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Hotel Industry: Brand Image and Customer Loyalty

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Published: Thu, 21 Jun 2018

Hotel Brand Images: Exploring Customer Loyalty and Satisfaction

Contents (Jump to)

Introduction

Rationale

Aims and Objectives

Hypothesis Statement

Secondary Literature Review

Primary Quantitative Research

Literature Review

Brand Identity and Image

Brand Strategy and Customer Satisfaction

Consumer Loyalty and Brand Image

Hotel Brands and Consumers

Conclusion and Implications

Research Approach

Survey Questionnaire

Data Sampling

H1: Consumer loyalty is not related to brand identity in hotels.

H2: Consumer satisfaction is not related to brand image of hotels.

Correlation Analysis

Conclusion

 

Introduction

This research paper takes the position that branding and brand loyalty have become an important part of modern day business marketing. Accordingly, consumer perceptions, brand image, and market research are all important components of developing continuous brand image. The development of brand loyalty has a direct impact on today’s marketability and viability of a service or product in today’s competitive market. Brand loyalty has been considered to be the repetition of consumer purchase behaviour under the conditions of the consumer’s sensitivity to a product as on of the more prevailing trends in global hotel marketing (Kayaman and Arasli 2007). Other viewpoints describe brand loyalty as having an attitudinal measurement (Kayaman and Arasli 2007). Brand performance has several aspects: quality, price, credibility, value, trust, and consistency. Delgado-Ballester & Munuera-Aleman (2001) suggested that core brand trust and brand image functions have a key role in developing consumer loyalty and is characterised by high involvement of the organisation in service quality. The ability of an organisation to hold onto a market position is highly based on its ability to gain new customers while retaining old customers. Gunter & Heather (2007) showed that in the service industry, the ability of team members to complete a service to the customer is important in developing customer loyalty and increasing the customer’s perception of service quality.

This research explores key performance indicators of brands as they impact consumer loyalty in the hotel industry. This is done by looking at the theories behind brand performance, which include market signalling theory as well as brand identity and brand image. The research examines the efficiency of internal operations of organisations as they impact brand consistency. These components are interrelated with evidence for consumer patronage and consumer loyalty, based on various factors that will be explored as being relative to building (or diminishing) consumer loyalty. The dissertation will utilise secondary research as a literature review to establish the components and relationships between brand identity, consumer loyalty, and brand strategy. The ultimate goal of this research is to describe how consumer’s build expectations and perceptions regarding a particular brand image and how consumer loyalty to a particular hotel can be managed through brand strategy.

Rationale

Dean (2001) made the conclusion that the hotel industry has suffered in stock value compared to other industries. In 2001, only the Hilton brand was present in the top 100 brand names, with a market value of 1.4 billion dollars (Dean 2001). This shows that there is a need to understand and describe customer loyalty in the hotel industry to further consumer patronage of hotels. The hotel industry, especially in the luxury sector, offers an experience of a product and service. Therefore, it stands to reason that the consistency the brand offers has a strong impact on the consumer’s perception. Kandampully & Suhartanto (2000) showed that hotel consistency should revolve around the internal performance of housekeeping, reception, food and beverages, as well as price and value to be considered competitive and to maintain consumer loyalty. This research is rationalised by the idea that understanding customer loyalty based on satisfaction in these arenas impacts market value, and thus can assist hoteliers in world wide competition.

Aims and Objectives

The aim of this dissertation is based on the above rationale and is focused on consumer based perceptions of hotel brands. The goal is to explore and examine the factors of customer loyalty, customer satisfaction, and hotel branding for the betterment of organisation’s operating in the hotel industry. Thus, the research aims to develop stronger market value through brand identity and brand image perceptions of the customer. The objectives to reach this aim are to first, describe the relationships between brand identity and customer loyalty through secondary literature review research. The next objective is to utilise primary quantitative survey methods to statistically evaluate the impact of the relationships between customer satisfaction and brand identity on customer loyalty. The end results should lead towards a description of the occurrence of customer loyalty perceptions in the hotel industry based on the factors of brand identity and customer satisfaction described in the literature review.

Hypothesis Statement

Based on the aims and objectives of the research, the following hypotheses are to be explored through quantitative data:

H1: Consumer loyalty is not related to brand identity in hotels.

H1.0: Consumer loyalty is related to brand identity in hotels.

H2: Consumer satisfaction is not related to brand image of hotels.

H2.0: Consumer satisfaction is related to brand image of hotels.

Secondary Literature Review

The secondary literature review will be conducted to establish the variables and factors that develop the above hypothesis. In this, the research has chosen to utilise mainly scholarly journal databases, including Sage Journals Online, EbscoHost, and Thomspon-Gale. Each of these databases is peer-reviewed and scholarly, as well as international, which allows for a holistic focus on the issues of consumer loyalty from a global viewpoint. The point that each of these journal databases is international is important as this research focuses on the hotel industry as a whole, not on the hotel industry in any particular nation. The research was conducted using the Boolean search terms of ‘brand identity’ and ‘consumer loyalty;’ ‘brand identity’ and ‘consumer satisfaction’; ‘brand image’ and ‘consumer satisfaction’; ‘brand image’ and ‘consumer loyalty’; ‘consumer satisfaction’ and ‘consumer loyalty’; ‘brand identity’ and ‘brand image.’ Results were then sifted through based on date and current relevance to organisational branding, hotel branding, or market branding. This was important to do as some research findings were not related to the actual research, some findings that were unrelated and had to be removed included gender bias, cow procreation, and other unrelated terms. Future secondary literature review research will focus on stronger Boolean search terms to remove unwanted topics and prevent unnecessary time extensions. The secondary literature review is utilised to establish the questions in the quantitative survey as well as to establish relationships between each hypotheses statement.

Primary Quantitative Research

Primary quantitative research was chosen for this study as it allows for statistical and objective evidence to be presented and to accept or reject the stated hypotheses. The choice and rationale for the primary quantitative research is explored further in the methodology section. For this short introduction, quantitative research allows for specific information regarding the occurrences of customer loyalty and satisfaction, which can act as a precursor for further qualitative research later. Furthermore, the use of surveys allows the researcher to make specific and numerically succinct statements regarding the subjects at hand, from the customer’s perception. The research approach is deductive, meaning that it is theory testing rather than inductive, which is theory generating. In this manner the research proposes to accept or reject the hypothesis and establish the relationship between hotel brand identity-image and consumer loyalty-satisfaction.

Branding is method of determining an organisation’s competitive position based on consumer perceptions, where the organisation’s position to competitors impacts consumer choices (Daffey and Abratt 2002). In corporations, branding has increased in recent importance, particularly in leisure and travel services, where increased attention has been placed on service branding in hotels, retail, and banking industries (Hatch and Schultz 2003). Research identified the need for branding as it pertains to the brand image and brand identity, which separates the brand based on the internal components of the industry or organisation as well as it is congruent with shared values and meanings identified by both the organisation and consumer perceptions (Hatch and Schultz 2003). Thus, the relationship between brand identity, brand image, and consumer perception for leisure services, such as hotels, has become imperative to describing the marketing needs of an organisation.

Brand Identity and Image

Brand identity is an antecedent to brand image, thus what the organisation puts forth as its brand identity impacts the consumer’s perception of brand image (Daffey and Abratt 2002). The focus can be placed on the interface within brand identity and consumer perception of brand image, which involved the corporate branding method and the manner in which it is perceived by the consumer, thus impacting the consumer’s identification with the brand and increasing or decreasing the consumer’s perceived brand value (Daffey and Abratt 2002). Conceptually, brand identity is the organisation’s marketing mission in regards to the brands vision and values (Kapferer 2004). Brand identity is thus fulfilled by the organisation’s competence towards its internal and external vision, aims, and values (Kapferer 2004). This means that brand identity is an articulation of the organisation’s ethos, which incorporates the individualistic image that a competitor places on its products, where the goal is to differentiate the service or product definition from other brand identities (Kapferer 2004).

The statement has been made that brand identity has three main goals (Albert and Whetten 2003). The first of these goals are to capture the organisation’s essential service or product paradigm (Albert and Whetten 2003). Secondly, the organisations brand identity should exhibit and define its meaning towards consumers; and thirdly this meaning allows the brand to be differentiated and exhibited with continuity in the consumer’s mindset (Albert and Whetten 2003). Bosch (2006) examined that the construction of brand identity is to involve the elemental intent of the organisation’s product or service, where the organisation’s reputation is relevant to the personality of the brand identity set forth by the marketing strategy (Bosch 2006). Thus, brand identity becomes an organisation’s operational strategy that allows it to enhance or integrate an internal vision to external customers, thereby shaping the customer’s purchase intentions and value-added perceptions towards that brand.

As noted, brand identity precedes brand image. Brand image is imperative to gaining consumer validation and retention. When an organisation sets forth an image that is favourable in the mindset of the consumers, it inherently builds a specific competitive advantage (Aaker 1997). Brand image is a construction of consumer perceptions of the brand, and therefore is based on the most recent mindset of beliefs that the consumer holds towards the brand itself (Nandan 2005). The consumer’s perceptions and feelings are based on the brand identity, as well as the consumer’s experiences and relationships with the organisation (Nandan 2005).Thus, brand image has a strong value for an organisation and is ascertained to create a distinctive and sustainable competitive advantage (Aaker 1997). It is therefore defined that brand image is the meaning of connection between the consumer and the organisation’s product or service, where the goal is to increase consumer loyalty in the net result of the marketing strategy (Aaker 1997). This net result is impacted by the consumer’s perception of the brand (Aaker 1997). This consumer perception is built by experiences with the brand and the impressions the brand leaves with the customer, thus altering the customer’s beliefs and feelings towards the product (Aaker 1997). This alteration of the consumer perception creates the consumer’s behaviour and attitude about a product or service (Aaker 1997).

The link between brand identity and brand image has been noted to be largely based on the role of communication that forms consumer perceptions as they pertain to branding (Harris and de Chernatory 2001). However, some confusion as to the specific role of marketing brand identity and the formulation of brand image exists. While some researchers explore that consumer perception is built based on such marketing communications (Harris and de Chernatory 2001), others substantiate that brand image is not a result of brand identity marketing, but of the experiences of consumers with the product and service of the brand (Chun and Davies 2006). This means that the external communications of the organisation, noted in the above paragraphs to be centred on exposing the value, aims and intentions of the brand (Kapferer 2004) have less impact on the consumer’s mindset than the consumers actual experiences with the brand (Chun and Davies 2006). This is especially true in the service oriented industries, such as hotels, where service context related firms are more likely to gain or lose brand image in the customer’s mindset based on consumer experiences with the service (O’Cass and Grace 2004). Consumer experiences such as word of mouth, poor service relationships, and negative service receipt are more likely to impact the perception of a brand image than the organisation’s marketing strategy of the brand’s identity (O’Cass and Grace 2004). In this relationship, the role of service employees and their relationship with the customer becomes an integral part of building a brand image, where the recognition of employees to the brand identity as well as towards delivering a positive customer service experience is more important to sustainable brand image than any other factor (Hardaker and Fill 2005). This is because the employee operating in a service context, such as a hotel, is the first point of contact the consumer has with the brand (Hardaker and Fill 2005). Thus, the experience a consumer has with an employee of a service based industry has multiple interfaces as the employee’s value, the brand identity, and the consumer’s perception, all of which create the brand image (O’Cass and Grace 2004).

Brand Strategy and Customer Satisfaction

It stands to reason that if consumers create a perception of a brand image based on their level of satisfaction, then there is an inherent link between brand image and customer satisfaction. This was established as a positive image towards consumer satisfaction increases consumer loyalty, where it is postulated that the relationship also develops consumer loyalty (Chun and Davies 2006). In this relationship, there is a congruent development between brand identities, as it is externally presented by the organisation, and consumer satisfaction as it is internally perceived by the consumer (Chun and Davies 2006). The development is that a firm utilises brand strategy, as this has the ability to increase brand loyalty when it ensures that the relationship between brand identity and image is congruent and consistent, as it applies to influencing consumer loyalty (Nandan 2005). Thus, brand identity has an increased positive relationship that is established between the customer’s perception of satisfaction, the development of loyalty, and the brand’s image (Nandan 2005).

Consumer promotions are one method that organisations use to increase brand awareness, and thus establish brand identity. Consumer promotions include coupons and sweepstakes, but increasingly include loyalty programs such as points for repurchases. These types of sales promotions are have the targeted goal of increasing repurchase intentions of final purchases (Kotler and Armstrong 2002). Consumer sales promotions are just as various as brands themselves, existing as incentives for purchasing or repurchasing, while others attempt to communicate the nature of the organisation (Kotler and Armstrong 2002). Some promotions will be based on pricing discounts, while others are non-priced based, such as additional products or special services (Kotler and Armstrong 2002). Consumer promotion is a traditional brand strategy that is thought to enhance consumer loyalty by offering special rewards for repurchasing a service or product (Kotler and Armstrong 2002). Thus, it is supposed that consumer promotions influence the consumer by enhancing how the customer cognitively perceives the value of a service or product (Kotler and Armstrong 2002). Value, as the difference between price and received goods, is the object that creates price perception. Price perception, in turn, establishes how a customer values the brand’s overall image, and thus if the consumer is willing to purchase the brand (Schiffman and Kanuk 2004). Price perceptions can be both positive and negative. In luxury instances, higher prices for higher levels of services are considers attributes to the consumer’s success, and therefore the repurchase intentions may be based on the intrinsic value the consumer places on the actual service receipt, rather than the cost of the service (Moore et al 2003). Price and customer loyalty therefore become complex, as in some cases very low prices for a luxury brand, or over-promotion of the brand, lead to devaluation of the brand, where the consumer finds less value for the same service offered at a lower price (Moore et al 2003).

This leads towards product quality perceptions, where the superiority of a service is approached by the consumer based on the consumer’s expectations of the service (Moore et al 2003). Consumers may place a judgement upon the quality of a service based on the information they have received through brand identity strategies regarding the service, when this information is not congruent with the customer’s received service, there is a negative gap in customer satisfaction (Schiffman and Kanuk 2004). Consumer judgements are created by intrinsic and extrinsic information (Schiffman and Kanuk 2004).

The concern is that there is a gap between brand identities put forth by the organisation and brand images received, or perceived, by the consumers (Hatch and Schultz 2003). This gap exists when the internal identities of the organisation, as they relate to the values and ideals of the organisation, are not externally perceived by the consumer (Hatch and Schultz 2003; Chun and Davies 2006). Thus, the need for a brand strategy that bridges this gap for increased customer perceptions becomes a managerial goal to narrow the gap (Harris and de Chernatony 2001). This need for gap reduction is stated to be a holistic need, where brand strategy is centred on the ability of the organisation to ensure that all employees are able to breach the gaps and have the same values and aims that the organisations places external brand marketing importance upon (Harris and de Chernatony 2001). Emphatically, this means that strategy towards the brand image is highly reliant upon the internal brand identity of the organisation and the external brand image the customer forms (Harris and de Chernatony 2001). Thus, there is an increased need in brand development and strategy for organisations to match the consumer’s needs and perceptions with the brand’s identity, which in turn will increase consumer loyalty but not necessarily consumer satisfaction (Chun and Davies 2006).

Consumer Loyalty and Brand Image

Conceptualizing the link between customer satisfaction and customer loyalty has several dimensions (Oliver 1999). In this, satisfaction has the asymmetric consequence towards the development of consumer loyalty, yet consumer loyalty does not impact consumer satisfaction in the same manner (Oliver 1999). A consumer that has been traditionally loyal to a particular brand will not simply choose the brand after a dissatisfactory service experience simply because they have formed a habit of being loyal to that brand (Oliver 1999).

Chun and Davies (2006) examined that a brand’s image can impact consumer loyalty based on the experiences of a customer in regards to the brand service delivery by employees. This means that employees are frequently the heart of a service brands image, and the front line of the ability of a brand to build consumer loyalty. Furthermore, employees are the most frequent determination of a consumer’s mindset towards a brand, which in turn impacts the consumers perception and frequency of loyalty towards the brand (O’Cass and Grace 2004). Thus, it is implied that employees are the foundation of building service brand images, and the employee of the service brand has the strongest impact of brand identity communication in the customer’s mindset (O’Cass and Grace 2004). Thus, what occurs is a service brand dimension where the employee, rather than the organisation, becomes the forefront for brand image formulation, which establishes that employees are the ambassador’s of a brand image (Harris and de Chernatony 2001). For the leisure and travel sectors, employees act as the interface between the consumer’s service needs and the brand image formation (Harris and de Chernatony 2001). Therefore, the consumer’s internal perceptions of a brand are enhanced or diminished by the service experience and communications of employees, which in turn results in future commitments to brand loyalty when these experiences and communications are positively perceived by the customer (Harris and de Chernatony 2001).

Consumer satisfaction and loyalty are dependent on the consumers perceived value of a brand image. In early work regarding the subject, Oliver (1997) showed that consumer satisfaction is the ability of a service to fulfil the consumer’s need, thus it is based upon the response of the organisation towards fulfilling what the consumer believes, or perceives, to be important and of value. The ability of the consumer to develop a perception regarding the service of a brand is based upon a consumer’s judgement regarding the provisions of services and products and the pleasure that the customer receives, intrinsically, from the consumption of the product or service (Oliver 1997).

Oliver’s (1999) later work established that consumer loyalty is a strong commitment of the consumer to repurchase the product or service in a consistent manner, based on the previous judgements that the consumer held, which are further enabled by both the customer’s and the organisation’s behaviours and attitudes towards the brand’s identity and image (Oliver 1999). Consumer attitudes have several components. First, the cognitive component establishes the rational appeal of a product or service, where the consumer makes a decision based on characteristics the consumer determines to be imperative to filling a consumer need (Rowley and Dawes 1999). The affective component is established as the emotional connections a consumer develops with the service, such as fulfilling a social or status need by purchasing a particular brand (Rowley and Dawes 1999). Lastly, the cognitive components of consumer attitudes are those that are relative to the consumers’ behavioural patterns (Rowley and Dawes 1999). Cognitive components are based on the consumer’s previously formed behaviour patterns, for example the difference between a hedonic and utilitarian purchaser. A hedonic behaviour pattern is where a consumer purchases a product based on the ability to receive a particular emotional need, such as societal satisfaction (Rowley and Dawes 1999). A utilitarian purchaser focuses on the physical needs of a product’s ability to fulfil a gap in the customer’s necessary purchase intentions (Rowley and Dawes 1999). This is further established by Chun and Davies (2006), where consumer loyalty as a behavioural and attitudinal aspect contains strong intrinsic characteristics built by the needs of the consumer and compared to the ability of the organisation to deliver towards these needs, which in turn develops the consumer’s attitudes and behaviours towards a brand. Yet consumer perception and brand loyalty is not only directed by behaviours and attitudes, it is also built by cognition of the brand and its associative value (Jones and Taylor 2007). In this, while attitudes and behaviours are important, the customer also may be inclined to cognitively assess the price that has been paid against the service or product received, which is the basic foundation of consumer’s perceived value (Jones and Taylor 2007).

Hotel Brands and Consumers

Consumers of hotel services seek consistently reliable service with fair to high quality and an affordable price within their perception of affordability (Dube and Reneghan 2000). Hoteliers place strong significance towards consumer satisfaction as this impacts the hotel’s perceived brand image (Dube and Reneghan 2000). What occurs is the brand hotel begins to operate based on its quality of service by delivering service value information to the customer before the customer views or uses the service product (Bruicks, Zeithaml and Naylor 2000). This means that as consumers seek out a particular amount of service quality to fulfil the gap between their needs and the service receipt, hoteliers are simultaneously awarding service quality based statements towards their internal brand identity and external brand image (Bruicks, Zeithaml and Naylor 2000). Effectively, brand images are built with multiple brand scopes achieved, where larger hotel chains offer several brand images with their end consumer’s perception of value and quality in mind (Dube and Reneghan 2000). Thus the hotel’s brand strategy is to develop brand value based on service awareness, rather than service receipt, as well as the quality of perception in the consumer’s mind, leading towards consumer satisfaction (Aaker 1991).

As brand strategy leads towards the sight unseen ideal of gaining customer satisfaction, researchers have explored that hotels with higher consumer satisfaction for a perceived high value or high quality service are less conscientious about price and promotions, but more consciences in regards to service receipt and the quality of service (Dube and Reneghan 2000). Brand strategy of hoteliers focuses on increasing operational success of their overall brand measurements, where the ideal strategic viewpoint is to gain market share from the brand strategy (Ekinci 2002). However, the hotel industry has mixed results from brand strategies and brand images (Ekinci 2002). These mixed results are due to consumer’s perceptions of the brand image and brand quality (Ekinci 2002). The divergence exists when brand growth and consumer quality perceptions create a gap between the consumer’s expected service quality from the brand identity and the consumer’s receipt of service quality (Ekinci 2002). Pricing and promotion models also create a gap in expectations and perceptions (Ekinci 2002). This occurs because of the market signalling theory, which explains that consumers may expect higher quality from organisations with higher market shares, which increases the demand for future business and services (Helloffs & Jacobson, 1999). In the hospitality industry, as market share leaders become more visible to consumers through brand identity and brand marketing strategy, advertising messages become aligned with the high market share and high quality perceptions (Helloffs & Jacobson 1999). Size of the hotel chain, amenities, desirable locations, and similar services at various locations all become part of hoteliers brand marketing strategies as they gain market share. However, there is the concern that strategic brand management may cause a negative relationship between brand image, market share, and consumer’s perceived expectations of quality (Helloffs & Jacobson 1999). Some studies examine that consumer’s expectations of quality increase as market share increases, yet the consumer’s satisfaction with a service decreases almost simultaneously (Helloffs & Jacobson 1999). Therefore, market signalling theory, as it applies to a hospitality organisation’s externally presented brand identity, may not be the precursor to adequate consumer satisfaction and the consumer’s internal perception of the brand’s image.

Hoteliers are very aware of the needs for strong consumer focus, yet multiple hospitality organisations have differing perspectives regarding the customer’s needs and perceptions. For example, hoteliers may focus on strong franchise development, based on tourism locations, and typically focus on the customer needs of service continuity, as offering the same services at each tourism franchise location (Linder 2001). However, another line of thought is that corporate development and managerial strategy, rather than the franchise consumer, is more important in building brand identity to customer awareness (Linder 2001). Thus, there is a divergence in hotelier’s management strategy between the continuity of service franchises and the value of service towards the customer. There is some evidence that hoteliers have a brand identity need to respond to the customer’s concerns of cost and quality, but also to decide the level of service continuity within the franchise’s, or in the lack of franchising, to respond to the needs of quality in the consumer’s service receipt (Michael 2000). One interesting component of this relationship is that franchising actually has a negative impact on quality, but service continuity has a positive impact (Michael 2000). Thus, the consumer may expect the same service quality at each hotel location, but is not likely to receive the same level of quality at each franchise location (Michael 2000). However, when the customer’s level of perceived quality does not have a gap in service continuity between franchise or hotel locations, then there is a strong positive relationship (Michael 2000). There is a negative relationship when service quality of a particular brand image that the customer has a created a specific internal perceptions are not equivocal, leaving a gap between what the customer believed would occur in values and quality, and what the customer believed they received in value and


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