Lessons on Brands and Discounting (with a touch of humor).
By Dr. John Hogan, CHE CHA MHS
Friday, 10th July 2009
As a columnist, an educator, an entrepreneur and a hotelier, I have learned to seek out as many ideas and options as possible to improve my rate of success. 

In LESSONS FROM THE FIELD, the book on hotel sales that Howard Feiertag and I co-authored, we used as many examples and lessons from as many different people as possible to explain different ways to succeed in hospitality.

Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map.
Wayne Calloway  (1936-1998) Former CEO of PepsiCo, Chairman of the Board at Wake Forest University and Director of General Electric, Exxon and Citicorp

This is a slightly unusual approach to my regular columns, but it addresses two topics that seem to be getting increasing attention the past 12 months or so.  Those topics are:

1- brands and
2- discounting

One only needs to read any news today globally to learn of continuing economic hesitation in projecting when the economy might reverse direction.  One also can read the online or print stories about the challenges facing hospitality.  Even though it has been substantiated repeatedly by every qualified source that huge discounting alone is NOT a good business decision, we continue to read stories about that exact approach by too many hoteliers.

I just read a recent article by Ram Badrinathan, General Manager-Asia of PhoCusWright Inc who wrote about what he feels is a substantive move from brand value to intrinsic value.   His article, "Death of the Travel Brands", provided a very solid background on how brands in business came to be significant.  He offered details ranging from the time of the Industrial Revolution and mass production and added his insights from his professional experience in advertising on the need to differentiate between products.

He also offered the perspective that many products didn't really have much difference, and then emotional discriminators were introduced to induce or maneuver consumers to purchase the product.   He  opined that fast moving consumer goods were "masters in the promotional game and categories like tobacco, soap, beverages, and snacks invested heavily in advertising campaigns to build ‘brands'".  

Mr. Badrinathan's article is well-written and I urge you to read it and glean his full intent from his methodology. I do not believe he is criticizing brands per se, but rather is expressing a warning to managers and owners that there is a need to make certain that your business is examining all approaches to finding your success.

Mr. Badrinathan's background information in his article included the Interbrand Corporation's [1] 2008 annual audit of most valuable brands.   Using their database of global brands, populated with critical information over the past 20 years of valuing brands and more than 30 years of consulting with organizations, Interbrand has formed an initial consideration set.

All brands were then subject to the following criteria that narrowed candidates significantly:

  • 01 There must be substantial publicly available financial data
  • 02 The brand must have at least one-third of revenues outside of its country-of-origin
  • 03 The brand must be a market-facing brand
  • 04 The Economic Value Added (EVA) must be positive
  • 05 The brand must not have a purely B2B single audience with no wider public profile and awareness
These criteria exclude brands such as Mars, which is privately held, or Walmart, which is not sufficiently global (it does business in some international markets but not under the Walmart brand).

Interbrand Corporation's 2008 top 10 global brands are: [2]

1. United States- Beverages     Coca-Cola has once again retained its status as the world's most valuable brand. Proving that it still has a few tricks up its sleeve, current trends toward healthier diets have seen Coke shift focus to better-for-you drinks in the last year, with the launch of products like the vitamin and mineral enriched Diet Coke Plus and the continued push behind Coke Zero, which is now available in more than 80 countries.

2 United States - Computer Services     Big Blue's transformation from PC vendor to solutions provider continues. Recognizing that we live in an increasingly connected world, IBM has positioned itself as the partner of choice for businesses that operate across borders.  

3 United States - Computer Software   Despite maintaining its position as one of the world's biggest brands, Microsoft has had a slightly rocky year. The new operating system, Vista, was poorly received, not least of all by Intel, which refused to install it on its machines due to compatibility issues. The failed takeover of Yahoo! and Bill Gates' decreasing role piled further pressure on a brand already struggling to articulate how its offering fits together.

4 United States - Diversified   Few companies are in as strong a position to push the green agenda as GE. Its Ecomagination program has been incredibly successful in raising sustainability awareness and has reflected positively on the brand. As GE continues to expand internationally it has a unique opportunity to shape the way that businesses all over the world approach sustainability and in doing so, can cement its green credentials.

5 Finland -  Consumer Electronics      Despite increased competition from the likes of Apple, Nokia has solidified its position as the #1 mobile phone brand, increasing its global market share to 38%. The iPhone and the Blackberry have certainly raised consumer expectations of what devices can do, but Nokia has not stood still. It recently launched the E61 in direct response to the Blackberry and is currently developing the "Nokia Tube", an eagerly awaited touch screen device that will see it compete head-to-head with the iPhone.

6 Japan -   Automotive       Toyota continues to benefit from the "green halo effect" of the Prius, which is still widely talked about in the media. Like its sister brand Lexus, Toyota has managed to control the perception of its national heritage where helpful, but also ply its trade as a truly global brand.

7 United States-   Computer Hardware    Having just announced its most profitable quarter ever, Intel is reaping the benefits of continued innovation and a partnership with Apple that has seen it get inside some of the most desirable computers of the moment. Going forward the brand will shift half of its advertising budget to the Internet channel to better target technology-savvy consumers who are spending more and more time online.

8 United States - Restaurants      McDonald's has never been a brand to sit still and its ability to adapt to consumer needs is almost as fast as its food. McDonald's has been addressing the healthy eating issues that have dogged it in the past. Its french fries are now trans-fat free, and its offering of healthier meal options keeps increasing. Looking ahead, the chain aims to become the #1 destination for chicken and to significantly boost its coffee credentials by introducing 14,000 coffee bars at its US outlets. With specialist baristas serving cappuccinos and lattes at a time when consumers are less willing to fork out for a pricey Starbucks, it's a shrewd move.

9 United States -   Media     The magic has stalled somewhat for Disney, with the brand taking a bit of a back seat to those it partners, and its core target becoming more distant from the Disney brand as a result. Still, the phenomenon of High School Musical and its spin-offs is keeping the tills singing around the world, and it's bearing rich fruit from its partnership with Pixar. As consumers upgrade to high-definition TV, Disney should see strong sales of its back-catalogue, offsetting the decline in profitability of theatrical releases.

10 United States - Internet Services      Google is the undisputed king of the internet world and the last year has seen it gain even more ground against rivals. Innovations like Google Mobile, Google Docs & Spreadsheets and Google Book Search extend the brand's reach and ubiquity and make it an increasingly important part of our everyday lives. Yet these projects wouldn't be possible without its core business – 99% of its revenues come from advertising on its search result pages.

Only Google differs from the previous year, as it replaced Mercedes Benz, which dropped one spot.

I initially found it surprising that there is not a travel or hospitality company in this list.  When I gave it more thought, I realized what I suspect many readers already know – the hospitality industry may be one of the world's largest, but it consists of many small businesses and organizations that all contribute to the total.

Brands and Discounting

I have worked in both independent and branded hospitality businesses and found advantages and limitations in both at times.  The reality is that brands can offer tremendous resources to participants if everyone acts as partners and not antagonists.

The owners and managers of each individual hotel and hospitality business need to be aware and involved in the pricing levels offered by their business.  I sincerely believe adding VALUE and creating synergy with other businesses is a much better way of reaching both ongoing and long-term success.  Contact me for examples or ideas.

Lessons on Brands and Discounting (with a touch of humor)

I mentioned in the opening that I have learned to seek out as many ideas and options as possible to improve my rate of success.  As someone who is regularly involved in the learning process in workshops in corporate, academic and association settings, I have also learned to maintain a sense of humor and perspective.

The following was sent to me about 20 years ago, and I have used it regularly as a focal point for reminding all of us that size alone of a company does mean it will always be successful in its efforts. 

I hope you enjoy :     

The Top 10 Most Brilliant Marketing Screw Ups (Author unknown)

1. Coors  Beer put its slogan, "Turn it loose," into Spanish, where it was read as "Suffer  from diarrhea."

2. Scandinavian vacuum manufacturer Electrolux used the following in an American campaign: "Nothing sucks like an Electrolux."    

3. Clairol introduced the "Mist Stick", a curling iron, into German only to find out that "mist" is slang for manure. Not too many people had use for the "manure stick."   

4. When Gerber started selling baby food in Africa, they used the same packaging as in the U.S., with the beautiful Caucasian baby on the label. Later they learned that in Africa, companies routinely put pictures on the label of what's inside, since most people can't read.                            

5. Colgate introduced a toothpaste in France called Cue, the name of a notorious porno magazine.     

6. An American T-shirt maker in Miami printed shirts for the Spanish market, which promoted the Pope's visit. Instead of "I saw the Pope" (el Papa), the shirts read "I saw the potato" (la papa).              

7. Pepsi's "Come alive with the Pepsi Generation" translated into "Pepsi brings your ancestors back from the grave", in Chinese.   

8. Frank Perdue's chicken slogan, "it takes a strong man to make a tender chicken" was translated into Spanish as "it takes an aroused man to make a chicken affectionate."    

9. The Coca-Cola name in China was first read as "Ke-kou-ke-la", meaning "Bite the wax tadpole" or "female horse stuffed with wax", depending on the dialect. Coke then researched 40,000 characters to find a phonetic equivalent "ko-kou-ko-le", translating into "happiness in the mouth."  

10. When Parker Pen marketed a ball-point pen in Mexico, its ads were supposed to have read, "it won't leak in your pocket and embarrass you". Instead, the company thought that the word "embarazar" (to impregnate) meant to embarrass, so the ad read: "It won't leak in your pocket and make you pregnant."

[1]/[2] www.interbrand.com/best_global_brands_methodology.aspx?langid=1000

If you would like a complimentary copy of this message in a power point,  send an email requesting    Top 10 Most Brilliant Marketing Screw Ups   To johnjhogan@yahoo.com

Feel free to share an idea for a column at johnjhogan@yahoo.com anytime or contact me regarding consulting, customized workshops, speaking engagements …………. And remember – we all need a regular dose of common sense.

Autographed copies of LESSONS FROM THE FIELD – a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES can be obtained from THE ROOMS CHRONICLE www.roomschronicle.com and other industry sources.

All rights reserved by John Hogan and this column may be included in an upcoming book on hotel management.   The opinions expressed in this article are those of the author and do not necessarily reflect the views of this publication

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