Rosewood Hotels & Resorts
Rosewood Hotels & Resorts 1 Running Head: ROSEWOOD HOTELS & RESORTS Rosewood Hotels & Resorts Rosewood Hotels & Resorts 2 Rosewood Hotels & Resorts is a collection of unique, one-of-a-kind luxury properties that are individually branded with the purpose of capturing what is unique about a given location. This strategy has been successful but now management believes that branding the hotels as a collective will increase customer visits between properties. Question #1- Why is Rosewood considering a new branding strategy?
In your answer consider the characteristics of the company, its competitive environment, customer base and its current marketing/branding strategy. Rosewood Hotels is considering a new branding strategy to increase its revenue. They recognize that the even subtle increases in customer lifetime value (CLV) can mean significant increases in the bottom line. They also realize that an investment in retaining a customer to increase the CLV is more cost effective than attracting new customers due to the long term benefits.
Management believes that moving from marketing the properties individually to corporate branding will increase customer repeat visits between hotels and that will consequently increase revenue by increasing CLV. This individual “brand positioning substantially limits our market,” as chairman of the board Maritz states, “I think we are underestimating the power of corporate brands, such as the Four Seasons, as status symbols. At this time, we are after only a subset of the luxury market-the sophisticated customers who value the distinctive, exclusive „collection hotel? hen in fact the vast majority of the luxury market seem to value the corporate-branded version of luxury” (Dev & Stroock, 2007, p. 3). Currently Rosewood customers don? t realize that they own other luxury hotels, consequently the corporation is unable to capitalize on the exceptional experience that their customers are having. This lack of education is resulting in a significant opportunity cost because their happy and satisfied customers aren? t making the natural transition to visit more of their hotels simply due to that lack of information and education.
Rosewood is different from the corporate brand model in which luxury tended to follow a “canned and cookie cutter” approach across properties. In contrast, Rosewood operates a collection of unique properties, each with its own name or brand that reflects local character and culture. They believe this is a powerful strategy to differentiate their properties from competitors with the corporate brand (Dev & Stroock, 2007, p. 2). According to Silk, brands are the names or symbols that marketers have introduced to make product differentiation concrete (Silk, 2006, p. 100) and because Rosewood hasn? had a name or symbol that did this for the collective of their hotels, they are missing out on a powerful opportunity. Rosewood is horizontally differentiated from its competitors since their products differ in ways independent of buyers? overall judgments about the products? quality levels. Silk states that a firm pursuing horizontal differentiation should identify the group whose needs are not sufficiently served by a competitor (Silk, 2006, p. 92). Rosewood was hoping to attract “Rosewood junkies,” clients who would seek out Rosewood properties exclusively.
This was a very different strategy than their current individual branding since their customer surveys show that a majority of consumers did not know the brand (Dev & Stroock, 2007, p. 3). A collective brand could result in vertical differentiation because the exceptional service and experience at one hotel could compel a satisfied customer to visit another Rosewood property in a different area. Rosewood is leaving “money on the table” each time that a consumer visits one hotel and doesn? t realize that they have additional properties in other areas.
They are investing time and money in marketing, exceptional customer service and a unique local cultural experience without Rosewood Hotels & Resorts 3 capitalizing on the fact that they have the guest right in front of them that might be interested in a similar experience in another location. Question #2 – What are the pros and cons of Rosewood moving from individual brands to a corporate brand strategy? Customer Lifetime Value Individual Brands To increase CLV with individual brands, you have to wait for the consumer to return to a specific property.
Corporate Brand Strategy To increase CLV within all the properties you simply have to educate consumers that you have additional properties and then deliver an exceptional product so that consumers want to experience it in other locations. With corporate branding, you are only as strong as your weakest hotel experience. You run the danger of one negative experience at another hotel ruining your opportunity to attract a new customer to your hotel in another city. With corporate branding you must have strong and consistent brand standards that are reinforced at every level.
This would be a completely different approach to how Rosewood has positioned their hotels in the market. When moving to marketing the hotels as a collective group of properties, care must be taken to maintain the unique image of each property while expressing the shared brand strategy. Since each property has a unique and local flavor the marketing must support that successful direction while unifying the properties under a corporate brand strategy. With a corporate branding strategy Rosewood runs the risk of losing their individual competitive strategy with unique properties with a local cultural feel.
Careful attention will be required to focus on preserving the unique feel of each hotel while tying them together under one corporate branding umbrella. Brand Standards With individual branding an individual hotel manager can control the consumer experience. If that experience was exceptional they have a fantastic chance at having a repeat customer the next time they were in the area. Commitment to unique, one-of-a-kind luxury properties It? s very easy to attain this goal when marketing individual properties.
You can focus on the unique characteristics of individual properties and design material that fits that particular property. Differentiation Individual branding supports the strategy that Rosewood has successfully followed to differentiate themselves from their competition. Consumers stayed at the Rosewood because their properties were unique and local and not the “cookie cutter competition”. Rosewood Hotels & Resorts 4 The largest danger that I see in moving away from the individual branding is Silk? s statement that brands “assert that a firm? products are different from those offered by competitors” (Silk, 2006, p. 100). The Rosewood has done an extraordinary job of creating a different look and feel from the competition by launching this individual branding strategy. While I think that it is worth the risk to increase the CLV and ultimately increase revenue, careful attention must be given to insure that the corporate branding strategy supports the individual branding that has been so successful. Question #3 – Will the move to corporate branding strategy maximize customer lifetime value? As Silk states, “value is created by meeting customer needs.
Thus, a firm must define itself not by the product it sells, but by the customer benefit provided (Silk, 2006, p. 3). The benefit that the Rosewood is providing the customer is not changing if they move to a corporate branding strategy. It would be easy for Rosewood to define itself by the product that it sells in individual properties, instead of focusing the customer benefit provided; unique properties with local culture and flavor. Continuing to focus on the unique nature of its properties under the collective Rosewood name will give their customers reason to experience new hotels that Rosewood owns.
Because the focus is the benefit that Rosewood provides to its customers, they can market as they always have with one simple addition; the added benefit to customers that when they stay at another Rosewood hotel they can expect the same benefits of an exceptional experience at a unique property with local flavor and culture. Silk defines marketing strategy as involving two major activities: selecting a target market and determining the desired positioning of the product in the target customers? minds and specifying the plan for marketing activities to achieve the desired positioning (Silk, 2006, p. ). Moving to corporate branding will require them to focus their efforts on not losing the desired positioning in their current customers minds by continuing to market the strength of the individual uniqueness of their properties while subtly tying the hotels to the corporate brand. As Silk states “many brands struggle to denote anything that the consumer finds worthy of notice” (Silk, 2006, p. 94) and Rosewood has defined what the customer finds worthy; unique, local properties. Keeping this is mind as they create the corporate branding will aide in their success.
I think that by keeping the individual property as the cornerstone of marketing in the hotel with a subtle tagline of “by Rosewood Hotels and Resorts” can keep the uniqueness in the forefront of the customers mind and still achieve their corporate branding goal of increasing revenue through CLV. Corporate marketing that has all the hotels listed and their individual local character can be a powerful way for consumers to see that there are more hotels that share in the same characteristics if they want an additional experience similar to the one they just had.
Silk notes that Marketing? s customer focus is to develop and manage trustworthy relationships with customers, thereby providing the context in which exchanges occur (Silk, 2006, p. 50). These trustworthy relationships will be developed through strong brand standards that will need to be defined and strictly adhered to so that one bad experience at a hotel will not damage the reputation of the other hotels and consequently negatively impact the CLV of the entire company.
Silk also states that companies must understand how they can best augment their core product to create the bundle of benefits that will provide the most satisfying customer experience and shield the company from threats by competitors (Silk, 2006, p. 101). This bundle of benefits Rosewood Hotels & Resorts 5 is the fact that Rosewood has other wonderful hotel experiences waiting for their customers once they realize that additional properties exist.
I am convinced that moving to a corporate brand strategy will indeed increase their revenue by increasing CLV as long as their corporate brand strategy combines the unique individual attributes of each property with the benefit to the consumer of a predictable exceptional experience. Bibliography Dev, C. S. , & Stroock, L. M. (2007). Rosewood hotels & resorts. Harvard Business Publishing. Silk, A. J. (2006). What is marketing. Boston, MA: Harvard Business School Publishing. Rosewood Hotels & Resorts 6