What is brand name effect or brand effect, to understand what it is, one thing needs to be questioned, what is a brand? The brand usually is seen as the unique design and symbol for particular products, however, this is a common misunderstanding to many people. A brand is not only embodying the design and symbol but also include the emotional demand of certain consumer groups who value the product concept (Keller & Lehmann, 2006). In another word, the targeted consumer’s attitudes towards to the products are substantially shaped by the brand value (Rao & Monroe, 1989). Therefore, the brand effect comes from the consumers’ knowledge and the attitude toward the brand. The basic theory of brand effect is that the quality of a product can only be experienced after purchase by consumer, however, brand effect can help buyer in the selection process by reducing other low knowledge brand and choose a well-known brand, because high knowledge brand gives a promised quality even before the consumer’s purchase behaviors (Milgrom & Roberts, 1986). In addition, the consumer’s buying behavior is determined by a series of psychological mechanisms, and empirically discovering these mechanisms to promote the branding strategy has been an active research topic in recent years (Campbell & Keller, 2003). This paper will analyze the branding strategy of Chinese hotel brand enter the world market. As the foreign brands, what is advantage and disadvantage Chinese hotel brand have and how to gain a competitive advantage in the western market?

Rationale of the study

Even though there are numerous of studies on branding strategy has been made, it is rare to see studies focus on Chinese hotel’s oversea branding strategy. There is no necessity to repeat the importance of branding strategy to one product, especially for the Chinese hotel brand who aim to expand to other countries, the branding strategy is extremely important that could either destroy a hotel or bring prospering business. As the Chinese economy grow rapidly in the last two decades, the capital is accelerating increase after China joined WTO in 2001. The expansion for the hotel brands is becoming necessary for the industry keeps growing. However, Chinese brands as the foreign brands to the western market are going to meet even more difficulties than a western brand in their expansion, which made the branding strategy study significantly vital for a successful business.

Aim & Objectives

The aim of this study is to evaluative the branding strategy of Chinese domestic hotel that is attempting to enter the larger world market. In order to explore the aim of this study, three objectives must be investigated. The first objective is to analyze what is driving the brand internationalization and whether the firms should expand the business into a totally unfamiliar environment or not. The second objective is to investigate the branding strategies that need to apply to gain a competitive advantage by exploring the key branding strategies for western hotel brand have used to expand their business in China market in the early 90s, and the cases for Japanese expansion to the western in 70-80s. The third one is to analyzing whether hotel brands should put the emphasis on customizing products or standardized products when they attempting to enter the global market.

Literature review

Objective 1

According to Lascu & Yip, there are four drivers for industry globalization which is the market, cost(economic), government police and competitive moves. These four drivers cover all factors of major industry on their potential for globalization (Lascu & Yip, 1994). For the hotel industry, the potential to globalization is much higher than other industry as a service-oriented business, the competitive and market would be the two main drivers for the hotel industry to go globalization, in order to transfer the pressure from other competitors. On the other hand, the hotel industry would gain more market in the foreign countries with lower competitions which could achieve more sales and profits. 

Companies that are entering the international markets could receive many benefits, however, the way to go globalize is not always flat and comfortable. Roughness and difficulties will be existing along with the company’s growth. According to Hurmelinna-Laukkanen & Ritala, the internationalization is seen as a good solution to promote the performance, however, the benefits of internationalization may not automatically achievable by everyone (Hurmelinna-Laukkanen & Ritala, 2012). There are various of disadvantage for the company go globalize, for example, the company may lose domestic market as the capital and advantaging strategy is focusing on overseas market, or they may meet dreadful competitors that destroy the business before it even starts (Manthiou, Kang, Sumarjan & Tang, 2015). Even though there are enormous of advantages for brand internationalization, to be specified, first of all, the most obvious advantage for marketing globally is the extension of company’s business which will increase the sales and profits as the product can reach more customers in the global market. Secondly, export the product into the international market is going to help increase the reputation of the brand, and it is potentially promoting the product by increasing the product knowledge. As the result, the customers tend to purchase a high knowledge product which is manufactured by multinational firms (Milgrom & Roberts, 1986). Especially for the hospitality industry, most of the guest make choices based on brand names, a well-known brand can provide a promised service that they could expect for their stay (Yesawich, 1996).

Objective 2

The industry rivalry of the hotel is intensive, and fiercely competition among the industry will lead a less profitable situation. However, according to Mr. Porter’s five forces model, companies who have more competitive advantage would achieve higher profitability from the market (Porter, 2008). Chinese brands in order to survive in the western market, it has to apply appropriate strategies to gain more advantage on competitiveness. Therefore, studying on the western brand’s strategy is an efficient way to discover the key successful branding strategy. Marriott is the first international hotel chain that has successfully get into the Chinese market after China “open-door” police in the late 1970s. By the end of 2000, the Marriott is running 17 hotels in 12 big cities across the nation, and by the end of 2016, there are 120 hotels operating by Marriott (Wong & Wickham, 2015).

The research shows the western brands that successfully got into the Chinese market both have four factors in common: firstly, companies are able to clearly analyze the market of China and apply for the appropriate strategy, secondly, they are able to build a productive brand name in the Chinese market by invest in advertisement, in additional, they gain a good reputation by doing charity activities such as supporting poor people and protect environment. Thirdly, they are able to build a valuable relationship with stakeholders and owners. Last but not least, they invest sufficient money in the human resource as foreign direct investment(FDI) in China (Topolinski, Zürn & Schneider, 2015). These four strategies enhance the western brand’s sustainability and business to prosper in the Chinese market which could be used for Chinese brands in their expansion.

The Japanese branding strategy in last century is a very interesting case to study, the Japanese economy was growing fast after the WWII, especially in the late 70-80s. At the top point of the Japanese economy in 1989, the sum of land prices in the 23 districts of Tokyo can even buy all the land in the United States. Furthermore, the Mitsubishi Estate was buying the Rockefeller Group for about $846 million, which acquire the using right for the Rockefeller Center that is located in the middle of Manhattan. However, after 1990 the Japanese economic bubble was collapsed, many Japanese brands and capital force to pull back to Japan (Ikeo, 2002). Therefore, many people concern that Chinese will become the second Japan as the Chinese economy was growing rapidly in last decade which is same as Japan did in last century (HONGHUA, 2017). In consequence, under the unstable economic environment, what should be the companies’ strategy. According to the KENNEDY, when the economic environment and national policy relative unstable the enterprises should control production capacity to the lowest demand of the market, reduce the unnecessary staff, and try to reduce production costs (KENNEDY, 2005). Only in this way, the brand can survive through the winter of the market contraction.

Objective 3

According to Theodore Levitt, technology is changing our world by converging the commonality into one, and under this situation, companies should focus more on standardized products instead customizing them. In his theory, the well-managed globalized companies will achieve long-term success by concentrating their products on everyone’s need rather than focus on individual request (Levitt, 1983). However, many cases of failure-proof the for the Chinese hotel brand simplify copy and paste the successful mode from the domestic market to the foreign market would not working as the same. In order to acquire a successful business, the brand needs to customize the service to adjust standardized service to personalized service to meet local guests’ needs, which is the correct choice for Chinese brand to make in their expansion (Xinxin & Ali, 2016).

Methodology

The research is using the Qualitative approach method, that the qualitative data will be collected by interviews method to the hotel managers. By using the qualitative method instead of the quantitative method, the interviews will collect more data from interviewees towards the feeling and experience on the research topic to justify the theory used in the article is correct or not. In the broad terms, the qualitative method could describe as the way of deductive understanding of the relationship between theory and the research (Brotherton, 2015). Therefore, the qualitative approach method is appropriate for this study, and it will fit more on the selected aim and objectives.

Interview with the method using the research enjoys more advantages than survey by focussing more on personal feelings and perception, and more detailed question to be asked (Duffy, 2013). In this research, the size of the interview will be 10, the participants will be hotel managers as they have sufficient experience toward to the topic and they could provide more critical answers to the theory. In the interview, the questions will be asking to hotel managers, for example: what will be the option when you go abroad, a Chinese hotel brand or a foreign hotel brand, and why? Or what do you prefer for hotel service style, standardized or customized, why? By asking these question, the researcher will gather enough data to analyze the value of the theory and mode used in the study. If the study would be reproduced the result would be similar because the information and data gathered from hotel manager would not have colossal change.

Limitations

The main limitation for the research is trustworthy, as the methodology will impact or influence on the interpretation of the result of the research, and the unstable result will relative effect the trustworthy of the research (Shenton, 2004). Another limitation is lack of sample size, 10 hotel managers as interviewee size may fit the basic need of data but it is not diversifying and sufficiently enough to maximize the result to variegated. However, lack of sample size can be an opportunity for the future investigation, as the research goes deeply the sample size may increase as the result.

Reference list

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