Novotel Vision 2015 Global Brands 2015

Transcription

1 Novotel Vision 2015 Global Brands 2015 Purpose The purpose of the Novotel 2015 Vision Papers is to help us understand today s world, as well as the world of 2015, so that we might better understand how Novotel needs to evolve as a company and a brand to be successful in These papers are not intended to be a complete review of everything that could be important in 2015, but they give us a way to explore some interesting and perhaps important topics to stimulate our thinking. Novotel 2008 Page 1

2 What will a global brand be in 2015? A Customizeable Brand How does a global brand adapt its identity from region to region? Should a brand message be the same in China as it is in Europe? And how customizeable is the experience that your customer experiences? That is, how much control does the customer have over their own experience? At Nike.com, you can design your own shoes. Can you customize your hotel room? Co-Branding Another key concept in the world of branding is co-branding. Thus, Nike also has developed a partnership with Apple to create the Nike ipod, which runners can use to integrate the experience of running with music and management of the training regimen. Once, not so long ago, many travel companies explored co-branding. Airlines bought hotels and car rental companies, hoping to create a seamless brand experience for their clients. But it didn t work very well; people saw that a plane trip was a plane trip, and a hotel was different than that. But perhaps someone in the travel industry will figure out how to merge these experiences, and their brands, to provide a better experience to the customer. Page 2

3 Impact of the Internet on Brand Management In the era of Web 1.0, brands presented themselves on the internet with static brochures. In the era of Web 2.0, brands attempt to engage customers as members of a community. But it s not only customers; they also want to learn from suppliers, shareholders, neighbors, and others. One way they do this, of course, is via the internet. This can be particularly relevant in the innovation process, and it has led to the concept of open innovation. Open innovation is when the innovation process is managed as a collaborative process between a firm and its broader community. It is one of the most power strategies for managing a brand, because by engaging in collaboration with a company, people develop a much strong connection with the company s brands. Dell Computer invites anyone to give them feedback on Dell products. You can enter your ideas on a user-friendly web site. about new products and concepts, and have helped to shape the brand image of the company. The South Korean cosmetics company called Missha has developed a community of customers numbering about 1.8 million people. They give the company valuable feedback Proctor & Gamble has opened up its research and development process, and now expects to get more than half of its new product ideas from outside the company. Even the car company BMW wants you to share your new ideas! Page 3

4 The world of UGC, User Generated Content, is also a powerful means of creating brand loyalty. People literally build the brands they care about by contributing content to make them more meaningful; it is a positive spiral of engaging people to build brands that they are more attached to as they build them. Impact of Social Values on Brand Choices Social values certainly influence brand choices, and as the importance of sustainability becomes more important to many consumers, their consumption patterns change. A manager at Whole Foods Market recently commented that the company attracts many new customers who become pregnant or have children for the first time, because they suddenly feel that organic products are much more important. Although Whole Foods prices tend to be higher than mainstream grocery stores, these people become loyal customers because they are willing to pay more to achieve a healthier lifestyle for themselves and their families. Do social values also affect employee retention? How much does the holistic image of the brand affect the ability to attract and retain employees? In Europe, where the workforce is shrinking, can the brand make a difference in recruiting employees? Core vs. Edge Researchers now recognize that as markets evolve more quickly, they need reliable new ways to identify emerging trends. In the past, they focused on understanding the needs of core customers, but now they see that they also must pay attention to groups that are recognized as extreme customers as well as non-customers. These groups are sometimes referred to as edge customers. Page 4

5 The reason this is so important is that edge customers often become core customers as the market evolves. For example, college students embraced Napster before digital music became mainstream, but then within only a few years the ipod became a tremendous market success in the mainstream. The edge moved to core very fast. One consequence is that CD sales are steadily declining, and globally the music industry is struggling to adapt. Apple, meanwhile, is making tons of money selling ipods and songs via itunes. In their recent book, John Seeley Brown and John Hagel explore the importance of edge competence in addition to core competence. The edge is becoming the core. The edge is where the action is - in terms of growth, innovation and value creation. Companies, workgroups and individuals that master the edge will build a more sustainable core. The edge is giving rise to a new common sense model. We all perceive and act based on "common sense" assumptions about the world around us and the requirements to achieve our goals. Young people respond differently to brands than their parents do. For example, Levi s was a very strong brand in the 1960s and 70s that appealed to young people. As they grew up, they continued to identify with Levi s, and the brand came became established in the core of the culture. However, in the 80s and 90s the brand started to erode and sales fell significantly. Why? One explanation is that children didn t want to wear the same jeans that their parents did. So they switched to new brands that were on the edge. In the US, the best selling car in 1976 was the Oldsmobile Cutlass. The Cutlass typified the core of the market. Thirty years later, Oldsmobile not longer existed; the brand had died with its customers. Toyota became established as a Baby Boomer brand, but concerned that it did not appeal to younger customers, Toyota created a new brand called Scion. Designed with a rebel identity, the brand is designed to appeal to young people with style and Page 5

6 humor. In the current auto market, Scion is the edge, while Toyota is the core. In some markets, it s not necessarily easy to find the edge customers whose needs will migrate to become the core, but the faster the market evolves, the more important it is to do so. Stronger Brands Command Higher Prices A recent Deloitte survey showed that the brand premium on cola products, for example, is as much as 250%. (2 liters of supermarket cola cost about $0.39, while 2 liters of Coca Cola is $1.36). In contrast, however, the brand premium on hotels was only about 10%. Brand Asset Value Shifts In April 2007 it was reported that the frequent flyer program of American Airlines, AAdvantage, is currently worth more than the airline itself. According to an Icelandic investment fund, the AAdvantage program is worth $6 billion, about 1/2 a billion more than the airline, whose market capitalization is about $5.5 (which is $200,000 less than it's cash balance of $5.7b). This is similar to the situation faced by GM not long ago, when its GMAC finance subsidiary was earning 5x more in profits than the manufacturing arm. GM sold a 51% stake in GMAC for $14 billion last year, giving it muchneeded cash to invest in its turnaround. American probably won t sell AAdvantage. The company is not under financial or operating pressure, and American Chairman Gerard Arpey didn't express much interest in the idea. From the standpoint of innovation, what's particularly interesting about all this is how value shifts to various different parts of the business depending on the context and situation. AAdvantage is a service business whose primary asset is its membership; the membership exists because the airline exists, but once the membership and the airline become separate entities, as they have, then the membership as an asset in itself can be monetized. Back in the late 1980s when AAdvantage was created, who would have thought that the values of the 2 assets could have switched as they have? Page 6

7 blog/ 2007/ 09/ asset-tail-that-wags-creating-do... Designing Experiences Ten or 15 years ago when computers and databases started getting really powerful, someone realized that a company could put all its data about each customer into a database so that when the company had any contact with that customer, you could address them by name, and know a great deal about their needs, interests, and preferences. This is called Customer Relationship Management. As global competition increases, the leading edge of business continues to advance. Not so long ago companies were considering how to improve customer service, but today service is a commodity; then they were investing big money in CRM systems to track customer data. But today the leading edge has moved further still, and by 2015, where will it be? Today the key question is how to provide customers with compelling experiences that create enduring memories and lasting relationships. Part of the challenge in building memorable customer experience is that experience is an intangible quality that is so different from one person to the next. Experiences are built around feelings, emotions, smells, colors, spaces, sounds, human contact, branding, a thousand other factors, and time. A great experience is created - yes created, because it doesn't happen by accident. It is not only the result of better product features and functions, or better services ; it comes about because of how it makes people feel. A great café has just the right ambience; a great bookstore invites you to stay for hours, and makes you comfortable doing it; a great retail store makes you feel like family; a great brand becomes part of your own identity. All of these experiences happen on purpose, for they are designed experiences. To design great experiences you have to understand the customer's unique perspective, because experience is the interaction between a customer and the designed environment, between a customer and the designed web site, and between a customer and the people who help them. Designing great experiences is a critical part of building a successful brand, and the retail companies that we admire have done this brilliantly. Companies such as NikeTown, Starbucks, and Disney. Page 7 Even struggling companies such as United Airlines, recently out of bankruptcy, understand the importance of improving the customer s experience. Because of competitive pressure, they are investing millions of dollars to

8 replace all the business class seats in the international fleet with sleeper beds. Summary: Managing Brands 2015 Managing the experiences that customers have becomes ever more important to the success of every company. Companies are engaging broad communities of people across all kinds of relationships to help them innovate more effectively. Researchers are learning to look for their future customers on the edge of the current market. They are developing edge competence to complement their core competences. Social values play an increasing role in brand choices. People choose brands that they relate to. For Novotel 2015, some of the key ideas and questions are What will customers expect from a global hotel brand in 2015? We can be sure that they will be highly particular about their experience. They will expect to be included as a member of the brand s community, and if they are loyal to the brand they will expect the brand to respect their individuality. How much can the hotel experience be customized? How much can user-generated content become a part of how the company operates? This Vision Paper was prepared by InnovationLabs for Novotel. Page 8

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