Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Strategy and Management Chapter 6

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J HMS - Brand Equity “…is the net result of all the positives and negatives linked to the brand.” name symbols loyalty awareness perceived quality associations

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J HMS - Brand Equity (continued) “It just does not happen…its creation, maintenance, and protection need to be actively managed and monitored.”

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Equity Short term tactics produce more earnings (price promotions). Brand building activities add equity “value” over time (image advertising). “The challenge is to balance these activities to provide needed business while adding “value.”

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand “Value” Price premium the name supports Name impact on customer preference Replacement cost of the brand Stock price Ultimately the resale value

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Value of Brand Loyalty Reduced marketing costs Create brand awareness Generates new customers Provides “base” business

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Value of Brand Awareness Top of the mind recall People like the recognizable Repetition-reinforcement-sales Brand extensions

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Value of Perceived Quality Better prices Market share Higher ROI Point of differentiation

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Value of Perceived Quality Clues to Success: Price itself (positioning) Appearance of service personnel Public spaces Other visible impression areas

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Value of Brand Association “Anything mentally linked to the brand is a brand association.” Affect recall Point(s) of differentiation Reasons to buy Create positive attitudes and feelings Serve as a basis for trial

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Value of Brand Association Clues to Success: Overall quality ratings Technological leadership Newness Customer benefits

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Positioning Rules Don’t try to be something you are not. Differentiate your brand from competitors. Provide associations that add value and/or provide reasons to buy. “The marketing of your brand influences how it is perceived and thus ultimately its value.”

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Names, Symbols, and Slogans “Brand names, symbols, and slogans are critical to brand equity…they are assets and indicators and central to brand recognition, positioning, and associations.”

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Names, Symbols, and Slogans Clues to Success: Easy to recall name Suggest positioning Support a symbol or logo Suggest desired brand associations Be easily recognizable Create positive associations and feelings

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Extensions “…are one way to exploit brand equity and extends the name.” Need to provide point of differentiation or advantage Should “fit” the brand Should be “linkages” “Upward” extensions enhance the perception/ positioning “Downward” extensions could harm the brand

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J The Brand Equity Equation Communication Brand Relationships Brand Support Brand Equity

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Ten Strategic Drivers of Brand Value  Creating and nourishing relationships rather than making transactions.  Focusing on stakeholders rather than just customers or shareholders.  Maintaining strategic consistency rather than independent brand messages.  Generating purposeful interactivity rather than just a mass media monologue.

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Ten Strategic Drivers of Brand Value (continued)  Marketing a corporate mission rather than just product claims.  Using zero-based planning rather than tweaking last years plan.  Using cross-functional rather than departmental planning and monitoring.  Creating core competencies rather than just communication specialization and expertise.

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Ten Strategic Drivers of Brand Value (continued)  Using an integrated agency rather than a traditional pull service agency.  Building and managing databases to retain customers rather than just acquiring new customers.

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Value of Loyalty To Company/Brand Buys more per year Less costly to sell to Less costly to service Willing to pay higher prices To Customer Reduces risk Simplifies choices Saves search time More efficient transactions

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Value of Loyalty (continued) To Company/Brand Provides valuable feedback Makes referrals Convenient test pool To Customer Eliminates switching costs Minimizes cost of educating suppliers Recognized by company

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Cross and Smith’s Five Levels of Branding Awareness. Brand is included on the customer’s menu. Identity. Customer proudly displays the brand. Relationship. Customers communicate with the company between purchases. Community. Customers talk to each other. Advocacy. Customers recommend to each other.

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Stakeholders Investors Financial Analysts Standard and Poors Financial Press Suppliers Customers Employees Government Regulators Competitors Media “All departments and employees must keep in perspective the overall corporate stakeholders and priorities…they are interlinked.”

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Stakeholders (continued) “Because brand equity is determined by the net-sum support of all stakeholders, it is important to develop and manage relationships by treating each stakeholder group as a target market with its own objectives and message strategy.”

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Four Sources of Brand Messages Planned messages (marketing) Product messages (operations) Service messages (marketing and operations) Unplanned messages (situations and events) “Consistency begins with brand positioning, which is based on core values, selling promises, and distinctive features.”

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J The Integration Triangle Say ConfirmDo Planned Messages Unplanned Messages Product, Service Messages

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Message Control vs. Impact High Low Relative- impact High Ability to control/ influence Planned Unplanned Product Service

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J External Customers “One of the psychological barriers that presents many companies from really listening is an attitude that customers don’t have anything valid to say”…”Listening is your most valuable marketing weapon.” All brand contact points need to be monitored and measured.

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J External Customers (continued) All marketing (media) should focus on: increasing and/or creating awareness qualifying prospects generating trial motivating repeat business motivating multiple unit/ brand purchases re-acquiring those who have defected

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Menu Media and Relationships Brand relationships AwarenessResponseDialogue Mass media Interactive Media Addressable Media

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Perception Image of the brand (company/ place) Self (customer) image when experiencing the brand

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Become a Brand Equity TEAM

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Identity “Unique set of brand associations which represent what the brand stands for and implies a promise to customers…” by generating a “value” proposition by indicating benefits by eliciting emotion

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Identity Perspectives and Dimensions Perspective Brand as a product Brand as an organization Brand as a person Brand as a symbol Dimensions scope attributes quality/ value users organizational attributes personality customer relationships visual imagery metaphors prestige

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Why is it Hard to Build Brands? 1. Pressure to compete on price 2. Proliferation of Competitors 3. Fragmenting Markets & Media 4. Complex Brand Strategies & Relationships 8. Short-Term Pressures 7. Pressure to Invest Elsewhere 6. Bias Against Information 5. Bias Towards Changing Strategies Building Brands

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Identity Traps Brand Image Trap External Perspective Trap Brand Position Trap Product- Attribute Fixation Trap BRAND IDENTITY TRAPS

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Position Brand ImageBrand IdentityBrand Position How the brand is now perceived How strategists want the brand to be perceived The part of the brand identity and value proposition to be actively communicated to a target audience

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J A Brand is More Than a Product PRODUCT Scope Attributes Quality Uses Organizational Associations Brand Personality Country of Origin User Imagery Self-Expressive Benefits Symbols Brand-Customer Relationships Emotional Benefits BRAND

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Position Subset of Identity/ Value Proposition Core Identity Points of Leverage Key Benefits BRAND POSITION Target Audience Primary Secondary Actively Communicate Augment the Image Reinforce the Image Diffuse the Image Create Advantage Points of Superiority Points of Parity

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J How Brand Identity and Position Creates Value Provide Extension Options Improves Brand Memorability Guides and Enhances Brand Strategy Provides Meaning and Focus to the Organization Brand Identity & Position The Bottom Line-provides a value proposition, credibility to other brands, and basis of relationship.

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Roles Endorser Driver Silver Bullets Branded Benefits Features Components Service Programs Strategic Brands Sub-brand Roles Describe Offerings Structure & clarity offerings Augment brand identity Exploit market opportunities Support extensions BRAND ROLES

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Silver Bullets A “branded benefit” that is employed as a vehicle for changing, supporting, or enhancing the brand image of the parent brand (company). Provide extra resource allocations (i.e., advertising, PR, etc.)

Equity/Sales Relationship % Using Brand Perceived Quality Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J The Brand Equity Ten Loyalty Measures 1. Price premium 2. Satisfaction/ loyalty Perceived Quality/ Leadership Measures 3. Perceived quality 4. Leadership/ popularity

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J The Brand Equity Ten (continued) Associations/ Differentiation Measures 5. Perceived value 6. Brand personality 7. Organizational associations

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J The Brand Equity Ten (continued) Awareness Measures 8. Brand awareness Market Behavior Measures 9. Market share 10.Market price and distribution coverage

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Ten Guidelines for Building Strong Brands  Brand identity  Value proposition  Brand position  Execution (Communications Program)  Consistency over time

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Ten Guidelines for Building Strong Brands (continued)  Brand system  Brand leverage  Tracking brand equity (awareness, perceived quality)  Brand responsibility (someone/ team in charge)  Invest in brands (up & down times)

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Steps to Developing a Strong Brand Choose a brand positioning for the product/service. Choose a specific positioning for the product/service. Choose a value positioning for the product/service. Develop a total value proposition for the product/service.

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Steps to Building the Brand Choose a brand name. Develop rich associations and promises for the brand name. Manage all customers’ brand contacts so they meet or exceed the customers expectations associated with the brand (perception positioning).

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Name Desireabilities Suggests something about the products/services benefits. Suggests something about the products/services qualities. Easy to pronounce, recognize, and remember. Not carry poor meanings in other languages.

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Associations Attributes Benefits Values (company) Personality Users

Hospitality Management Strategies©2005 Pearson Education, Inc. By R.A. NykielUpper Saddle River, N.J Brand Building Tools “Owned” word association Slogans Colors Symbols and logos Stories and legends