Banyan Tree – Developing a Powerful Service Brand Essay Example

how many in the class have heard of Banyan Tree Hotels & Resorts before taking the course, and inform students that the brand is relatively new compared to other established brands. It is also one of the few established service brands, poised towards going global, that is developed from Asia.

____________________________________________________________________ © 2005 by Jochen Wirtz and Maisy Koh 1 Suggested Supplemental Readings 1. Chapters 3-5 of Services Marketing – People, Technology, Strategy, 5th edition, by Christopher Lovelock and Jochen Wirtz, Prentice Hall, 2004. . “Cultivating Service Brand Equity,” by Leonard L.

Berry, Journal of the Academy of Marketing Science, vol. 28, no. 1, pp. 128-137. Case Questions 1. What are the main factors that contributed to Banyan Tree’s success? 2.

Evaluate Banyan Tree’s brand positioning and communications strategies. Can Banyan Tree maintain its unique positioning in an increasingly overcrowded resorts market? 3. Discuss whether the brand portfolio of Banyan Tree, Angsana, Colours of Angsana, and Allamanda, as well as the product portfolio of beach resorts and city hotels, spas, galleries, and museum shops fit as a family.What are your recommendations to Banyan Tree for managing these brands and products in future? Discussion of Case Questions 1. What are the main factors that contributed to Banyan Tree’s success? Banyan Tree’s success might be attributed to an overall well designed and executed external and internal marketing program, and in particular: • Choice of target segment • Positioning and branding strategy • Product/service design and delivery • Aggressive internal marketing • Winning the support of local communities and public interest groups • Pioneer status: first mover advantage Pro-environmental business practices Choice of target segment • The large

price gap in the luxury resorts market meant that middle upper class consumers must either stretch to pay for ultra luxurious resorts such as Aman, or settle for resorts, though luxurious, are catered to the masses. • Ho recognized the business opportunity presented by the gap in the resorts market: there was room for something pricier and more exclusive that would better cater to these middle upper class consumers, who had better spending power than had the average consumer in the mass market, and would be able to fford and willing to pay for a more exclusive premium service offering.

2 • Moreover, as a result of today’s generally more hectic and stressful lifestyles, many well-to-do couples would appreciate Banyan Tree’s value proposition of a memorable, romantic holiday experience that would both provide relaxation and create quality time for them to spend quiet moments together. Positioning and branding strategy • Although Banyan Tree’s service offering was unique when it was first launched, this would not be a sustainable competitive advantage, as most tangible products could be easily copied by competitors.Establishing a strong service brand, however, would serve to distinguish Banyan Tree from competitors when they do jump on the bandwagon. • Positioning as a sanctuary for romance and intimacy was well thought out, these being timeless attributes valued by many couples. • A clear brand promise of romance and intimacy, which the company consistently delivered, also helped it achieve a clear and distinctive market position.

That the company consistently delivered on its promise further reinforced what Banyan Tree stood for in the minds of its customers, thereby building both brand loyalty and emotional bonds.Product/service design

and delivery • The luxurious villas and distinctive native settings provided an excellent backdrop for guests to create memorable holiday experiences. • Service employees were warm, sincere, and respectful; knew guests by their names; and remembered their preferences. Such personalized service delivery warmed guests, and helped them feel comfortable and relaxed, contributing to the entire customer experience.

This was further enhanced by the feel-good factor that guests’ patronage helped to contribute to various social and environmental causes. Repeat patronage was also encouraged by the different services offered at different locations, which gave satisfied guests an added incentive to visit Banyan Tree resorts around the world, to experience authentic flavors and practices of various local communities. • As employees were given freedom to decorate the villas and in serving guests, even regular guests of a particular resort would have a different experience and may be pleasantly surprised every time they checked in. Such ractices, together with continual service innovations, kept the Banyan Tree experience fresh and interesting. • The whole Banyan Tree experience was engineered to appeal to one’s senses, giving guests a unique value proposition unlike the regular room stays offered by competitors then; such a service feature was also difficult to imitate, and successfully set Banyan Tree apart from other resorts in the market.

Satisfied guests not only became loyal customers but also helped spread positive word-of-mouth, which in turn gained the company new customers. 3 Aggressive internal marketing Generous staff welfare policies created a strong sense of brand ownership among employees, which motivated them to achieve service excellence. Service staff served guests with passion and sincerity that could not be bought or easily

copied by competitors. employees may not always provide the standard service across all the resorts nor always similar to that commonly found in five-star establishments in developed countries, their friendly and respectful attitudes towards guests more than made up for it and actually provide an element of surprise even to the most regular guests.Winning the support of local communities and public interest groups • The company’s considerable investments in conserving/preserving/promoting the social/cultural/natural environment beyond what was required of the company (without sacrificing on service quality) showed proof of corporate ethics that were driven by the management’s personal values.

Such acts projected the Banyan Tree brand as being caring and sincere, consistent with its positioning of a romantic brand. Overall, Banyan Tree was viewed by guests, staff, local communities, and public interest groups as a warm, sincere, caring, ethical, and responsible company. Even when guests wander beyond the resorts’ compounds, the genuine feelings of hospitality and appreciation showed by the local communities at the villages made guests felt welcome and at home, making the entire stay pleasant and memorable. Such service capabilities were extremely difficult for competitors to imitate, requiring lots of investments in time, effort, and money by the firm to gain the trust and respect of both staff and the local community alike. Pioneer status: first mover advantage At a time when clinical spas were the norm, Banyan Tree invested in tropical garden spa pavilions, pioneering the concept of tropical spas and Asian therapeutic massages, a novelty which proved to be popular. • Being the first in the market gave them a head start in penetrating the market.

The lack of competition in the

beginning also helped in consolidating the company’s position in the spa and resorts market. Establishments that were interested in providing similar spa services naturally approached them to establish an outlet in their premises, which helped further promote the concept of tropical garden spas beyond the regional markets.Pro-environment business practices • Although being environmentally conscious sometimes resulted in costlier business decisions, for Banyan Tree, a major part of the resorts’ attraction was in the natural beauty of the location in which the villas were located. So, it made economic sense to protect and preserve the resorts’ surrounding environment to ensure that it remained an attractive tourist destination in the long run, or as 4 Banyan Tree put it, “to prevent today’s darling from becoming tomorrow’s has-been. • Such pro-environmental business practices also generated a lot of positive publicity and won the company several awards, and these not only helped increase the brand awareness of Banyan Tree but also generated much interest among potential customers.

• At the same time, the company got the support of various public interest groups, such as environmentalists, and this saved the company from having to deal with any potential trouble that might have arisen from their development of the natural habitats of various flora and fauna for business purposes. 2. Evaluate Banyan Tree’s brand positioning and communications strategies.Can Banyan Tree maintain its unique positioning in an increasingly overcrowded resorts market? Brand positioning is timely and appropriate in today’s hectic and stressful lifestyles • Banyan Tree was positioned as a sanctuary that offered couples an exclusive romantic and intimate holiday experience. • Positioned on such timeless attributes as romance and intimacy between

couples, the positioning is timely and appropriate in today’s increasingly hectic and stressful lifestyle, where many couples are busy with their careers and have little time to spend together. Banyan Tree’s offering of an avenue to get away from it all and spend quality time together while relaxing and de-stressing would appear to be valued benefits sought by today’s busy couples.

• Being the first and only resort to be positioned as such, Banyan Tree occupied a unique position in the luxury resorts market when it first started. Focused promotion efforts with minimal wastage • Banyan Tree’s communications program focused mainly on public relations and publicity, and direct marketing through its web site and sales offices that targeted wealthy consumers, with little emphasis on advertising. As advertisements were selectively placed in only high-end travel magazines that targeted the higher income and more sophisticated segment of the market, wastage in advertising exposure is minimized. • Showcasing the awards and accolades won credibly enhanced the brand’s reputation.

• Promotion through agents specializing in exclusive holidays adequately exposed Banyan Tree to its target segment of wealthy consumers. 5 • Efforts at obtaining and increasing editorial coverage on Banyan Tree both increased brand awareness in the industry and helped to sell the “Banyan Tree experience” credibly, coming from a neutral third party. Much positive publicity and public interest was generated as a result of the company’s investment in pro-environmental business practices, such as sponsoring various environmental conservation programs and community outreach programs. • Besides being viewed as a caring and pro-environmental company, such publicity also drew attention to the natural beauty of the resorts and their environments, which helped

the company to advertise its villas. Unique positioning sustainable? Whether Banyan Tree can maintain its unique positioning in the market would depend on how well it can keep its identity distinct and prevent competitors from encroaching into its turf. • Generally, the positioning of providing romantic and intimate holiday experiences is not difficult to imitate; so is the concept of individual villas and any tangible offering.

• But, the overall service experience at Banyan Tree can still be unique, given its location specific service offerings and the uniqueness of the natural nvironment that Banyan Tree resorts are located. • Although service innovations can be copied easily, the personality of a brand is less so, and the same can be said of the attitudes of staff and the local community at the resort destination, as well as the genuine feelings of hospitality shown towards guests. • Banyan Tree had tried to appeal to “the senses,” focusing on the overall customer experience and working on what the customer will ultimately bring home—memories.Judging from its success so far, it appears that even if competitors come up with similar lower-priced service products, it is unlikely that they would be able to replicate the total Banyan Tree experience so quickly.

Perceptual mapping could be used to visualize the market positions of Banyan Tree and its sister brands relative to competitors in the industry. An example of a positioning map with the attributes price level and romantic versus sporty image is shown below: 6 Expensive Aman Resorts Banyan Tree Sporty Romantic Hilton Resorts Angsana Colours of AngsanaLess expensive 3. Discuss whether the brand portfolio of Banyan Tree, Angsana, and Colours of

Angsana, as well as the product portfolio of beach resorts and city hotels, spas, galleries, and museum shops fit as a family. What are your recommendations to Banyan Tree for managing these brands and products in future? From luxurious six-star Banyan Tree resorts to small, individual Colours of Angsana branded hotels in exciting locations, these properties were bound together by one central theme: the romance of travel and the beauty of discovering the world. Banyan Tree targeted the higher end of the luxury resorts market • Angsana was more mainstream and contemporary, targeting the wider market • The Colours of Angsana range of boutique hotels catered specifically to the soft adventure tourism segment, locating in remote and exotic places that cannot justify the premium prices charged by Banyan Tree villas The various brands thus served to cater to different segments of the hotels and resorts industry, made distinct by price and benefits offered.Some students may point out that Banyan Tree Bangkok, with its urban location and standard hotel rooms, did not fit well with the Banyan Tree family of beachfront resorts and the individual-villa concept.

In response, the instructor might explain that: • The city hotel was also positioned similarly on romance and intimacy although it additionally catered to business travellers. • There is a heavy emphasis on spa, designed to provide an escape from the hustle and bustle of the city. • It also offered various getaway/wedding packages for couples to indulge in romance and intimacy. The various facilities, such as spas and retail outlets, found across Banyan Tree resorts, were also available at Banyan Tree Bangkok. In particular, the hotel had an open-air

rooftop lounge, Vertigo, at the top of the building, where guests could 7 get a good view of the city; the lounge could also be used to host wedding receptions and other parties. Four broad product lines: accommodation, clubs, spas, and retail outlets • Banyan Tree’s products and services could be classified into essentially four product lines: hotels and resorts, clubs, spas, and retail shops, under various brands and sub-brands.

Banyan Tree’s properties and spas could be classified under the business of travel and leisure. • The retail shops augmented and helped to extend the overall service experience through the sale of products that consumers might use at home to replicate and remind them of the Banyan Tree experience. Also, the arts and crafts sold at the shops not only served to reinforce Banyan Tree’s brand personality, but also fitted in the travel industry, with the sales of indigenous products that tourists could buy as souvenirs. Achieving branding consistency through management by brandManagement of the portfolio by brand would achieve more consistency in branding and positioning, and also make it easier to cross-sell and bundle products, although such an arrangement would require duplication in resources for various functions. Notes on recommendations • Students may make recommendations on brand extensions and product development, or market development to introduce current brands globally.

However, the recommendations made should take into consideration the location and cost constraints that Banyan Tree may face for its different brands. Note that the business had been profitable even after huge investments in protecting and preserving the cultural and natural environments because the company operated mostly in business environments where cost structures were favorable.

Such a strategy might not be possible in developed countries where labor costs might be prohibitive. • Notice that though Banyan Tree also tried to appeal to travellers from developed countries, specifically the States and Europe, the costs of setting up shop in such places were also high and very expensive.So, Banyan Tree resorts were built in places that were a few hours’ flight away from major cities in Europe and America, to make them more accessible to their target market in the developed countries, and yet locate the resorts in attractive, exciting, and exotic places, such as Mexico and Morocco, where cost structures were low and labour was relatively inexpensive compared to the developed countries.

• The instructor might also point out that like Banyan Tree, the Colours of Angsana brand was also a pioneer in the soft adventure tourism segment, and so could enjoy first mover advantages.Students might be asked what could be done to help Colours of Angsana fortify its market position before competition built up in the market segment. • Recommendations for the future might also consider changing market tastes and whether the brands and products would still be relevant as new products emerge 8 and consumer tastes change. Just as tropical garden spas have become more popular than clinical spas, some day, competitors might come up with yet another concept that might overtake the garden spas.As consumer taste changes, the brands’ personalities may also need to evolve and new products be offered to suit the changing market environment.

• Finally, although the brands and products are currently tied together by a central theme, once competitors come up with similar themes

of romance and intimacy, what would differentiate Banyan Tree from the rest of the players in the market? Concerns to address in expanding operations • Other locations may not offer the low-cost structure that Banyan Tree is currently familiar with.Students should therefore explain how Banyan Tree’s strategies could be replicated in other countries where cost structures might be different. • Tropical forests might not be available in temperate countries, and so the relevance of the Banyan Tree brand in such locations would be lost. A possibility would be for the company to launch a new brand name that would reflect the temperate settings of such locations should the company be interested to venture into temperate countries. The culture, values, and norms of service staff in other non-Asian countries may be distinctly different from those of Asian countries. Thus, the compatibility of Asian hospitality in non-Asian settings is suspect.

• Further, current services of Banyan Tree are based on Asian therapies and remedies. Would these be compatible or appropriate in a non-Asian location, e. g. , Europe or America, with different settings, culture, heritage, and norms? Multiple brand extensions might result in brand dilution; but having too many individual brands might confuse potential customers: they may wonder about the differences between the various brands. • As the number of service outlets grows, there is also the need to ensure the consistency of service quality across a large number of service outlets.

Some students might suggest training all employees at a central academy. Note however that some employees might be uncomfortable with such an arrangement. Also, there is a risk of losing the personal touch and unique

service culture of the locality.