Circos Brand Karma

Official Blog of Circos

What if Kleenex and Generic were the same price?

with one comment

Which would you choose?

I think most of you would select Kleenex if it were the same price as the grocery store generic.

And in that question lies the importance of brand equity in these times.  As more and more hoteliers drop rate to sustain volume, some of the sacrifices that they make come at the expense of upholding their brand promise.  The problem with this is that while the price tactic might drive volume in the short term, it may not necessarily increase the number of loyal customers if the sacrifices comes in the form of service or other features that has been associated with the brand.

Hoteliers have wonderful opportunities when deploying price cutting campaigns to win customers.  Their focus shouldn’t be just on driving volume, but attracting and developing loyal customers.  In a contracting market, to maintain the same volume the customers must come from somewhere else (e.g. your competitors).  Therefore, if you reduce price to increase volume, a portion of those customers will be new ones that came from your competitors as a result of your lower price.  What will you do to get them to come back a 2nd time … nth time in the future… and at a higher price point?

The answer lies in what is the brand promise you present when these customers come in through your doors.  You must love them to win them.  Brands that do not compromise on their brand promise in these times have the opportunity to win new loyal customers if they take the loyalty factor into account when planning their campaigns.  Just focusing on volume and not loyalty is short-sighted; this tactic makes the numbers now, but when the market recovers what the customers associate with your brand is just low price, i.e. just as it’s hard to make people pay (the good-time) Kleenex prices for generics, it will be hard for people to pay a higher price for a hotel that has lost its brand promise.

With social media and user generated content having persistence and being publicly accessible, compromises in brand promise experienced by customers will be documented and become part of the brand story –and brand marketers will have a difficult time regaining control over the story.


Written by Morris

March 31, 2009 at 5:58 pm

One Response

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  1. And it’s getting easier every day for customers to boost (or destroy) brand equity…



    April 1, 2009 at 2:09 pm

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