Transcript Brand awareness and image

Chapter 4
Competitive strategies
After going through this chapter, you should be able to:
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describe how hospitality organizations vary in their
segmentation, positioning and differentiation strategies
understand the characteristics of hospitality firms that
impact on marketing practice
carry out a competitive analysis, using Michael Porter’s
Five Forces model
understand the role of branding in hospitality organizations
appreciate the international significance of major players in
the hotel and restaurant industry
Hospitality competitive environment:
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dynamic
intense
turbulent
since more supply than demand in most market segments
Segmentation, positioning and differentiation strategies key
to creating strong hospitality brand and building sustainable
competitive advantage
Mass marketing:
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responds to similarities of consumers’ needs and wants
companies offer standardized product to satisfy customers
benefits to the company include a standardized operation, leveraging significant savings
in purchasing, production, staffing, promotion via massive economies of scale
Differentiated marketing:
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identifies differences between the needs and wants of various market segments
multi-brand hospitality companies develop individual marketing programs for each
market segment
helps increase overall sales and market share by providing more bedrooms in different
branded hotels, or more covers/tables in different branded restaurants, in the same
locations, with each brand serving different market segments
specific marketing programs developed for each segment
Focused, concentrated or niche marketing:
Hospitality companies that concentrate their marketing programs on a single-market
segment adopt a focused or concentrated or niche segmentation focus (can be a market
segment (luxury) or geographic (Carribean)); focus on a single segment enables hospitality
operators to develop expertise in that market segment
Figure 4.2 The process of segmentation, targeting and positioning in hospitality
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Intense competitive environment forces hospitality
firms to try and create a distinctive marketing offer
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Selection of target markets provides a focus for the
development of positioning and differentiation
strategies
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Identifying target markets needs and wants, and
identifying company strengths to match target needs
and wants, provides starting point for developing a
positioning strategy
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Dilemma for hospitality operators – virtually no significant
differences between competitor core products
Generic products which do not have any real differences are
described as commodity products
Tangible elements of a hospitality experience (bed, meal, drink)
are so similar that they are commodity products
Innovations/improvements quickly copied or imitated by the
competitors
Some hospitality brands have distinctive images compared to
their rivals
The design and maintenance of a distinctive position in the
minds of target markets is the focus of a positioning strategy
Objective positioning:
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refers to tangible, physical attributes, e.g. size of bedroom, facilities,
the menu items
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purpose of objective positioning is to use a tangible attribute as the
main differentiator from competitors but commodity product
attributes easily imitated by competitors
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objective positioning not effective long-term strategy
Subjective positioning:
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focuses on the intangible aspects of the offer or customer experience
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perceived image of brand may not necessarily reflect the true
product/service
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what matters is the customer’s perception of the offer
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offers hospitality operators opportunity to effectively position the offer
because positioning strategy is linked to intangible attributes that are
difficult for competitors to imitate
Positioning strategies are designed from answers to two questions:
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Which competitor brand(s) should the company position against?
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How should our brand be positioned?
Typical hospitality positioning strategies:
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product feature or special attributes
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price/quality
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customer benefit
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use or usage
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user
Positioning maps
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plot competing hospitality products using two or more attributes on to a map
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attributes include:
 price, quality, location, reputation, value for money, product/service
quality, range of facilities
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note the relationship between quality and price; normally a brand must stay
within its price/quality product class
Figure 4.3 Hotel positioning map
Some hoteliers and restaurateurs claim their product is so unique that
they ‘do not have any competitors’
Reality is all hospitality businesses operate against many different types
of competitors
Macro-competitors:
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indirect competitors from different industries that compete for
consumers’ disposable income against hospitality:
 major household purchases (e.g. motorcar) compete with
luxury holidays
 supermarket easy-to-cook meals compete with restaurants
 shops that sell alcohol for consumption at home compete
against bars
Figure 4.4 Five Forces analysis
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Reflects strength of buyers’ bargaining position, especially price,
which customers have over suppliers
Customers purchasing larger volumes of bed-nights with low
switching costs (i.e., it is easy and economical to change supplier)
Leverage strong bargaining force in the competitive environment
Examples: tour operators, who book thousands of customers in to
hotels, have a strong bargaining position and can demand lower
prices from hotels
Individual customers have a weaker bargaining position if demand is
high and capacity is low, but when demand is variable and capacity
high then individual customers have stronger bargaining power
Suppliers, including employees, can negatively influence the attractiveness and
profitability of a sector by increasing their prices (or wages) and thereby
increasing industry costs and reducing profit margins.
Powerful suppliers are those organizations that control the supply of goods and
services to the hospitality industry. This varies from country to country.
Examples include:
 monopoly suppliers controlling electricity, gas or water supplies
 oligopoly suppliers, which are concentrations of only a few major
suppliers in one sector
 owners of computerized reservation systems
 powerful trade unions, which can negotiate improved pay and
conditions on behalf
The threat of new entrants is dependent on barriers to enter, including:
ability to generate economies of scale and experience
 opportunities for product differentiation
 amount of capital required to buy into the industry
 access to the distribution channels
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In hospitality there are low barriers to entry in many sectors
Substitute industries provide competing offers that satisfy the
same generic needs, or perform the same function for
consumers
Example is the convenience eating-out market that competes
against substitute convenient eat-at-home products marketed
by supermarkets
Continual developments in technology keep changing the
potential threat from substitute products
Rapid development of mobile communications, personal
communications and video-conferencing has presented a
substitute product for the hotel meetings market
Rivalry varies between industries and sectors
Categories of rivalry:
 conflict (efforts to destroy competitors)
 competition (to provide better solutions to customer problems)
 coexistence (rivals allow each other to operate in different
segments)
 cooperation (rivals cooperate in some activities such as
purchasing)
 collusion (illegal cooperation to fix prices)
Rivalry is dependent on:
 number of dominant players
 levels of demand and capacity
 personalities of competitors
Companies strive to compete more effectively by creating superior competitor
advantage based on critical success factors (CSF) – also called key factors for success
Defining CSF enables a company to understand market position vis-à-vis competitors’
CSF need to deliver experiences/attributes most valued by customers
Examples of CSF include:
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lowest cost base and extensive geographic coverage for budget hotel brands
high service quality for exclusive hospitality events
highly regarded brand reputation and high brand awareness for
international hotel chains
technical superiority in food production processes for fast-food chain
restaurants
consistent standards of service in standardized hospitality branded concepts
easy to find locations and secure parking facilities for provincial business
hotels competing in urban locations
superior service provided by well-trained and highly motivated personnel, in
luxury country house hotels
Competitive advantages that are easily copied have limited value
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Branding is a core concept in hospitality marketing
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The brand is the most overt manifestation of STP strategy
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A hospitality brand immediately distinguishes one company’s
offering from competitors’
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Brands help customers to identify what the product or company
stands for – a badge of quality
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Successful brands enhance company profits
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Most discussion/research into hospitality branding relates to
multi-unit chain operations
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Many of the principles of brand management apply to individual
properties – individual hospitality outlets can be perceived as
brands
Brands are complex and have multiple dimensions, they are:
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a legal instrument where a company owns the brand name, logo
and design
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a logo, which differentiates the offer with a visual identity and
name, providing customers with quality assurance
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an integral part of a company image, reflecting the culture, people,
personality and reputation of the company
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a shorthand symbol that is easily recognized by consumers
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a risk reducer, giving consumers confidence that their expectations
will be fulfilled – the brand as an unwritten contract adds value to
the customer’s subjective experience
Over time, the marketing investment in brands is rewarded by
consumer goodwill and loyalty
Functional: focuses on delivering core benefits of a hospitality
service with efficient, well-designed processes, and no attempt
to engage the customer in an emotional relationship
Symbolic: addresses consumers’ ego needs and the desire to be
associated with higher-status groups
Experiential: focuses on sensory pleasures which stimulate
consumers
‘Me Too’: simply imitates an existing competitor brand
A brand name should convey the essence of a brand to its target audience
in memorable words or a short phrase
International brands need to ensure their name translates, and sounds
appropriate in other languages and that the logo is inoffensive
Examples of brand types:
Founder
Geographic
Price
Acronym
Market segment
Animals
Colours
Letters
Numbers
Wacky
Hilton, Marriott
Best Western
Budget Inns
IHG
Luxury Collection
Red Lion
Green Tree
W
Motel 6
YOTEL
Two key measures are used to monitor the effectiveness of brands:
Brand awareness is measure of the brand’s visibility
High-brand awareness = brand is well known and enjoys a high profile
Low-brand awareness = consumers do not know the brand
Brand image is a measure of the brand’s reputation
High-brand image = brand has very good reputation
Low-brand image = the brand has a poor reputation
Brand awareness and brand image can be plotted on a brand matrix
Figure 4.6 Brand awareness and brand image
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