LITERATURE REVIEW
Literature review
When in the MSDI conference that was conducted in the late 1980s and at the beginning of 1990s, the concept of brand equity was discussed then participants agreed that there are two sorts of brand equity that includes financial brand equity and consumer based brand equity. Financial brand equity is related to the value of the company as it the brand of the consumer is treated as an asset. However, the consumer based brand equity (CBBE) is related to the value of customers because the brand adds convenience in the lives of customers (Cant, Strydom & Jooste, 2009).
It has been determined that with the modernization of world, the preferences of companies changed and customers become the core of marketing activities. Companies rather convincing customers on their ideas started building products based on the needs and wants of customers (Encyclopedia of Business and Finance, 2007). Therefore, by following the modern relationship marketing era, the major focus of this paper is on consumer based brand equity (CBBE).
Customer based brand equity (CBBE) can be defined as the pattern of estimating the customer's perception of a particular brand (Keller, 1993; 2001). Nowadays, companies are opting for building a strong branding and customer loyalty strategies. Nevertheless, building a strong brand image requires a fair amount of equity to be invested in. A strong brand image and a great level of equity funding can derive more benefits to the firm (Clow & Baack, 2007). Because the equity is considered as the sum of values related with the strong brand image. Creating a strong CBBE requires four steps explained in Keller’s brand equity model i.e. brand identity, brand meaning, brand response, and in last, brand relationships based loyalties created in minds of target customers. The Keller model of brand equity is composed of elements that are the true measures of brand equity.
(Kerri-Ann & Alpert, 2004)
In the first step of the model, brand identity must be defined by creating a brand salience or awareness so that your target customers can easily find the brand in the competitive market. Increased awareness of the brand is an important measure of brand equity in the hotel industry. For example, Marriott Hotel defines its identity as a luxurious hotel; it is a well-recognized brand and it awareness communicates the strength of its brand equity. In the second step, after defining the brands’ identity, brand meaning must be communicated through image or product sent to the target market so that the customers of that market can generate a positive perception about the product. Hotels communicate their inside experience through social media that allow customers to generate positive perceptions about the service. Positive perceptions lead customers towards the purchase of services. Until hotels do not generate positive knowledge, they would not be able to generate greater financial value. In the third step, the response of the customers with respect to the product is recorded with the help of customers’ judgments and feelings towards the brand. The service industry is sensitive and depended heavily on customer experiences; it is essential for hotels to provide a good experience to customers and taking feedback for making improvement in services. This helps in creating loyalty of customers to the brand. At last step, an intense relationship must be created between the brand and its customers for assuring long lasting loyalty (Keller, 2001). Measurement of brand equity over time will allow hotel managers in understanding that how their marketing activities influence the customer perceived knowledge about the brand and how by making the changes in those perceptions they can improve their sales (Kam Fung So & King, 2010).
EURIB (2009), briefly explained the model of brand equity by Aaker as a set of assets such as loyal customers, associations (e.g “it floats” and “being pure”), perceived quality, awareness of name, that customers link to the brand (symbol and name) and add or subtracts value to the service and product companies are offering to them. Brand equity is based on assets, and these assets vary with different context.
(EURIB, 2009)
The above picture summarizes the concept of brand equity. It shows the five categories of assets that are the base of brand equity (EURIB, 2009; Jorgensen, 2013).These elements of brand equity are important and used to as a measure of brand equity (Glynn, 2009; Trompenaars & Coeberg, 2014). For example, the awareness of brand name leads people to the familiarity of the brand that generates the level of comforts among customers regarding the brand. People tend to purchase the familiar brand more as compared to the brands they are not familiar. A well-known brand is more acceptable in term of quality and reliability as well such as Marriott and Ritz Carlton (Kapferer, 2012; Aaker 1991). Brand loyalty is considered a center of brand equity (Duan, 2005). Brand loyalty reduces the vulnerability of brand to the action of a competitor. The loyalty of customers allows hotels to remain stable and keep continuing with existing customers rather searching for new and spending huge amounts on marketing and advertising to approach new customer markets. For example, loyal customers of Marriott and Ritz Carlton do not allow them to marker their services to the lower class by communicating cheap deals. For generating brand loyalty hotels use diverse strategies such as issuing reward cards and lowering the hotel points’ value. Many offer access to advanced technology and provide information regarding hotel on different websites so they can easily compare accommodations and prices (Hilton, 2013). Perceived brand quality can be positive and negative as well; positive perceived brand quality allow hotels to charge higher prices for their brand. Hotels in this regard try their best to offer an excellent experience to customers through offering them differentiated services such as spa service, gym services, separate meeting rooms and so on (Fayrene & Lee, 2011; O’Neill & Mattila, 2010). However, the brand association is also an important component of brand equity. People prefer the brand most when they can associate the brand with themselves; hotels create an association by communicating their luxury and comfort with (Pride & Ferrell, 2015; Sun & Ghiselli, 2010).
All hotels provide similar services and making the distinction is important for gaining competitive advantage. Aaker (1991; 2009) says that brand equity or consumer based brand equity is the mixture of brand loyalty, and perceived brand value by strong branding. They all talk about creating or changing the perception of the customer regarding the product or service offered. They all talk about to create a distinctive image and identity of the brand so they can capture the eyes of the targeted customers. In the end, they all talk about the high level of customer research in the target market area so that hotels can know better about how the minds of their targeted customers work in relation to their services and the ways in which they can influence the purchasing decisions with more authority. All the definitions say only one thing that customers perceptions must be aligned in a manner that helps in creating a strong branding strategy, and customer loyalty (Fayrene & Lee, 2011).
Brand equity can be named as an intangible asset that a company builds with time by spreading brand awareness, clearing identity, by acting socially responsible, through communicating consistently, and by promoting and spending the brand. It is important because it helps organizations in gaining loyal customers, enhance the profitability through generating repeat purchase, and allow companies to charge premium prices. It offers a platform for growth and enhances the competitive advantage of businesses. Brand equity is something that creates value for both firms and customers as well (Aaker, 2009; Vulpula, 2006; Kayaman & Arasli, 2016).
Experience Economy
The concept of experience economy was first proposed in 1998 by Pine and Gilmore. They argued that economic experience is a final stage of the progression of an economy that has changed through the stages of services, goods, and commodities’ economies. The concept communicates that because of increasing competition, increased expectations of customers and technologies services have not been different and looked like commodities (Pine & Gilmore, 1998). For example, in prior stages, long distance communication services were sole on prices solely, but later experiences such as good and clear voice quality emerged as a subsequent step. Therefore, it has become essential for service organizations that they perform exceptionally and serve their customers with a differentiated experience. For the attainment of this purpose, they have to arrange memorable events for their consumers so that memories themselves become a service (the experience) (Pine & Gilmore, 1998; Mehmetoglu & Engen, 2011).
In this age of post-modernity, where transformation is interconnected with the social and economic life; it has become crucial to offer an exceptional experience. In this era of transformation where transformation is derived from the changes in social values, hotel industry needs to engage customers in the creation of experiences (Pine & Gilmore, 1998).
Economists have merged the experiences with services, but here is a need to understand that experiences and services are separate economic offerings, similarly as services are different from goods. For understanding the difference between experiences and services ones should recall the television show called “Taxi” in which a cab driver Iggy used to serve the drinks and sandwiches, San Frank Sinatra songs, and even conduct city tours. He engaged the customers in a way that turned the ride of an ordinary car into a memorable experience; the cab driver created a completely different economic offering (Pine & Gilmore, 1998).
The above example cleared that experience is not formless it is genuine offering as any other commodity, service, and good. It is clear that companies can no more survive by offering services only; they have to offer experiences as well. In other words, for charging higher prices, it is essential that services are based on experiences. If the hotel industry is observed, it has been realized that in current arena, multiple hotel companies sale experiences through wrapping then around their traditional or conventional offerings for making the better sale of their services such as giving more care to customers by giving them good attention (Mehmetoglu & Engen, 2011)..
However, for taking the full benefit or realization of staging experience, it is essential for hotels to design deliberately such engaging experience on which they can charge customers. For example, many hotels by placing their branches at locations that hold an attraction, by giving extra facilities such as late night dinner services, and providing latest technology create a memorable experience. Such experiences allow customers to perceive the services as value for money (Pine & Gilmore, 1998).
Smart organizations in the service industry or hotel industry are practicing the concept of experience economy and successfully generating memorable experiences that help the organization in adding value to the lives of customers. For example, Las Vegas creates experiences through their themed hotels such as “Treasurer Island” and “the Venetian” attempt to attract customers through providing them unique experiences. Even, multiple of these hotels have themed bars, restaurants, rooms, and pools that help in defining the experience (Beck, 2011).
Burj Al Arab and Atlantis hotels hold unique ability to use the internet with the aim of building experiences through sounds, pictures, videos, and interactivity (Beck, 2011).
Literature clears the concept of experience economy and sheds the light on the importance of the role that experience play in achieving a competitive advantage. Therefore, it is pivotal to measure the experience. Pine & Gilmore in their studies define the four realms of experience that just not define the concepts but allow provide organizations a practical framework for measurement. These four realms include arousal, memory, satisfaction, and overall quality (Oh, Fiore & Jeounge, 2007; Houseny & Witham, 2009; Quadri, 2012).
List of References
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