With the increasingly intense competition in the services sector, differentiating brands is very tedious and costly. This study presents the customers’ perceptions of brand equity in the case of the hotels, as strong brands would undeniably be the surrogates when the “company offers no fabric to touch, no trousers to try on, no watermelons or apples to scrutinize, no automobile to test-drive,” (Berry, 2000).
Thus the following discussion would be about branding services since there has been minimal inquiry upon it and has evolved as a major component of marketing strategy.
Every company is making the most of its fundamental assets they possess- the brand- may help them attain goals profitably in the long run. The challenge is to comprehend how consumers perceive the brand since organizations have not really come up to a coherent terminology.
According to the world’s standard marketing textbook, written by Philip Kotler (1984), a brand is “…a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.”
This definition considers the identification aspect of the brand as a sign and as label of differentiation from competitors. The rationale behind is correct as it has to do with consumer perception stressing on the supplier’s recognition to make a purchase.
Ambler and Styles (1996, p.10) put forward a refined definition of brand taking into account the intangibility and variability characteristics of services:
“…the promise of the bundle of attributes that someone buys…the attributes that make up a brand may be real or illusory, rational or emotional, tangible or invisible.”
In the “Power of the Brand” by Scott M. Davis (2000) argues that “a brand is made up of three things: what a company sells, what a company does, and what a company is. A brand represents a set of promises. It implies trust, consistency and a defined set of expectations.”
Service branding is crucial for an organization’s competitive advantage, emphasizing on Wood (2000) refined definition of brand that focus mostly on the consumer’s benefits:
“[…] a brand is a mechanism for achieving competitive advantage for firms, through differentiation (purpose). The attributes that differentiate a brand provide the customer with satisfaction and benefits for which they are willing to pay (mechanism).”
However, it did not match with the intense growth of the services sector but increased competition has made service companies realize of its fundamental nature (Chernatony & McDonald, 2003).
In the context of services, the company itself is the prime and meaningful brand compared to branding goods. Initially the focal point was on product preferably than services as such there has been minimal inquiry on how to brand a service. Much of the study has converged to service quality, service failures and customer evaluation of service in the marketing domain (O’ Cass & Grace, 2004).
According to Davis (2000), branding services merges the activities undertaken by a company from the customer’s point of view. Also, it is critical to apply branding in the service arena underpinning that services are intangible in nature for consumers to assess the quality. Service brand is eventually a promise of future satisfaction that customers believe in the invisible purchase (Berry, 2000).
Dobree and Page (1990) postulated five phases for branding services successfully:
building a brand proposition
overcoming internal barriers
measuring delivery against the proposition
continual improvement
expansion
Service branding comprises of multiple interfaces, as opposed to product branding. This involves the contact between the customers and the diverse staff across the service companies, thus resulting in the distinct experiences with the brand (Mc Donald et al, 2001)
The overall conception of branding goods and services is similar but the discrepancy lies in the execution of the product and service brand. Services have a number of distinctive characteristics including intangibility, inseparability, heterogeneity of quality and perishability (Jones et al, 2002).
Service branding is predominantly unlike that make service traits distinguish from physical goods and they depend much on the employees’ actions and mind set. In this project, the primary aspect impacting on the uniqueness of services is intangibility that is explored to build up successful service brands.
According to Rowley (1997), the objectives of service branding can be classified into the following categories:
to boost sales
to sustain or improve market share
to create a competitive edge
to inform and educate the market
to develop promotional efficiency
It should be noted that services branding might contribute to the attainment of any of these objectives, but it is vital to identify where the main concerns should lie. Moreover, the above-named objectives are not exhaustive as different organizations have diverse objectives.
According to Berry et al (1991), a service brand should possess, if not all, of these attributes:
Distinction. The brand name instantly recognizes the quality of service provided with a means to differentiate it from others.
Relevance. The brand name communicates both the nature of the service or identifies a trait
Memorability. The brand name can be understood, utilized and remembered easily; changing its brevity and simplicity into an asset.
Flexibility. The brand name allows probable growth so far including the current services provided.
Alternatively, Rowley (1997) proposes that service brand names should be simple for customers to say, spell and remember. In similar vein to Berry et al (1991), the brand names should be distinctive. Therefore, service brands are more than just names, which is a blend of all the elements that reflect the intangible nature of the services.
Services cannot be felt, tasted, touched or seen in contrast to goods, making them difficult to grasp mentally. Nevertheless, the existence of some tangible features helps consumers in general to evaluate the services fully. In the ambit of services, the company itself is presented as the brand to make the service more tangible. Studies show that consumers do not require additional information relating to an organization product and services since they are content to presume that well known companies have the exceptional service (Chernatony & Mc Donald, 2003).
Service branding must be made tangible to provide positive perceptions among customers to deal with intangible offerings, as often the service brands run the risk of being perceived as commodities. For instance, physical aspects such as employee attire, interior decoration and the tune played to customers on hold are effective ways to make brands tangible.
From the evaluation spectrum adapted by Zeithaml & Bitner (1996), service companies need to assess their services to allow consumers’ judge their service brand well. The level of difficulty in evaluation often depends on whether consumers are evaluating a search, experience or credence attribute of a service.
Search qualities-identifiable features like colour, smell, feel, price among others that can be judged by consumers before purchase. Word of mouth (WOM) is an effective tool for communication that persuades consumers to suggest the brand mostly to others.
Experience qualities- discerning attributes such as fun, taste and purchase satisfaction that can be best realized only during or after the consumption experience. As such, presentation of service facilities helps consumers to make a viable judgement of the purchase of the brand.
Credence qualities- characteristics that consumers lack to entirely assess the services, yet after consumption to compare the outcome expectations. For instance, service brand need to demonstrate the need to offer the brand attributes artistically through a strong message of trust.
According to Krishnan & Hartline (2001), most services are dominated by experience and credence qualities preferably than search attributes. Therefore, customers are able to assess the service features only during or after the consumption experience. Availability of information can by no means substitute the actual experience for services that are elevated in experience attributes such as a hotel stay (Fung So & King, 2009). Conversely, it has been argued that the presence of search attributes facilitates to tangibilize the service, thereby making the purchase less risky for the customers.
Branding services can also be an effectual means to hint to customers that the organization has devised a particular service offering that is special and deserving of its own name. Branding has obviously become a competitive tool for services. In addition, it helps to make the abstract nature of services more existing (Keller, 2003).
It is indeed fundamental to consider the methods to create successful brands in the services sector. As such, Doyle (1990) postulated four elements of strong branding but their significance in the service domain is not in doubt.
Prioritize quality
Service brands give the customers an indication of the service quality of the organization. High quality helps to create a competitive edge, thereby leading to scale economies. Most importantly, brands reside in the minds of the customers because of the past experience with the quality service.
Offer superior service
Service firms aims at offering exceptional service with regards to differentiating their offering with competitors. The bond between the brand and the customer is based on trust and loyalty with implicit understanding. Only if they derive satisfaction from the superior service, they will take full advantage from it otherwise, switch to another brand with high service levels.
Get there first
The importance here is to reach the customers’ mind set before the entrant of competitors, which is eventually to grasp the market first. This can be done thru’ the creation of rational structures that help customers to categorize the information about the firm’s services, thereby simplifying their decision making.
Be different
The offerings in the service sector are particularly similar but the opportunities to offer the customer something distinctive and special is being exploited by organizations. Moreover, the service brand must be the overall promise projected into the market and the experience delivered and both have to be aligned so it is the customer’s total experience of the organization. Therefore, the need for efficient control of differentiation in services paradigm is essential.
According to Mc Donald et al. (2001), service brands can be built up thru’ a fairly related process to product branding:
establishment of clear brand aims
description of clear positioning; and
choice of apt values
In the context of services, there have been over dependence on the traditional FMCG branding approach. But, the emergence of services branding literature by few scholars has shifted the focus from tangibles to intangibles with a more unbiased perspective.
As a result, the FMCG paradigm was customized with the need to ensure an absolute communication between the customer and the service organization, taking into account its specific nature:
Brand differentiation .Service marketers strive to distinguish their brands thru’ unique selling proposition, thereby building up lasting relationships with customers.
Consumer motivation. Customers are hesitant to switch between service brands because they see the disparities as minor, whereby customer loyalty is difficult to retain.
This chapter provides an overview of service branding. It started with some brief definitions of brand perceived by different scholars. Explanation was given to make clear of the evolving concept of branding in the context of services. It also highlights the objectives of service branding and the characteristics the service names should possess. It also provides emphasis on how to tangibilize the service brand together with the elements for building up successful service brands. The chapter ends with the notion of the modification of the FMCG model in the service companies. Having overviewed service branding, the next chapter deals with the brand equity that eventually relates to the Service Branding Model (Berry, 2000).
This chapter provides a critical analysis of the various economics associated with the brand equity concept. Building brand equity is considered to be the cornerstone of an organization’s success.
It should be noted that, referring to the previous chapter, service branding goes in line with the development of brand equity in the context of services. Thus the following discussion would be about brand equity relating to the Service Branding Model (Berry, 2000).
Brand equity has achieved much attention during the recent years. The commonly accepted definition of brand equity is the “added value endowed by the brand to the product” (Farquhar 1989). It is a primary tool that customers use to seek information about a purchase, like quality.
Aaker (1991) has considered brand equity and its contribution to value by defining brand equity as “the sets of assets (and liabilities) linked to a brand’s name and symbol that adds the value provided by a product or service to a firm and/or that firm’s customer”. This explores the fundamental nature of brand equity (Lemon et al, 2001) as customer’s subjective and intangible assessment of the brand, above and beyond its perceived value.
Keller (1993) overlooked the behavioral aspect and delineated brand equity as “the differential effect of brand knowledge on consumer response to the marketing of the brand”. Alternatively, brand equity has been operationalized by scholars like Blackston (1995) and Lassar et al (1995).
The challenge for hotel industry to gain higher brand equity lies upon “tangiblizing the intangible hotel experience” that customers confide in the invisible purchase (Kayaman & Arasli, 2007).
According to Prasad and Dev (2000), attitudes and perceptions, whether positive or negative, are likely to persuade a customer from choosing a hotel brand, which eventually represents brand equity. As such, they proposed a numerical brand equity index with the aim to help hotel companies capitalize on their brand value. It helps to scrutinize the modifications in brand equity through the use of brand performance and brand awareness as indicators.
Referring to Aaker’s (1991) definition of brand equity- a set of assets and liabilities linked to a brand- he grouped the major assets of brand equity model into five components of consumer-related bases that he describes as “brand equity drivers”: brand awareness, brand loyalty, perceived quality, brand associations and other proprietary brand assets such as patents and channel relationships.
According to Chen (2001), brand association is the underlying asset for creating strong brand equity. The reasons behind are:
Brand awareness is not adequate enough to build up strong brand equity though it is a vital driver. A powerful service brand requires more knowledge as compared to a weak brand.
The remaining brand equity dimensions increase brand loyalty. The perceived quality and the brand name help customers to buy and impinge on the satisfaction, thereby leading to brand loyalty. But, sometimes customers do not really think while buying a hotel brand, leading to the exclusion of brand loyalty from the brand equity concept.
Brand awareness is the primary step in building brand equity through the ability to recognize the strength of the brand in the customer’s mind. Social marketers try hard to build this equity through brand awareness that impact on the consumers’ brand choices (Xu & Chan, 2010).
Moreover, recognition and recall are much more than indicators for remembering a hotel brand. Brand recognition is merely to recollect a past experience with that particular brand whilst brand recall is to remember the brand when the service class is mentioned (Aaker, 1996). Little information is adequate enough for customers to know a brand that will eventually elicit a positive response.
Consumers perceive the quality of the offering with an association of the hotel brand development. This association drives the quality of the service delivery, thus fostering long term success.
Perceived quality is the only amongst the brand associations that drive financial performance. In the hotel industry, quality is regarded as the foremost values in the mission statement that depict the authentic hospitality experience. Customers judge an organization performance mainly through the quality of experience. Only if the perceived quality improves, then the customers’ perceptions of the hotel brand trigger a favorable response towards brand loyalty (Aaker, 1996).
Occasionally, brands fail to build up equity without loyalty (Aaker, 2001). Brand loyalty is developed and enhanced through the creation of brand associations that make the brand an important element of the target’s self-image.
Brand loyalty is the determining aspect that boosts the loyalty -building programs of hotel companies. In order to achieve higher brand equity, there is primary need to develop and maintain a positive relationship thru’ customer loyalty. This will ultimately drive the financial performance of the organization, as the costs for attracting new customers are superior to the costs of retaining the potential customers (Xu & Chan, 2010).
According to Aaker (1991, p.109)), a brand association is referred to “anything linked in the memory to a brand”. For instance, the associated link could be the country of origin, organization, competitor or others. He categorized brand associations into eleven types, including “product attributes, intangibles, customer benefits, relative price, use/application, user/ customer, celebrity/person, lifestyle/personality, product class, competitors and country/geographic area.” Brand associations lead customers to describe fully what actually the hotel brand implies to them (Kim et al, 2003).
Three principal perspectives have been adopted in an attempt to understand brand equity. These distinct stances are financial perspective, customer perspective and a combination of both perspectives.
For this study, we will focus on the customer based perspective as it investigates brand equity at the consumer level. The customer based perspective explores brand equity at the consumer level, taking into account the importance of customers as both stakeholders of the organization and target of marketing communications (Xu & Chan, 2010).
It includes the two concepts of brand strength and brand value. Brand strength emphasizes on the perceptions and behaviors that consumers gain from the brand benefits whilst brand value regards the outcome of management capability in financial terms to influence the brand strength for proceeds (Kim et al, 2003).
Brand equity from the customer perspective reflects positivity when customers respond favorably to the degree of marketing activity such as advertising and word of mouth communication. Moreover, customer based brand equity drives financial returns to an organization (Lassar et al, 1995).
Muller (1998) proposed 3 critical points that a service brand should focus so as to build up equity:
Excellent quality products and services
Performance of service delivery; and
Formation of a symbolic and reminiscent image
Aaker‘s (1991) brand equity model has been criticized for minimal clue as to what marketing mix elements should be espoused by hotel managers to develop brand equity but it simplifies the process of measuring the concept of brand equity.
Specifically, Keller (1993) postulated a knowledge- based framework that depicted brands from consumers’ perspective based on two components:
Brand awareness
Brand image
Brand awareness is a crucial step for building up brand equity as it helps customers to identify the particular brand under any conditions. Customers must be aware and be familiar with the offering. Brand image can be referred to as perceptions residing in the minds of the consumers. However, Keller’s (1993) model may not be relevant in the context of services as they are more important to manufactured goods (So & King, 2009).
In the light of the fundamental nature of brand equity, Berry (2000) proposed a different approach - Service Branding Model- to measure brand equity in the services sector. The model helps to explore the relationship between service customers and the brand (O’ Cass & Grace, 2003).
Recognizing the significance of brand development in the services sector, Berry (2000) has postulated a distinct framework – Service Branding Model – depicting the service brand from the customer’s standpoint in the formation of service brand equity. Similarly, Berry (2000) supports Keller (1993) approach that brand equity is influenced by both brand awareness and brand image (brand meaning) (O’Cass & Grace, 2003).
Customer’s experience with the brand is an essential aspect of the service branding model. This underpins the argument of Berry (2000) that customer’s experience with the brand has primary impact on brand meaning and that brand meaning then has primary impact on brand equity.
The service branding model demonstrates the relationships between the six key components namely; brand equity, brand awareness, brand meaning, company’s presented brand, external brand communications and customer experience with company. The relationships between the constructs are illustrated by both dotted lines (secondary impact) and bold lines (primary impact).
Source: Berry (2000)
The primary source of brand awareness, the ability for customers to identify and remember the brand endowed with an indication is the company’s presented brand, i.e. the organization controlled communications. It is the communications that sell the company’s uniqueness and purpose thru’ advertising or promotional materials, service amenities, physical air of service providers, company name and logo.
The next main construct in the service branding model is the external brand communications that have secondary influence on the brand awareness. It refers to the information that customers gather about the service brand which is basically unrestrained by the company. Word of mouth (WOM) communications and publicity are the nearly common types of external brand communications.
Word of mouth (WOM) communications are familiar in the context of services due to their intangible nature, thereby influencing highly in the purchase decision. Publicity can impact not only brand awareness but also brand meaning that ultimately help in brand development (Berry 2000). External brand communications are characterized by the dotted- line link to brand awareness and brand meaning as compared to the bold- line effect of the presented brand on brand awareness.
Alternatively, brand meaning is primarily determined by customer experience with company. Such service experience depends mostly on the brand activities that are internal to the company such as the dealing with the servicescape, supporting the uniform behavior of employees and making sure of the significance of the core service offered by the company. Brand meaning refers to the perceptions of a particular brand from a customer’s perspective. This is because the services sector are labor- intensive, and the human touch plays a vital role in developing the brand thru’ exceptional service. Therefore, customer experience is a crucial element in the model as it depicts the primary impact on brand meaning while company’s presented brand and external brand communications show secondary influence (So & King, 2009).
Customer’s experience with company is more dominant than the company’s presented brand and external brand communications. As such, a presented brand can only generate brand awareness with the existing customers but service experiences differ. Negative experience with a particular service provider will discourage customer’s repeat visit no matter how much advertising. In order to reduce advertising costs with the purpose of attracting new customers, there is the need to retain the existing customers by providing positive service encounters. The source of the experience is the locus of brand formation where the service organization is itself the brand.
Therefore, the Service Branding Model is concluded to be the most appropriate framework to date in exploring brand equity in the hotel services. In order to measure the six constructs in the Berry’s (2000) model, a sample comprising of hotel customers that have direct experience with the hotel brands are required in determining the brand equity. To facilitate this validation, the model is used as a conceptual framework upon which the research hypotheses are developed in the research methodology chapter.
This chapter depicts an apercu of the components and concept of brand equity. It deals with conflicting definitions of brand equity. The different elements of brand equity are also discussed in details. Emphasis is as well given on the brand equity approach from the customer’s perspective. Besides, this chapter deals with the essential Service Branding Model (Berry, 2000) and the relationship between the various constructs. After having reviewed the literature on the brand equity, the following chapter deals with the research methodology of the study.
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