Improving Brand Awareness and Customer

¶ … improving brand awareness and customer satisfaction in the hotel industry. In support of this aim, the study was guided by several research questions: (a) what current branding strategies are being used by hotel chains and how effective are these methods in contributing to their customer loyalty and profitability?; (b) what specific factors must be taken into account in formulating hotel chain branding strategies? (c) what effect, if any, does a hotel chain's brand have on customer satisfaction?, and (d) how can hotel chains use information technology to develop improved brand awareness and satisfaction with existing and potential customers? To achieve this research purpose and address these research questions, the study used a mixed methodology consisting of a review of the relevant secondary literature together with a synthesis of the results of a custom online survey of four- and five-star hotels concerning their branding strategies and customer relationship management methods. An analysis of the study's findings is followed by important findings, the prospects arising from the study and their implications for the hotel industry in the future.

Table of Contents

1.0

Introduction

1.1

Background

1.2

Focus

1.3

Statement of Study Problem

1.4

Rationale

1.5

Assumptions

1.6

Limitations

1.7

Working Definitions

1.8

Framework for Study

2.0

Literature Review

3.0

Methodology

3.1

Justification of the Methodology

3.2

Research Strategy

3.3

Ethical Considerations

4.0

Results

4.1

Pilot Work, Establishment Procedures

4.2

Exercise of Main Methods

5.0

Discussion

5.1

Presentation of Data

5.2

Critique of Data

6.0

Conclusion/Summary

7.0

Prospects Arising from the Study and Implications

Hotel Brand Satisfaction: "Identifying Opportunities for Improving Brand Awareness and Customer Satisfaction in the Hotel Industry"

1.0

Introduction

Travel and tourism represent the largest industry in the world today, and it is not surprising that the hotel industry has experienced a concomitant increase in demand. Moreover, most authorities predict that these recent trends will continue well into the foreseeable future, making the need for timely and relevant studies of critical success factors an important enterprise today. In the realm of those critical success factors that characterize the hotel industry is the need to promote hard-earned brands that can fuel repeat business and attract new guests based on their specific desirable attributes. These attributes, of course, span the entire range from the highly budget-minded traveler seeking two-star accommodations to more affluent clientele in the three-star range to the four- and five-star range where price is no object and luxury is the byword. By promoting brand awareness based on the targeted market's familiarity with the facilities, hotel chains can gain a competitive advantage over their counterparts that fail to achieve such a level of awareness. In this regard, Alwitt and Mitchell report that brand familiarity exists along a continuum that includes the various levels of brand awareness that are typical among hotel guests and potential hotel guests. According to these authorities, "Brand familiarity is conceptualized as an index of differential brand awareness, reflecting degrees of experiences with the brand (ranging from weak, indirect experiences like past exposure to advertising, to strong and direct ones like current usage)" (Alwitt & Mitchell, 1995, p. 22).

According to Romaniuk, Sharp, Paech and Driesener (2004), a number of different awareness measures are used to determine the level of brand awareness and as a gauge of the effectiveness of the marketing initiatives that are used. According to these authorities, "Brand awareness is considered one of the key pillars of a brand's consumer-based brand equity. Building brand awareness is a way of ensuring potential customers know the categories in which the brand competes. While many authors support the association between brand awareness and buyer behaviour, they have disagreed over the specific measures that should be used" (Romaniuk et al., 2004, p. 37).

Currently, there are three widely used measures of brand awareness: top of mind, spontaneous and aided as set forth in Table 1 below.

Table 1

Three Widely Used Measures of Brand Awareness

Brand Awareness Measure

Description

Top of mind awareness

The top of mind response to the product category cue is one of the best 'predictors' of choice of future sales (Romaniuk et al., 2004). Top of mind awareness is related strongly to brand preference with the strategic implications being that the brand's advertising needs to be high impact -- they must rise above the rest and capture top-of-mind unaided retrieval among a substantial share of customers when asked to mention ads that come to mind in the brand's product category (Woodside, 1996). Individual marketers must determine the optimal frequency needed to maintain top-of-mind awareness that will result in unaided store or brand awareness (White, 1993).

Spontaneous awareness

This is the unprompted recall of the brand name (Romaniuk et al., 2004). The level of spontaneous awareness is the brand's share of total awareness in the product category; in other words, memory relative to all other ads in the product category (Sutherland & Sylvester, 2000).

Aided awareness

This is the recognition of the brand name when prompted (Romaniuk et al., 2004). Not surprisingly, aided awareness is not widely considered to be a powerful indicator of future sales (Pallister & Isaacs, 1996).

Some researchers have argued that a particular measure is more appropriate at any given point in time and in different situations (Romaniuk et al., 2004). When alternatives are available at the time of the purchase decision, then aided awareness is relevant, when they are not, spontaneous awareness should be used. Likewise, other authorities distinguish between memory based, stimulus based and mixed (both) situations in which the capacity to spontaneously recall or identify something have different levels of importance (Romaniuk et al. 2004). According to Romaniuk and his colleagues, "Top of mind awareness is more relevant when a choice between competing brands is made quickly and this measure should be applied to low involvement impulse purchases such as most products in supermarket settings" (Romaniuk et al., 2004, p. 37).

Notwithstanding these controversial points concerning distinguishing between the different levels of brand awareness, three different brand awareness measures all appear to draw on the same fundamental construct which is the level of salience that is involved (Ramaniuk et al., 2004). With respect to brand awareness, the level of salience is used to describe the likelihood that the brand will come to mind during purchase decision situations (Romaniuk et al., 2004). In sum, then, different brand awareness indicators are fundamentally interrelated and differ only with respect to the individual situation that is involved (Romaniuk et al. 2004). In this regard, according to Romaniuk and his associates, "If all three awareness measures tap into the same fundamental construct then building brand awareness is not a choice of spontaneous vs. aided recall, but requires an overall improvement in the brand's salience. All three measures will reflect increases in salience; with the changes in actual scores for each measure simply dependent on the relative difficulty of the measure used" (2004, p. 37). In other words, when confronted with a purchase decision for a given product, consumers will likely think of the brand that is most well-known to them by virtue of exposure to repeated marketing messages, through personal use or testimonials of friends, family members and acquaintances. As Wells phrases it, "More simply put, when a consumer thinks of a dependable washing machine, the first brand that most likely comes to mind is Maytag. Based on years of long-term, consistent advertising, Maytag has dominated the claim of dependability and generated widespread brand awareness that is congruent with the desired brand image, despite the fact that Maytag's advertising budget is typically well below that of its major competitors" (1997, p. 177). This example suggests that long-term consistent advertising messages can create an image that keeps the brand in the consumer's mind. In this regard, Wells reports that, "If a company strongly associates itself with a particular attribute or image, it can afford to reduce its advertising budget or even stop advertising for brief periods of time without significantly hurting its sales. This tangible economic benefit must be considered in assessing advertising effectiveness" (1997, p. 8). The effectiveness of brand promotion initiatives, then, will relate to the frequency of the advertising message needed to build a desired level of brand awareness, as well as the content of those messages. With respect to hotel chains, the same factors beg the questions, "What types of strategies are being used to promote brand awareness in the hotel industry?," a question that also form sthe focus of this study which is discussed further below.

1.1

Background. This study was guided by the following research questions:

1.1.1

What current branding strategies are being used by hotel chains and how effective are these methods in contributing to their customer loyalty and profitability?

1.1.2.

What specific factors must be taken into account in formulating hotel chain branding strategies?

1.1.3.

What effect, if any, does a hotel chain's brand have on customer satisfaction?

1.1.4.

How can hotel chains use information technology to develop improved brand awareness and satisfaction with existing and potential customers?

1.2

Focus.

The aim of the proposed study was to identify opportunities for improving brand awareness and customer satisfaction in the hotel industry. In support of this overarching aim, the following objectives were also be used.

Objectives:

The proposed study has three objectives as follows:

1.2.1

To deliver a comprehensive and critical review of the relevant literature concerning the relevant issues.

1.2.2.

To administer a custom survey to various luxury hotel managers concerning their current branding strategies to identify commonalities and significant differences.

1.2.3.

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.

1.3

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.

1.4

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).

1.5

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.

1.6

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.

1.7

Working Definitions.

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).

1.8

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.

2.0

Literature Review

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 indicators, brand performance and brand awareness. Researchers also claimed that a hotel will have strong brand equity when a large number of customers have a favorable perception of and attitude toward the hotel brand. According to the results of very recent study on hotel consultants, Bailey and Ball (2006) defined hotel brand equity as "the value that consumers and hotel property owners associate with a hotel brand, and the impacts of these associations on their behavior" (p. 34). Similarly, empirical research conducted by Kim and Kim (2005) on luxury hotels and chain restaurants examines the customer-based brand equity and its effects on firm performance. The Kim and Kim (2005) study consists of four dimensions of customer-based brand equity-brand loyalty, brand awareness, perceived quality, and brand image. Results identified that strong brand equity can cause a significant increase in profitability and the lack of brand equity in hospitality firms can damage potential cash flow.

The identified characteristics of the hotel services combined with the growing prominence of service marketing have heightened importance of brand equity as a marketing imperative and raised the need to understand and manage brand associations. On the contrary the current empirical research output can be of little use to hotel industry brand managers in developing the performance of their brands. Against this backdrop, Mackay (2001) advocates empirical research to explore the managerial practices within service industries with regard to if and how brand equity is managed.

Despite a growing body of evidence in support of brand satisfaction as being a key driver for success in a number of service industries, there remains a paucity of timely and relevant studies that define a set of best industry practices in general and best industry practices for the hotel industry in particular. For example, Kimpakorn and Dimmitt emphasize that, "Research on branding in the hotel industry is still not very extensive" (2007, p. 49). The research approach used for this proposal and to be applied to the proposed study is based on personal and professional practice in as well as academic study of the hospitality industry. To achieve the overall aims and subsidiary objectives outlined above and to answer the above-stated research questions, the proposed study will draw on a variety of multidisciplinary resources, including peer-reviewed travel and tourism journal articles, scholarly marketing and branding texts as well as governmental- and industry-generated data, where appropriate, concerning brand satisfaction and customer loyalty as they specifically apply to the global hotel industry.

The main models, theories, ideas, authors and concepts that were consulted included those listed in Table 2 below, followed by a discussion of these and other relevant resources used in this study.

Table 2

Main models, theories, ideas, authors and concepts consulted

Main models, theories, ideas, authors and concepts

Rationale in support of use

Prasad and Dev's (2000) customer-centric model of hotel customer brand awareness and loyalty

The authors provide a valuable framework in which to evaluate the effectiveness of existing hotel brands and how these can be promoted to increase brand recognition and customer loyalty. The authors also provide a matrix of measures that can be used to assess hotel-brand performance and awareness.

Kimpakorn & Dimmitt (2007)

These authors provide an analysis of how hotel chain brands are affected by the perceptions of employees and what steps hotel chains can take to reduce turnover and improve employee satisfaction and morale in ways that contribute to higher levels of customer service.

The study by Kimpakorn and Dimmitt sought to understand how the concept of employer branding is used in the luxury hotel industry, and to determine which dimensions are meaningful to managers and employees in their conceptualizations of employer branding. As management highlights the importance of employees in service organizations, many companies have become increasingly interested in building their brands from the inside. Many studies indicate that effective management of service employee attitude can influence customer brand attitude and result in better organizational performance. Employers need to recruit the best talent as they select their potential target markets, to provide this talent with knowledge and understanding to assist them in performing their work, to motivate these new employees to actively commit to the company brand, and to consider the brand interest as they make decisions in their day-to-day work. By exploring the dimensions within the perspective of senior management, a greater understanding is gained of the meaning of employer branding and to what extent such dimensions impact on employer branding of the service businesses. These authors investigate employer branding concepts and dimensions attributed to the employer and explore issues related to how important the dimensions are in decision making and communication, according to the perspectives of senior management in the luxury hotel industry.

brand assimilation, brand knowledge, and employee perception of customer perception had special roles in their correlations with the level of employer brand equity. Employee perception of customer perception correlated most strongly with the total employer brand equity, followed by brand assimilation and brand knowledge. Thus, in order to increase the level of employer brand equity, the major strategic and operational emphasis of hotel management must be placed on the functionality of employee perception of customer perception, brand assimilation, and brand knowledge. If the employee impression of customer perception, brand assimilation, and brand knowledge are functioning well (that is, if employee knowledge toward brand values and employee engagement with the brand values are high, and the employee has a positive perception of customer perception with the brand), managers then have the opportunity to improve the performance of the brand.