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In support of this overarching aim, the following objectives were also be used.
The proposed study has three objectives as follows:
To deliver a comprehensive and critical review of the relevant literature concerning the relevant issues.
To administer a custom survey to various luxury hotel managers concerning their current branding strategies to identify commonalities and significant differences.
To provide a synthesis of the secondary and primary research that can be used as a set of best industry practices for promoting brand awareness and customer satisfaction in the hotel industry today.
Statement of Study Problem.
A wide range of factors have been cited in the literature for the growth of branding within the hotel industry, with virtually all authorities agreeing that the basic motive for such initiatives is increased profitability and a sustainable competitive advantage. In this regard, Allen (2007) reports that, "What has recently come to distinguish the concept of branding is the need to provide clear product differentiation in an increasingly competitive, globalizing marketplace that rests on memorability and emotional connection with consumers, delivered through all points of contact in the product/service value chain" (p. 61). One of the more salient factors that has been associated with this increasingly competitive marketplace has been the concomitant growth in a "McDonaldization" or heightened uniformity among destinations that makes differentiation all the more important, but also all the more challenging at the same time. In this regard, Allen adds that, "Destination marketers are confronted by increasing product parity, substitutability, and competition. Today most destinations have superb five-star resorts, hotels and attractions, every country claims a unique culture and heritage, each place describes itself as having the friendliest people and the most customer-focused tourism industry and service, and facilities are no longer differentiators" (p. 61). Consequently, there is a compelling need to carefully examine the role played by branding in the hotel industry today. As Allen points out, "Branding, therefore, now has a role as a strategic lens, a decision-making tool, and as shorthand for the personality of place in the place environment that broadens the traditional role of marketing beyond communicating features and benefits to one of deepening relationships with customers" (p. 61).
From the consumers' perspective, some of the primary benefits that can accrue to heightened brand awareness include the attenuation of the perceived risks as well as the costs involved in locating the product (Sangster et al., 2001). In terms of the brand owners, the main arguments advanced to date concern (a) the ability to charge a price premium over and above what rival hotel chains and independent hotels charge, (B) the ability to gain market share against these rivals, and (c) the ability to keep customers by building brand loyalty which can in turn reduce marketing costs (Sangster et al., 2001). In fact, brand loyalty has enormous implications for the hotel industry, with some chains electing to pursue a low-cost leadership role through price discounts while others seek to develop customer loyalty through the provision of unique amenities for their guests (Kandampully & Suhartanto, 2000). Indeed, according to Bowen and Chen (2001), "It is commonly known that there is a positive relationship between customer loyalty and profitability. when a company retains just 5% more of its customers, profits increase by 25% to 125%" (p. 213). Likewise, O'Neill and Mattila (2004) also indicate that brands with higher guest satisfaction levels seem to achieve not only greater revenues per guest room but also achieve higher growth rates in room revenues than brands with lower satisfaction. Despite these interests, the existing literature on brand equity within the hotel industry is still sparse. At present, though, there is a gap in brand equity literature as to what is meant by hotel brand equity, what perspective it should be viewed from, and how it should be operationalized (Kayaman & Arasli, 2007). These gaps are therefore worthy of further investigation as described further below.
Rationale. Studies have shown time and again that, ceteris paribus, companies that enjoy brand recognition attract repeat customers at higher rates than those that do not (Zingale & Arndt 2001). Studies have also confirmed that it is far cheaper for companies to keep existing customers than it is to attract new ones (Hung 2008). For instance, according to Prasad and Dev, "The chief reason for building brand equity as the cornerstone for business success is that it helps offset competition by differentiating the product, allowing brand owners to charge a premium, and fostering customer loyalty" (2000, p. 23). Therefore, improving brand awareness can have a wide range of benefits, including increased market share, the ability to charge higher prices compared to competitors, reduced marketing costs, attraction of new customers, and, of course, higher profits (Hung 2008).
Assumptions. The main assumption used in this study related to the identity of the respondents who completed the online survey who were assumed to be the intended individuals who were recruited for this purpose.
Limitations. The primary limitation of the study related to the relatively small number of respondents (n=32) who completed and returned the custom survey used to collect primary data.
The following definitions are used throughout the study.
Brand equity: The broad meaning attached to the term "brand equity" in branding literature is similar to the definition provided by Farquhar (1989) as the value endowed by the brand to the product. Aaker (1991) defining brand equity as: a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firm's customers (p. 15).
Brand awareness, brand associations, perceived quality, brand loyalty and other proprietary assets were the five assets of brand equity he proposed. Keller (1993) referred to brand equity as the differential effect of brand knowledge on the consumer response to the marketing of the brand (p. 8).
Brand knowledge: Keller defines brand knowledge in terms of two core components, brand awareness and brand image. The importance of understanding brand equity from the customer's point-of-view is explained by Keller (1993) as: "Perhaps a firm's most valuable asset for improving marketing productivity is the knowledge that has been created about the brand in consumers' minds from the firm's investments in previous marketing programs" (p. 2).
Hotel brand: This term is defined by O'Neill and Matilla (2004) as any affiliated hotels of the same name, whether franchised or not (i.e., corporate managed): "In other words," they add, "the major hotel companies (e.g., Marriott International) are composed of a number of brands (e.g., Marriott, Renaissance, Ritz-Carlton, Residence Inn, Courtyard, Fairfield)" (2004, p. 3).
Hotel brand equity: Prasad and Dev (2000) define hotel brand equity as the favorable or unfavorable attitudes and perceptions that are formed and influence a customer to book at a hotel brand represent the brand equity (pp. 23-24).
Framework for Study. Despite the availability of numerous definitions for brand equity in the literature, there is no common consensus about what brand equity means and how a firm can measure the value of the brand (Bailey and Ball, 2006; Park and Srinivasan, 1994). Though several dimensions of brand equity are identified in the literature, the interrelations among the various dimensions of brand equity remain better described than understood. In this study, customer-based brand equity concept is measured by breaking it down into sub-components and testing the relations between these sub-components so the end results can identify new opportunities for managers to develop detailed brand equity strategies.
On the one hand, the global hotel industry has become increasingly competitive in recent years (Lucas 2003; Thompson 2001). On the other hand, though, the global hotel industry has also experienced enormous growth and opportunities for expansion exist around the world (Rushmore 2006). In response to these trends, branding has emerged as one of the most approaches being used by global hotel industry. For instance, in the United States, brand penetration in the ratio of branded vs. non-branded properties is over 70% in the commercial lodging industry; however, although the rate in Canada remains just under 40%; and in Europe it is currently under 25%, these percentages continue to increase (Forgacs, 2006). This growth has been paralleled by the increased attention being paid to the concept and measurement of brand equity in the hotel industry. As a result, these constructs have attracted considerable attention from academicians, practitioners, and researchers in recent years (Bailey and Ball, 2006; Kim and Kim, 2005; Prasad and Dev, 2000; Cobb-Walgren et al., 1995).
Prasad and Dev (2000) defined hotel brand equity as the favorable or unfavorable attitudes and perceptions that are formed and influence a customer to book at a hotel brand represent the brand equity (pp. 23-24). These researchers developed a brand equity index for hotels according to the customer's rating of the brand by using…[continue]
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