By Ray George
There’s a cautious optimism across the hotel sector as the second half of 2003 approaches. But while there appears to be light at the end of the tunnel, it remains a difficult time for hotel companies to focus on brand development. In tough economic times, brand efforts are frequently considered “discretionary spending” and often fall under the knife. However, this type of short-term perspective ignores the lasting impact of a strong brand on not only customer perceptions and behavior, but also on the organization’s long-term economic health. While the link between brand investment and business results is clear to marketing executives, it is less so to executives with direct financial accountability.
Brands are not only reflections of business strategy, but also key levers to assist executives in achieving articulated business objectives. One approach for improving the visibility and fundamental importance of brand building with executives is by tying business challenges and/or desired strategic outcomes to brand-related efforts.
A framework to introduce brand into strategic discussions demonstrates how brands play a role in a company’s ability to capitalize on market opportunities. Known as the “credibility footprint,” the framework shows the intersection of a company’s core competencies, market opportunities and brand relevance.
Most strategic planning initiatives seek to demonstrate the overlap between market opportunities, which include customer behavior, competitive trends and macro-economic factors, and an organization’s competencies, whether product innovation, service excellence and/or customer intimacy. But if a company’s brand bears no relevance to target audiences, not only will efforts to capitalize on market opportunities stall, but the company’s core competencies will be undermined as well.
The media has written extensively about many of the most important links between brand and business results. A look at some of the less followed business challenges where astute brand development and management can help facilitate and accelerate business results follows.
MERGERS AND ACQUISITIONS
In any given year, many hotel properties and hotel companies change hands. This activity has increased in recent years as many hotel companies have shed under-performing assets to optimize profits. In an environment of organizational transition, brand can play a critical role as an M&A facilitator.
Two potential approaches can be utilized to enable brands to facilitate organizational transition in an M&A environment:
- Define the brand portfolio strategy. Given the merger or acquisition of assets, companies need to determine which of these assets hold the most economic potential and best support long-term business objectives. The key is to make sure such portfolio decisions are rooted in business strategy and customer insights.
- Once the portfolio strategy is set, use brand strategy and direction to guide the actions and behavior of those individuals required to make the brand transition. In addition to providing the creative guidance for new property owners, brands can define the ideal customer experience and the operational imperatives to deliver on that experience. Best of all, brands can define how each individual contributes to that ideal experience.
IBM is one company that has leveraged its brand using this approach. When Lou Gerstner joined IBM in 1993, he quickly made the portfolio decision to focus the majority of brand investment, which had been scattered throughout the IBM brand portfolio, on the IBM brand. This singular focus on the IBM brand not only allowed it to quickly assimilate acquisitions into the business portfolio, but also helped accelerate and simplify the organizational transition from a hardware to a services company.
Faced with aggressive competitive pricing, hotels taking on the characteristics of other products and services that are mature and facing stagnant growth. This quagmire can be avoided by pursuing relevant innovation (either product, service, people or other means) through customer understanding. “Customers” means both end-customers and franchisees, which are a critical link to the end customer. The key to relevant innovation lies in understanding your organizational capabilities, brand strength and potential and having an intimate understanding of customer needs.
While strong brands provide stretch to reach new customers/channels/markets, a combination of brand strategy and customer insight can also be a creative-brainstorming guide to fuel new product/service ideas and innovations. The key is to be specific, not only about the customer needs you are trying to address, but also about the usage occasions in which these needs occur. Similar to the credibility footprint, combining nascent opportunities with brand relevance can unearth growth potential in stagnant markets. In the past year, a host of innovations have emerged in the hotel sector, including hometown paper delivery to your hotel room, branded in-room features and 24-hour check-in. All address customer needs and leverage brand equity.
Brands should be built upon a foundation of a sound and viable business strategy. Often, brand strategy development can help to refine and enhance the business approach. But this articulation is often lost on employees who are not directly involved with or responsible for marketing and communications. A brand implementation exercise called “touchpoint alignment” can bring brand strategy to life internally. This identifies the critical points of interaction that define the customer experience and where the gaps lie between the current and desired experience. Interactive workshops with employees across the organization puts brand in the context of the ideal client experience; employees are then asked to translate that experience into their day-to-day jobs. It not only provides an opportunity to gain additional appreciation and understanding of the brand strategy, but also can drive organizational change in such a way that seeks employees’ expertise and assistance rather than dictates their actions.
Many organizations have leveraged their brands as their organizational transformation guides. As mentioned before, IBM drove significant cultural change through brand focus on service. UPS has aggressively shifted its brand relevance beyond package delivery to outsourced supply chain services while staying close to its powerful organizational values.
As companies seek to drive sustained organizational change, one of the challenges they face is how these changes will be embraced and managed across geographies – particularly daunting in a franchise environment. The key here is to manage, not message. As David Aaker, a world-renowned thought leader on brand, wrote: “There are no global brands, just global brand management.” Global brand management practices and organizational roles will enable global coordination, as brand provides a common point of reference that fuels valuable discussions across geographic borders.
Companies are embracing the idea of brand operationalization — bringing the brand to life through people, systems and processes — as a means of enabling global brand management and execution. Significant focus is being placed on organizational structures, roles and responsibilities related to brand management, which take into account the specific company capabilities and norms in order to balance consistency with customization. As these organizational structures are developed, supporting processes such as brand measurement and tools such as brand knowledge sharing and standards, are required. The combination of the strategy, organizational structure, processes and tools will enable global organizations to enhance brand leverage and equity to achieve business goals.
Large global corporations as well as niche global brands have developed and implemented such capabilities to support business and brand strategy execution. Global powerhouses such as BP and UBS, for example, have focused significant attention on brand management capabilities and tools, while smaller yet equally prominent global brands such as Zippo have pursued more sophisticated brand management.
It should be clear that brand must play a key strategic role in business strategy. Brands are assets and critical components of business strategy development and execution, and as such money spent on brand-building efforts should not be considered “discretionary spending,” but an investment in the long-term economic health of the company. Ignoring the lasting impact of a strong brand could be detrimental to the organization. As hotel companies seek to overcome business challenges and tackle new business opportunities, it’s essential that brand remains a strategic investment priority.
A version of this article was featured in the August 2003, issue of National Hotel Executive magazine