Rosewood hotels and resorts Case Solution
Rosewood is a 5-star luxury hotel, with its headquarters situated in Dallas; Texas. The hotel has a strong financial background and operates with unique brand strategy. It assigns its different projects as standalone projects which incorporate different and separate brand image, brand equity, positioning and culture into it.The standalone brand strategy enables Rosewood to indulge the atmosphere and culture of the hotel accordingtoits vicinity. It helps the organization link, integrate and synchronize itself with the local culture and social values of the region that contributes to creating anassociationwiththe people around it.
However, with passingtime and changing market behavior, CEO John Scott and VP Boulogne, identified loopholes in Rosewood brandstrategy. The company does notassociate its name with the hotels located in different regions. Itdoes notendorsestrongly the other SBUS of rosewood, which has led to low brand awareness and hence leading to low brand equity. In such situation, the company decides topursue a new marketing strategy in which a strong brand awareness will be initiated through unified corporate strategy.
The company aims to pursue thismarket strategy either by adopting the corporate strategy or by establishing acustomer membership program. Both these initiatives have some advantages and disadvantages, yet it has to be decided which strategy is to be followed in order to regain and sustain the brandimage of the hotel in the market.
In addition to the following, the hotel does nothavecorporate images like its direct competitors Ritz Carlton, Four seasons and Fairmont. All these hotels have achieved their goal of expanding its horizon by using strong brand awareness.Also, since these players have strong brand awareness, the rate of arepeatcustomer is also high(100000) while in thecase of Rosewood, It is only 5%.Hence, there is a significant untapped opportunity for the company to build and evolve its brand image by usingstrongadvertisement and brandawareness strategy.
Rosewood follows distinctive, differentiated brand portfolio approach, which inculcates the separate brand design, culture, and environment. The strategy in start helped the company to attract the visitors and local customers to enjoy the distinctive culture of the hotels which engraves the local and historical values into it.Under such scenario and brand strategy, only a few number of employees knew the real nameof rosewood and could buildapositiveassociation with it.
However, the other competitorspursuedstrongbrand building and brand association strategy, which helped them to attract repeatedvisits, create avalue proposition and brand identity in the market. Under such scenario, the main managerial issues the company faced were:
Lack of Market and Customer Behavior Understanding
The company failed to understand the market forces and consumer behavior. Itneglected to understand the core basics of building a unified brand and its essence on theoverall brandimage. Rosewood was established as anexquisitely styled hotel, yet itfailed to connect all of its hotelsthrough one name, “rosewood.” The approach hindered the company’s profitability because of no brandawareness and association.The uniquebrand name creates a unique value proposition in the market, through which the customer connects with the organization.Rosewood failed to foresee theimpact of strong brand awareness on its brand portfolio.
It also faced acomplication in handling the customer data, which if arranged and utilizedearlier, could have depictedthe trend of consumer behavior towards availing services of Rosewood. Indoing so, the company overlooked the value of creating a specific positioning in the consumermind as well in the market, to make itself identifiable.Due to the generic nature of Rosewood hotels, the company itself diluted its brand name.
No Strong Endorsement
The company endorsed its parent brand name through the accessories and equipment used inthe hotels, and almostin such a smallsize that many of the timecustomers overlooked the name Rosewood.Even in advertisementcampaigns, the name of Rosewood remained the secondary focus of the company.The strategy lacked to draw an enormous mass ofcustomerstowards the parentbrand, through which they could havedeveloped the brand association and brand loyalty with the customer.Also,suchcampaigns missed to position itself in the mind of the customer through which they could identify and choose rosewood over other hotels.
Since the company did not affiliate itself with its other brands, the less popularity and brand awareness drove thecustomer away from the company, reducing the number of repeat sales.
The company, after identifying the key problems that cause low profitability, devised the solution of doing corporate branding. The change in organizational strategy made many managers to resist itbecause of the loss of autonomy and equity of the brand that each hotelcarries as a standalone brand.Also, the management faced resistance from themanagers to accept the change and devise a new business plan that will require workingfrom scratch............................................