knowing the progress of a specific hotel or hotel chains. Hotel chains make use of typical applications of brand approach. Branding enables hotel chains to identify and differentiate them among other competitors in customers’ perspectives. A brand represents the core of the customers awareness of the hotel, its services and products. Keller (1997) explained that the positive or negative perceptions that are created and persuade a customer to avail or not to avail services at a certain hotel stand for the brand equity. A customers excellent experience with a certain hotel brand creates a strong representation of that hotel brand, whereas an awful experience wears away that strong brand. A prospective customer does not require first-hand experience with a certain hotel brand to create an impression of that hotel brand. Brand equity makes use of the media or other marketing techniques to strengthen mass exposure of their hotel brands. This means that people are aware of which among the hotels are classified excellent and poor even if they haven’t experienced being guests in those hotels. So, a strong need for hotel management is formed into creating the best and strong brand of hotel for business longevity as well as increase in profit. Creating strong hotel brands is believed to be one of the key factors in considering the success of the business. Hotel managers therefore need to study what composes brand equity in the hotel industry and exhibit a technique for how do they effectively measure hotel brands offering a decision-making tool for them in order to take full advantage of the value of their brands. The main rationale for building brand equity as the keystone for the success of the business is that it aids counterbalance competition by distinguishing their product, permitting hotel owners of a premium charge, and promoting customer loyalty. Aaker (1991) argued that defining precisely what composes a brand, nonetheless, is not as easy a job as stating what a brand should bring about. At some point, the concept of a brand is that a brand comprises a name, a symbol, a logo, and a trademark. However, pointing out brand in its complexity implies that a brand encompasses everything that the business stands for. Digging deeper into its complexity, the brand is considered a a guarantee to the buyer, a set of relationships or beliefs, an insight of the hotel’s entirety, an image that generates an inclination on the part of customers to acquire the brand, or in other words the hallmark of quality so as to speak, hotel quality. With this the brand becomes a representation that unites the company with the customers in a distinct relationship and symbolizes the complete personality of the product as Leuthesser (1988) explained. The strength of a hotel brand grows over the passing of time, and a strong brand is costly to build. Tauber (1988) argued that it is very important to manage brands well to make the most of shareholder value given the money and time necessary to build up a strong brand. A few observers stated that administering brand equity is done in an ever more difficult manner due to rapid propagation of new brands, remarkable boosts in the cost of media, the more wide-ranging and forceful use of promotions by reputable firms, and the rate and complexity of gaining distribution (Aaker and Keller 1990). A well-positioned brand can be a major hindrance to the opening of new brands. However, Dev, et al. (1995) opposed and argued that poorly managed brands are frequently targeted by entries of new brand. To preserve the competitive advantage of the hotel brand amidst the potential and existing competitors, a well- executed brand strategy will facilitate the separation of the frontrunners from the losers. Customers are the final judges of brand equity and the monetary value of shareholder since the customers are the sources of all cash flows and the ensuing profits. Arnold (1992) pondered that brand equity is defined by recurring purchases of the product or services brought about by brand-use satisfaction, recognized better value for the price they pay and a loyalty felt for the brand. How one can measure brand equity of hotels? Brand equity, as discussed is a gauge drawn from an array of customer-satisfaction criteria. A hotel has strong brand equity when a great number of customers have a positive perception of and thoughts toward the hotel brand. High equity is correlated with high customer brand preference, satisfaction, and loyalty; high retention on the number of guests; high market share; a premium price; high profits; and finally, superior shareholder value. It simply saying that brand equity is the sum total of all the positive ratings compensated into the account of brand equity. Most of studies done to gauge the brand equity of hotels based it on the ratings of customer of the brand by means of numerous measures. The different statistical and survey methods used are focus on brand-awareness and brand-use and the findings are collated based on the viewpoint of attitude, satisfaction and use. In computing brand equity, the primary step is to quantify the ratings of customers satisfaction in five or more hotels based in two sets of indicators: the brand awareness and brand performance. The brand performance can be calculated by overall approval on product and service, price-value perception, return intent, and brand preference, while brand awareness according to Chandon (2003) “is measured by brand recognition or recall. Brand recall reflects the ability of customers [consumers] to retrieve the brand from memory when given the product category, the needs fulfilled by the category, or some other type of probe as a cue. Brand recognition reflects the ability of customers [consumers] to confirm prior exposure to the brand.” By categorizing these customer ratings for a certain brand and its major competitors, one can build up indices for awareness and performance. Then by combining indices for brand performance and brand awareness; a hotel manager can develop a combined measure, which is called the brand-equity index. Three main Reasons of measuring brand equity If rising brand equity is the key to potential hotel business success; then, it makes sense that hotel managers should have a means to measure and quantify it. Below are the three chief reasons for measuring brand equity according to Keller (pp. 372-379). Measuring brand equity is a sole, significant measure of reaction from customers. Whereas that reaction could be evaluated in different ways such as revenues. Brand awareness or recognition, its opinion, and overall satisfaction of customers with the performance of the hotel brand can reveal whether the equity of the brand is increasing, decreasing, or remaining constant. It also permits a study of why the hotel is performing as it does. A brand-equity when measured reveals changes in relations to competitors; thereby, timely alerts and sounding applicable when tracked over time. Measuring brand equity will assist in gauging the impact of the marketing actions on customers; whereby affecting the performance of the hotel. This will help the marketing to create new strategies when a decrease in brand’s equity is experienced. Advantages of Measuring Brand Equity Measuring brand equity does four things: tracking customers’ perceptions of the hotel’s products and services, alarms management when remedial marketing is necessary, measuring the impact of remedial marketing implemented and helps in monitoring competitors. Initially; talking about perception tracking, measuring brand equity will gauge the degree of customers overall favorable opinion of a hotel brand. These measurements describe the strength of the hotel brand in view of price-value, return intent, satisfaction, and preference. The indices allow the hotel manager to make a supplementary assessment with competing hotel brands and can be a standard for evaluating the trends of customer-preference over time. It is advisable for the hotel manager to compute the brand equity index at least at least once a year or more if needed. When a change in trends is experienced, the hotel brand manager is encouraged to tackle challenges and opportunities to keep the brands performance on track. Speaking of remedial marketing; the trend in question, in turn, could help to locate problems that need remedial action in operational areas or in marketing. Generally the brand equity index will direct to a need for further investigation, and the predicaments could be comprehensive. For example, the brand equity index may show a decrease in return intent; however this could be due to such various aspects such as dated guest rooms, or an outdated guest-preference program or poor guest service. Likewise, a decreasing trend in awareness would propose an evaluation of advertising strategy. The efficiency of these remedial actions could then be tracked without difficulty after executing another brand-equity measurement in the following year or earlier as deemed necessary. In terms of monitoring competitors; the brand-performance, brand-awareness, and brand-equity measures propose a means of learning about changes in rival brands positions in relation to each other. Brand Equity Measurement in Categorizing Hotel Brand Types Brand Equity Measurement can be used to categorize the hotel brands in four types based on the trends derived from the measurement. Below are the hotel categories as segregated on indices performance: 1. The brand champions- If the rate of hotel brands in both performance and awareness is high; that hotel brand is classified brand champion. Customers remember that brand well and rate its performance as superior than that of other hotel brands. With this, hotel brand champions are capable of commanding strong room rates and occupancies, thus earning strong profits. 2. The rising brands- If the rate of hotel brands in performance is high; however, awareness is low; those hotel brands are classified rising brands. Low awareness may be due to location of the hotel which can be in just one region and could not gain nationwide exposure. However, advertising is necessary for rising brands to counteract the effect of low ratings of their brand awareness. 3. The troubled brands- Generally long-established hotel chains are high in total awareness, but their operations no longer sustain the consistency and quality levels that customers would expect. These hotel brands may have been obsolete in terms of service and products they offered in comparison with other brands. Regardless of the reason, the hotel troubled brands have poor ratings in customer-satisfaction and are trailing down in total awareness they once commanded. 4. The weak brands- May it be new or old, these hotel brands demonstrate little delineation in the minds of the customers. They offer poor service and weak brand strategies. In conclusion, hotel brand image emerged to have a strong effect on the performance of hotel chains. The customers ideas affecting reflection may differ from the actual characteristics because of the individual experiences of customers and the results of selective retention, selective distortion and selective perception. In view of this probably difficult inconsistency between actuality and image, Hotel operators should bear in mind that the management of hotel brands for the image portrayal requires a long-term measure for attaining high profits goals. Hence, hotel marketers must be prepared with a comprehensive knowledge of the vital traits of brand image. Strong brand equity can result a major increase in revenue and that a defiance of brand equity in hotel chains can break possible cash flow. It is when marketers in hotel firms do not make an effort to perk up brand equity that hotels should anticipate decreasing revenues over time. Hotel brand managers should bear in mind that a lot of old well-known brands may die due to poor brand management, overextension, and lack of investment in making brand value. References Aaker, David. 1991. Managing Brand Equity. New York: Free Press Leuthesser, Lance. 1988.Defining, Measuring, and Managing Brand Equity. Conference Summary. Cambridge: MA: Marketing Science Institute Keller, Kevin Lane. 1991. Conceptualizing, Measuring, and Managing Customer-based Brand Equality. Working Paper. Cambridge: MA: Marketing Science Institute, Aaker, David.1996. Building Strong Brands.New York: Free Press. Tauber, Edward.1988.Brand Leverage: Study for Growth in a Cost-controlled World. Journal of Advertising Research, Vol. 28, No. 4. Aaker, David and Keller ,Kevin. 1990. Customer Evaluations of Brand Extensions. Journal of Marketing, Vol. 54. Dev, Chekitan, Morgan, Michael, and Shoemaker, Stowe. 1995. A Positioning Analysis of Hotel Brands. Cornell Hotel and Restaurant Administration Quarterly, Vol. 36, No. 6. Arnold,D.1992. Handbook of Brand equity. Boston: Addison-Wesley Keller, Kevin. 1997. Strategic Brand equity; Building, Measuring, and Managing Brand Equity. New York: Prentice-Hall. Keller, pp. 372-379. Chandon, P. 2003. Note on Mesuring Brand Awareness, Brand Image, Brand Equity and Brand Value. INSEAD < http://ged.insead.edu/fichiersti/inseadwp2003/2003-19.pdf> Read More