Crowne Plaza Hotel's Positioning Analysis

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26th May 2017 Marketing Reference this

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Hotels generate the revenues by providing the tangible and intangible assets and services to the customers. They are different from other commercial businesses such as real estate which can be considered to be following the same business model however very broadly. The commercial real estate similar to that of hotels gains their revenues by providing mostly their tangible assets. However hotels are significantly different from commercial real estate as they are very complex to manage. While commercial real estate has long-term contracts with their customers which ensures revenue over a longer period, hotels revenues have significant fluctuations and is more dependent on the economic cycle (Bennett and Strydom 2009).

The asset of a hotel considered by Ferrell and Hartline (2010) is its location, the attributes which are tangible, and the services provided by the organisation which is intangible. The value addition by the brand image and name of the hotel is significant as apart from the location and physical attributes, the brand image has a role in influencing the consumer’s choice. This brand image, location and the attributes together can be considered as the market position of the hotel (Hassanien et. al. 2012).

As identified previously, the hotel’s revenues are considerably dependent on the larger economic factors. A marketing strategy which provides significant returns at one point of time may not be sufficient when the external environment and the economic factors change. These external environmental factors can be the micro and macro environmental conditions. The positioning of a hotel with respect to the market is an important factor to be analysed as it contributes to the development of the marketing strategy. It is not easy to change the positioning of the hotel, as the tangible factors (location) and to a large extent the physical attributes cannot be changed to the market conditions.

Repositioning is considered when the brand image and the services provided are not matching with the needs and requirements of the customers. Although it has been suggested by Cant and Styrdom (2009) and Nykiel (2008) that repositioning is employed when the brand (product or service) is not performing to the expectations, there are several instances where repositioning has been undertaken to improve the revenues and profitability. Hence one important criteria for the measurement of a successful repositioning strategy would be the performance especially the financial considerations.

Aim of research

The aim of the research is to analyse the strategies and methods being adopted by Crowne Plaza hotels in its repositioning to target the upper-upscale market.

Objectives

To critically evaluate the literature on repositioning of an organisation and hospitality sector in particular

To analyse the repositioning strategy adopted by Crowne Plaza hotels

To recommend improvements to the repositioning strategy of Crowne Plaza hotel brand

Research aims for objectives

  • To critically evaluate the literature on repositioning of an organisation
  • To analyse the literature available on positioning and repositioning
  • To evaluate the strategy used for repositioning in the hospitality industry
  • To analyse the main method of hotel repositioning
  • To analyse the strategies adopted by Crowne Plaza hotels in repositioning to target upper-upscale market
  • To analyse the characteristics of the upper-upscale business segment
  • To analyse the general objectives of repositioning of Crowne Plaza hotel
  • To analyse the competition for Crowne Plaza Hotel after repositioning
  • To recommend improvements to the repositioning strategy of Crowne Plaza hotel brand
  • To recommend tangible changes to be implemented by the hotel
  • To recommend positioning messages for the hotel

Literature review

Introduction

The following section contributes to the completion of the first objective namely the analysis of the literature on repositioning of organisations. The first objective is divided into three phases as below.

To analyse the literature available on positioning and repositioning

The first section contributes to the evaluation of the general positioning and repositioning strategies and practices from the literature.

To evaluate the strategy used for repositioning in the hospitality industry

The second section evaluates the strategy of repositioning especially in the hospitality industry.

To analyse the main method of hotel repositioning

The third section analyses the main method of hotel repositioning mainly renovations of the hotel properties.

Positioning

Positioning is defined by Bennett and Strydom (2009) as involving a complex set of perceptions, impressions and feelings that the customers have about the product or an organisation, often compared to the competitors. Most of the authors have similar definitions about product positioning hinging on the concepts of perception of the target market in relation to competitors. One important contribution by Chon and Maier (2009) who studied product positioning is the conclusion that customers would position an organisation, product or service, always in conjunction with the market and even if the organisation is not doing any strategic positioning. Different forms, options and methods of positioning have been suggested by several researchers. The success of positioning is determined by the uniqueness of the product-service makes and the promotion (Ng 2009). The concept of “unique selling proposition” provides the management with a differentiator from the competition and hence a competitive advantage.

The various definitions analysed by the researcher, some of which are provided above indicates that positioning is the concept rather than a fact and pertains to influencing the customer perceptions. Most of the positioning concepts in the reviewed articles are about products and not entire organisations. Furthermore positioning of the product or an organisation is relative and is the combination of those factors and information that the market segment has about the product or the organisation.

Based on the concepts of perception and the relativeness of the positioning of an organisation or product, Hassanien (2008) has identified that advertising and marketing communications attempt to provide the information and teach people about how to perceive a brand. On the other hand Ibrahim and Gill (2005) have provided contrary opinion which indicates that the basis of all advertisement and marketing communication is to divide the competitive landscape and associate the marketer’s product or organisation with specific factors which are unique. Hassanien (2006) who evaluated brand positioning have come to the conclusion that positioning strategy of an organisation is a battle for the consumer’s minds and when an organisation promotes a particular type of position, the competitors are also positioned in the minds of the consumers. Although most of the researchers has considered positioning from the perspective of advertisements and marketing communications, Tinnilä and Vepsäläinen (1995) have indicated that consumer’s viewpoint and perceptions about a product or an organisation is derived mainly from the performance or the experience. The positioning messages through advertisement and marketing communication should be in line with the performance and experience characteristics.

The above discussion indicates that positioning is relevant to the concepts relating to advertisement and marketing, however as promoted by Hassanien (2006) positioning can be defined from the perspective of customers evaluation of the product or the organisation. The other researchers have identified the various methods available for positioning. The most apt definition for positioning is provided by Hassanien (2006) based on the concept of capturing the consumers might and in relation to competitors.

Lo et. al. (2012) have identified that positioning messages are significantly different from the brand communications and marketing communications. Many organisations as per McGoldrick (1992) ignore the need to provide a positioning message. The implementation of a particular positioning strategy would depend upon the ability of the communication strategy of the organisation about the product or service. Ibrahim and Gill (2005) have analysed the end results of failure to plan and implement a positioning of the product or an organisation thus necessitating a planned repositioning. The failure to plan and a strategic miscarriage of implementation can result in the product or the service relegated to the position facing competition which is unwarranted, leads to the position with little customer demand, leads to confused positioning, over positioning and under positioning (Lo et. al. 2012).

Based on this one can say that positioning of an organisation is not conducted in vacuum and rather than establishing one organisation or product, positioning is encouraging an alternative view of the product or the organisation. Although it is considered that branding and marketing communications are different from product positioning messages, the previous section have contributed to the conclusions that these messages are very much in line to the positioning messages and hence should have a high degree of correlation.

Repositioning

Repositioning has been considered by Wong and Merrilees (2007) as a strategy to align the organisation/product/service with the existing or future market conditions. Since positioning has a considerable effect on brand management, marketing communications, strategic management, human resources and so forth, Bruyn and Freathy (2011) have concluded that positioning can be analysed and evaluated from all the activities of the organisation. Even if an organisation’s product or service is placed at a better position than the competitors, it is natural to conduct repositioning to improve the competitive advantage. Hence the repositioning according to Saxena and Khandelwal (2010) is not only because of failed positioning strategy but also to improve the future prospects of the product or service. The different reasons identified by several researchers for repositioning are provided below.

Reasons for repositioning

As per Ibrahim and Gill (2005) repositioning is conducted to improve the competitive advantage or to avoid and create a barrier for new firms entering into the same position. Saxena and Khandelwal (2010) from empirical research of several organisational and product repositioning have acknowledged that repositioning is usually conducted to target a new segment of customers even while holding onto the old ones. However Kalafatis et. al. (2000) have indicated that expanding the target segment may lead to confused positioning even if the organisation is able to improve the revenues and the market share. Expansion of the market share by targeting a new segment would need satisfying the current and potential consumer base which may have varying levels of needs and requirements.

Apart from the organisational or internal factors contributing to a repositioning decision, several other researchers such as Bruyn and Freathy (2011) have analysed the need for repositioning based on changes to the larger environment. A new trend in the market, emerging technology, improving the corporate image and compliance to legal regulations are some of the larger environmental factors necessitating the repositioning. However, most of the repositioning of products and services has been to correct the confused positioning, over positioning and under positioning as per (Boric 1998).

Several necessities or the factors contributing to repositioning of products or organisations identified above indicates that there could be external and internal factors facilitating the decision on repositioning. Even though Saxena and Khandelwal (2010) have conducted an empirical investigation, the researcher feels that it is not sufficient as the research is based on a small number of samples where repositioning was conducted and hence it is not clear how an organisation can target a new segment even while holding onto the old ones. The expansion of the target segment as identified by Kalafatis et. al. (2000) could lead to confusion in the market which is contradictory to the position of Saxena and Khandelwal (2010). Further Kalafatis et. al. (2000) has done the research using several case studies and has appropriately provided several certifications about confusion of positioning and expanding the target segment.

Process of repositioning

The concept of repositioning in marketing literature comes in tandem with the branding and product development. Although branding and positioning of products and organisations have several common and uniquely accepted definitions, repositioning seems to have little uniqueness in terms of the definitions proposed by several authors.

According to Foxell and Trafford (2010) repositioning is a change in the image of the product by developing a change of the perception of customers. However the ways in which the perceptions of the customers are altered have received different explanations. According to Chotipanich (2004) repositioning has been considered in a vague manner by changing the existing positioning however the researcher has not provided any specific framework for the implementation. Similarly Groucutt (2006) couples repositioning with the advertisement strategy of an organisation, executing the image makeover and hence a change in the perception. A more in depth concept identified by Hassanien (2008) suggests repositioning as a process involving six phases depending upon the newness of the products to the market. Similar viewpoints are recognized in the works of Foxell and Trafford (2010) where repositioning is considered as a process of using same or differentiated products to new target markets or segments.

Most of the concepts of repositioning of products are in association with product development and branding. This would indicate that repositioning is a form of changing the direction of the existing products to new market segments. The repositioning process suggested by Hassanien (2008) involving six phases is very much pertinent to the hospitality industry and can be applied for products as well as organisational repositioning however other researchers have been focused on product repositioning rather than organisational repositioning and hence not very much pertinent to the processes adopted in the hospitality industry. However the general concepts relating to change of image and the perception of customers are very much relevant.

Another attitude to repositioning is taken by Park and Smith (1990) suggesting it as a strategy developed to enhance the performance of an organisation or product. The view expressed by Pierce and Moukanas (2002) however in conjunction with product development is the product repositioning for mature markets. According to Pike et. al. (2010) new product development is in itself a repositioning strategy and the coupling of repositioning with the literature on the new product is essentially based on the consideration that the new products are a modification of the existing products.

From the above one can consider that repositioning has received less attention in the form of developing a unique framework whereas it is being suggested in many areas especially related to new product development. However most of the repositioning in practice has occurred for existing products rather than new products. Based on the above review of different sources on the concepts of repositioning and its associations with different aspects such as target market, market segment, new product development and branding strategy, one can identify the considerable gap in the literature about the implementation of repositioning. Moreover repositioning is usually associated with product development and hence the literature indicates certain confusion in the way in which it is associated with products and brands. Further even the implementation strategy identified from different sources has focused on advertisements and has ignored several other considerations.

Another method to repositioning which can be considered as comprehensive is suggested by Gupta (2012) which touches upon the processes, controlling variables and its effects. The concept identifies the repositioning as part of the marketing process. It is the process involved in marketing either to partially or totally change the perceptions of the customers about an organisation by making amendments or adding value to the marketing mix. The marketing factors are changed to comply with the factors associated with consumers or competition with a target of retaining, expanding or changing the target segments.

The above view can be considered as comprehensive as it indicates the processes, identifying them as a partial or total change in the make-up of a product or an organisation, based on the marketing factors to change the perceptions of the target segment in order to improve the performance. Furthermore this concept can be differentiated from other definitions as the targets are uniquely identified as retention, expansion or even the change of market segments.

Strategy of repositioning

Most of the strategies of repositioning proposed by the researchers have similarities with little change or distinguishing features from one to another. As proposed by Hassanien (2008) and Chotipanich (2004) the first process is the determination of current positioning, followed by the analysis of the market to decide on the expected position. Further modifying, designing or renovating the product/service to suit to the desired position is also projected by Nykiel (2008). One distinguishing factor acknowledged by Gupta (2012) through the case study analysis of several repositioning practices is the measurement of the desired positioning and further rectifications. Although the positioning strategies seem to be relatively simple in structure and model, Bennett and Strydom (2009) and Foxell and Trafford (2010) have examined the credibility and reliability of the strategy through empirical and qualitative studies. This factor is deliberated by Ferrell and Hartline (2010) and suggests that it is far difficult to remove the old perceptions from the consumer’s mind rather than moving to a new idea with an existing product or service.

Furthermore based on certain case studies Chon and Maier (2009) have concluded that removing the old perceptions with a change of idea for an existing product is significantly different and promotes the idea of rolling out a brand-new product or service thus differentiating it with the old ones. However this may not be possible with all the products and services especially those in the hospitality sector. The repositioning of the hotel would need a move to a new proposition and removing those factors from the consumer’s mind which were identified with the old positioning strategy (Pike et. al. 2010).

When considering the larger picture, the strategies provided by the researchers as above, seems to be very similar to the steps in positioning a product in the first place. One difference especially in the hospitality sector would be the difficulty in moving to a new position relevant to the market and removing the old perceptions from the customers mind. Hence Chon and Maier (2009) have aptly pointed out that removing the old perceptions is difficult especially for hospitality organisations such as hotels and restaurants. The product may be repositioned by changing the packaging or even slightly the brand name whereas an organisation cannot be repositioned as easily as the products.

Resource based view of repositioning

Repositioning strategists have used the theoretical basis of resource-based analysis as the main factor. One of the basic considerations of an organisation or a brand repositioning is the imperfection of the market and the heterogeneity of the products available in the market (O’Fallon and Rutherford 2010). Consequently the market participants are having asymmetric information about the characteristics affecting the market. Repositioning according to Zaransky (2009) is the strategy adopted to improve the competitiveness of the brand or an organisation. Based on the resource-based view point Merrilees and Miller (2008) have concluded that repositioning of the brand or an organisation should consider the inefficiencies existing in the market and to capitalise on such inefficiencies and market gaps. As any strategy would have external and internal implications, Enz (2009) acknowledged that repositioning would be in relation to the competition (external) mainly emanating from the changes in the internal factors.

The resource-based view point would be highly dependent on repositioning of organisations rather than products as indicated by Zaransky (2009). Organisations have particular resources and when considering the hospitality companies, they are providing the resources as the services to the customers. Although the assertion by Merrilees and Miller (2008) about consideration of inefficiencies in the market and capitalising from the market gaps is a valid point, the researcher has not provided how such a repositioning of an organisation can be done.

Resource-based view in the hospitality sector

The concept under resource-based view characterises each organisation as having different capabilities and hence a certain level of uniqueness which are considered as “resources”. These resources are the underlying factors which provide a competitive advantage to an organisation in the market (Buttle and Bowie 2012). In the case of organisations in the hospitality sector, there are resources which are tangible and intangible. Since the hospitality sector is largely service-oriented, many of the brand identities and perceptions of the customers would be dependent on the intangible factors such as the service and the brand image (Pierce and Moukanas 2002). It has also been studied by Beri (2009) that the capabilities of a firm can also be considered as the resources especially for service-based organisations.

When analysing the resources of an organisation, especially the tangible assets, the location is a unique factor along with the physical assets. However Chon and Maier (2009) designates that all the physical assets cannot be considered as resources as most of them are expected by the customers. There are certain unique factors which differentiate a hotel property from another such as a large swimming pool, the quality of the room, room environment, atmosphere and similar factors which can be differentiated or compared with the competitors. When considering repositioning, some of the tangible assets cannot be changed, especially the location and the larger environment associated with the location (Merrilees and Miller 2008).

The intangible resources of an organisation would be the capabilities of the firm and more importantly the brand image (O’Fallon and Rutherford 2010). It has been identified from the concept of resource-based view that the organisational capabilities and brand image can change over a period of time. The brand image depends upon the customer perceptions and the organisational capabilities depend on the management. The managerial abilities are a significant determining factor in the success of the repositioning strategy as the flexibility of the organisation contributes to responsiveness to the market conditions (Zaransky 2009).

As identified previously, repositioning involves the first step as the identification of the tangible and intangible assets and hence the resources of the organisation. Since some of the resources cannot be changed and some others cannot be encouraged to improve the performance (Hassanien et. al. 2012), it is necessary to identify those resources which can provide value over the long-term and hence competitive advantage. Based on this perspective Ng (2009) have considered that a resource can contribute to long-term competitive advantage when there is demand, the competitors are unable to replicate the resource and when the organisation is able to invest in the resource and generate long term profitability.

Hence it is necessary that an organisation should consider the resources which can be leveraged and compare it with the competition. This would require a careful analysis where some of the resources are selected for modification and some others which have to be eliminated. Although the market demand has to be considered, the emergence of new players in the market also has to be analysed as the repositioning strategy would take some time to put into effect. Overall from the above it can be concluded that repositioning is an external change of an organisation especially a change in the perception of the customers in comparison with the competition by leveraging the unique resources of the company which cannot be replicated by the competition.

Repositioning in the hospitality industry

As indicated previously, the tangible factors associated with an organisation in the hospitality industry, especially hotels cannot be changed significantly to align with the market characteristics. Hence the repositioning of the brand in the hotel sector would be to change the intangible factors associated with the organisation to ensure competitiveness. This is advocated by Hassanien et. al. (2012) and confirmed by a study of repositioning of various hotels. The study has identified that repositioning was conducted for expansion of market share, repositioning to service a separate market segment, entering into new markets by developing new products and services. However it has been found from the studies of repositioning of hotels that most of it consists of improvising on the already existing assets both tangible and intangible. Furthermore the studies piloted by Cant and Styrdom (2009) specify that the main consideration for hotel repositioning is to change the existing impression about the brand.

Based on some actual practical examples of repositioning and the research studies which have analysed them, one significant conclusion is that many of the repositioning involved only perception changes rather than actual.

Gupta (2012) have confirmed this suggestion that many of the brand repositioning have consisted of changing the outward design which are the intangible elements that would create an impression in the minds of the consumer about the change. Pike et. al. (2010) has identified the change in pricing and market orientation as a way to reposition the brand. Nevertheless most of these changes did not have a significant impact or a change in the actual tangible factors which the customers could gain after the repositioning. However, almost all the research studies and thus the researchers are in agreement in their view about repositioning of hotels and its association with renovation.

Although it has been suggested previously that little tangible improvements occur in repositioning of hotel properties, almost all repositioning has been researched from the perspective of hotel renovations. Hence a change in the tangible elements of a hotel is the main basis for repositioning even though the theoretical concepts provide otherwise. Further this can be considered in line with the resource-based view point where the resources (tangible and intangible elements) are changed to develop an alternative perspective for the customers. Hence the resource-based view point about repositioning can be considered as very relevant for hospitality organisations.

Hotel renovation as a repositioning strategy

Renovation is considered as the main tool for repositioning of a hotel property. Renovations of the hotel according to Simms and Trott (2007) are the improvement in the tangible elements. This can be a complete modification of the entire property, new extensions, renovating fixtures, equipment, additions and changes of furniture. As identified in the previous sections, repositioning has been considered along with new product development and innovation. Innovation or new product development is the work involved in developing a new idea and concept. According to Aldin et. al. (2004) innovation and product development is a continuous process involving varying degrees of change from the existing. Innovation can be highly discontinuous giving rise to entirely new products which require different positioning strategies. According to Kalafatis et. al. (2000) an innovative product or service can be defined from the perspective of the organisation and the market. The concept of new product development and innovation has been connected with renovation of hotel properties and repositioning. Repositioning in the hospitality sector especially hotels has been considered as strategic (Lo et. al. 2012), contributing to operational and functional necessities (Simms and Trott 2007). Renovation is also essential to sustain the competitive advantage, sustain the market share, improve operational efficiency (Wong and Merrilees 2007), improve the brand image, compliance with new regulations, technology and market conditions (Saxena and Khandelwal 2010). According to Bruyn and Freathy (2011) renovation is considered as the most important practices adopted by hotel are in the repositioning.

Since there is a necessity for a tangible change which needs to be perceived by the customers, hotels have adopted renovation to either improve the positioning or repositioning. From the above it can be concluded that the concepts involved in product repositioning, especially through innovation and new product development is the main underlying factor in the renovation of hotel properties. Similar to innovations and new product developments, hotels can reposition by changing the tangible aspects which can be felt and perceived by the customer.

Summary

The above literature provided the general concepts about positioning and repositioning, reasons, processes and the strategy followed by a specific concept of resource-based view point about repositioning which is very much pertinent to the hospitality industry. Although repositioning can be considered as the change in the perceptions of the customer, it has been suggested that product repositioning is much easier than an organisational repositioning. Hence organisations especially in the hospitality industry would need to consider the tangible and intangible elements which are resources of the company. Certain resources cannot be altered (such as the location) and only an external modification can change the perceptions whereas most of the repositioning in the hospitality sector does not have altered the tangible elements. Hence even with the change in the intangible elements, the hospitality company can facilitate a repositioning in the market.

Research Methodology

Introduction

The following sections provide an understanding of the methodological framework used by the researcher especially connected to primary data collection and the analysis, to answer the research questions. Any research should have a properly structured method which can be verified and validated. Further the description of the methodology provides the reader with the ability to analyse the research proper; especially relating to reliability and validity.

The initial sections of the methodology revolve around the larger frameworks relating to the philosophy adopted by the researcher and the research approach. Further sections move on to the

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