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‟ when 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‟t 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...
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