Brand Equity Measurement in the Hotel Industry

Introduction to Brand Equity

Consumer perceptions extensively influence and shape purchasing behavior. Service and goods companies recognize the significance of marketing strategies in influencing consumer behavior. All brands that attract high profits have desirable loyalty levels among customers. Customers tend to hold a high perception of the quality of goods and services that dominate markets across different industries. The power that emanates from consumers' goodwill and recognition of a brand — earned over time, and which gives a brand a stronger competitive position than other similar brands — is known as brand equity. It refers to the desired differential effect gained from consumers' responses because of a strong brand name.

Independent hotels have a low market share compared to branded hotels. Several branded hotels extensively dominate the market because of their strong brand equity. The Starwood hotel group is remarkable for its high-performance luxury brands. St. Regis is one of the best-performing brands under Starwood. The Luxury Collection and W Hotels are also Starwood brands with international market dominance. The Sheraton and Westin are Starwood brands that enjoy exceptional customer preference. The W Hotels segment of Starwood launched another brand, Aloft. Element, another Starwood brand, has a wide customer awareness level in the market.

Examples of Branded Hotels

Beyond Starwood, several other branded hotels hold significant market presence. The InterContinental Hotels Group operates multiple brands in different locations. Choice Hotels maintains a diverse brand portfolio as well. Most branded hotels focus on brand extensions to maintain their market share in the industry.

Strong brand equity reflects a measure of high potential and actual value based on the apparent positioning of the brand in the market. It is also a source of assurance for sustained revenue generation from the brand and associated benefits. According to Isabel, Leslie, and Martinez (2008), services and goods with strong brand equity have the advantage of high consumer preference. Strong brand equity creates high margins and brand extension prospects. Service and goods companies exploit strong brand equity built from consumer experience to generate revenue. High equity rates for any brand are beneficial to the overall success of the company.

Consumer Perception Dimensions

Consumer perceptions about a brand may be understood along four main dimensions. Brand differentiation, as an element of consumer brand perception, refers to the features that render a brand outstanding in the market. Brand differentiation makes it unique, satisfying, and relevant to consumers compared to other similar brands. Marketers aim to shift consumers' perceptions and help them discover a brand's uniqueness. Marketers therefore work to initiate positive perceptions that set and maintain customer loyalty.

Setting and maintaining strong brand equity involves improving its relevance to suit consumers' demands — an essential step in gaining high brand equity. This dimension refers to how well consumers feel the brand satisfies their needs. Brand knowledge is the third dimension of consumer perception that builds strong brand equity; it refers to the extent of information about a brand that is available to consumers. Consumer esteem, as a fourth dimension, has an extensive influence on perception. Consumers can regard and respect a brand to the extent of developing a high esteem for it, which is beneficial for achieving higher brand equity. Every marketing strategy aimed at creating strong brand equity should address all four dimensions in order to effectively influence consumer perception.

Over recent years, brand equity has come to dominate marketing discussions, as noted by Isabel, Leslie, and Martinez (2008). Strong brand equity carries several related advantages for both service and goods companies. Brand managers must understand the essentials of measuring brand equity because of its importance in assessing market dominance (Isabel, Leslie, & Martinez, 2008). Brand equity measurement also guides strategic decisions in marketing. Marketers must embrace diverse measurement techniques to cope with increased competition from other brands in the market.

Measuring Brand Equity

Marketers apply brand equity measurement systems to gain timely and precise information for making tactical and strategic decisions. Most researchers, as identified by Pushpender and Anupam (2012), focus on brand equity measurement systems for goods rather than services. Companies that trade in goods therefore tend to have more robust brand equity measurement systems compared to their service-sector counterparts. The differences between services and goods require the application of dissimilar equity measurement systems. A twenty-one-item scale used to measure brand equity in services is applicable in the hotel industry, which deals specifically with service provision. This system uses four sub-scales: familiarity, association, perceived quality, and customer loyalty toward a given brand.

Isabel, Leslie, and Martinez (2008) outline a consumer-based scale used to measure brand equity. This scale uses four accepted dimensions: brand awareness, association, loyalty, and consumers' perceived quality. Based on these four dimensions, researchers develop empirical scales used as the basis for testing brand equity.

According to Singh and Jagrook (2010), several approaches developed by different researchers are applicable in measuring brand equity. Diverse approaches use perceptual or behavior-based parameters as a framework for measurement. Most approaches apply general parameters. Brand loyalty is another vital factor used in measuring brand equity. Singh and Jagrook (2010) note that it represents the state attained that initiates an enduring preference among customers. Brands with high customer loyalty are likely to attract recurring purchasing behavior. Loyal customers show a bias against competing brands. Brand loyalty can be understood along two dimensions: price premium or satisfaction level (Singh & Jagrook, 2010). At an individual level, brand loyalty is attributed to consumers' regularity and patterns of purchases.

Perceived quality also acts as an important factor in measuring brand equity. Perceived quality and leadership are appropriate measures of customers' sensitivity toward products or services that affect their purchasing intentions. Perceived quality refers to consumers' judgment of the extent of satisfaction derived from using a brand based on its performance. It increases consumers' preference for the brand and raises its equity. Improving the perceived quality of a brand involves promoting the brand name through advertising.

Strategists may also seek to create a particular brand association in the market. Brand association depicts what the brand implies or represents to its customers, attaching unique meaning to a particular brand. Singh and Jagrook (2010) highlight three dimensions of brand associations relevant to measuring equity: consumers may associate with a brand as a product, an organization, or a personality. Each of these three dimensions can produce differential effects on consumer behavior, such as perceived value.

Brand awareness also affects customers' purchase intentions and habits and is therefore an appropriate measure of brand equity. Brand recall and recognition depend on the level of consumer attentiveness toward the satisfaction derived from a given brand. Brand image and awareness can serve as valuable indicators of high or low brand equity. Brand image influences the level of recognition and the degree of attraction from customers. Brand knowledge is influential in shaping customers' reactions to various marketing strategies.