Rosewood Hotel operates as a multinational company in the hospitality industry. By 2003, the firm had established 12 outlets in different parts of the world. Since its inception, the firm had developed recognition due to its effectiveness in enhancing the value of its property.
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According to Kotler and Keller (21), branding is an important element in the success of a firm because it contributes towards creation of a high competitive advantage.
The firm had integrated the concept of individual branding. The objective of this branding strategy was to entrench its core value of ‘Sense of Place. As a result, the firm has been able to position itself by providing differentiated and unique products. According to Schultz, Antorini and Csaba (40), a firm may either adopt a corporate or an individual branding strategy.
Rosewood faced intense competition from both individually branded hotels and corporate branded hotels. Examples of corporate branded firms which Rosewood competed with include firms such as Ritz-Carlton, Four Seasons, One & Only, St. Regis and Mandarin Oriental Hotel. On the other hand, individually branded firms which the firm competed with include Orient Express, Auberge, and Rock Resorts.
Pros and cons of moving from individual brands to corporate brands, customer lifetime value, brand strategy
The firm’s management team realized that individual branding was not effective for the firm as a multinational firm. Individual branding strategy was not operational to various Rosewood outlets located in different parts of the world and had adopted the same branding strategy. This limited the firm’s competitiveness in the international market.
This arose from the fact that the customers who were loyal to the firm could not receive the unique characteristic of the hotel. As a result, they patronized the competing hotels which have incorporated strong brands. This means that moving from individual branding to corporate branding can result into the firm creating a strong customer relationship on a global scale.
Additionally, moving to corporate branding will enhance the firm’s market position within the luxury hotel industry. By adopting the corporate branding strategy, Rosewood was able to improve on its status symbol thus attracting a large number of customers. Corporate branding strategy enabled the firm to integrate frequent stay program.
The program led into a significant increment in the annual average rate of repeat purchases amongst customers from 1.2 per customer to 1.3 per customer. Additionally, the average stay also doubled from 5% to 10%. This illustrates that there is a high probability of the firm being effective in delivering value to its customers.
There is a high probability of the firm being efficient in its service delivery. This arises from the fact that the firm will be able to understand the customers’ habits more effectively.
However, there are some risks associated with integrating corporate branding strategy. The strategy may result into the firm incurring high costs with regard to its operating and marketing expenses (Davis 69). For example, to position itself in the market, Rosewood will be required to retain its brand promise. This will require the firm to make significant marketing investments.
Additionally, the strategy may also result into some of the firm’s customers being alienated. The resultant effect is that the firm may lose its loyal customers.
This is mainly likely to occur in well-established outlets such as The Mansion and The Carlyle. This means that corporate branding strategy may have adverse effects on the customers’ lifetime value. Instead of changing its individual strategy, the firm should implement promotional strategies.
Davis, John. Competitive success; how branding adds value. Hoboken, NJ: Wiley, 2010. Print.
Kotler, Philip and Keller, Lane. A framework for marketing management. New York: Pearson Education Limited, 2011. Print.
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Schultz, Majken, Antorini, Yun and Csaba, Fabian. Corporate branding. Copenhagen: CBS Press, 2007. Print.