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Individual Brand Strategy vs. Corporate Branding Strategy: Individual Brand Strategy Rosewood owned a collection of unique properties, each with its own name or brand. Each hotel and resort featured details and aspects that reflected local character and culture of the location embodying Rosewoods Sense of Place philosophy, meaning each of its properties is uniquely defined by the location. This differentiated Rosewoods properties from the competitors.
Corporate Branding Strategy: Rosewood Hotels & Resorts had very low brand awareness among its guests. To encourage guests to use more than one Rosewood hotel, two possible approaches were considered. The first possibility to boost Rosewood's customer multi property visits was to set up a frequent-stay program. But this was rejected by the management as it was found that such programs had only proved successful for large multiple-segment operators with broad geographic distribution, where guests could easily redeem their rewards. The other possibility of fostering guests connection with Rosewood properties was to adopt a corporate branding approach, which the company believed would encourage multi property guest stays while promoting the Rosewood brand. 2
Disadvantages of Corporate Branding: Increase in marketing expenses Inconsistencies with respect to the brands Sense of Place motto. Chances of losing the uniqueness associated with individual properties Managers being reluctant to embrace corporate branding. Guests unwilling to accept corporate branding. Corporate branding means additional branding on souvenirs etc.
The main challenge that was presented to the executives of Rosewood in considering the move to corporate branding was its affect on customer lifetime value. Rosewoods move to corporate branding will have a positive impact on Customer Lifetime Value (see Appendix for calculations). With the move to corporate branding, it is anticipated that the number of multi-property guests will double from 5% to 10 %( 5,750 to 11,500).The number of repeat guests will go up from 19,169 to 24,919(see Table 1 in Appendix for calculations). Even though the number of multi property guests goes up by 5%, the average gross profit per guest decreases by $9 due to the additional marketing expense. Overall, the increase in the number of multi property guests will positively affect companys CLV and will also increase brand awareness among the customers. From the calculations in table 1, number of multi-property guests, average gross profits without and with Rosewood corporate branding is $2,702,500 and $5,301,500 respectively. That is, corporate branding increases gross profits by $2,599,000. The CLV increases by $14,006,874 with corporate branding.
Therefore it is evident that the company has enough financial credentials to support its decision to move to corporate branding. But in spite of these positive attributes, the management must ensure that they preserve the uniqueness and individuality of the Rosewood properties while developing consistent brand-
APPENDIX: Table 1: Without Rosewood Branding With Rosewood Corporate Branding Total Number of unique guests Average Daily Spending Number of days of average guest stay Average gross margin per room Average number of visits per year per guest Average marketing expense per guest Average new guest acquisition expense Total number of repeat guests Total number of multi property stay guests Average guest retention rate Average gross profit per guest Average gross profit (based on Total number of multi property stay guests) 16.67% (19169/115000) $470 (750-150-130) $2,702,500 (470* 5750) 21.67% (24,919/11,5000) $461 (750-150-139) $5,301,500 (461*11500) 19,169 5750 (5% of 115,000) 24,919 ( 19169*1.3) 11,500 (10% of 115,000) $150 $130 $139 ((115,000*130) +1,000,000)/115000 $150 32% 1.2 32% 1.3 115,000 $750 2 115,000 $750 2
CLV per guest (with rosewood branding) = (461*6)-150 = $2616. CLV for repeat guests= 2616*24,919 = $65,188,104.