[Section A = 10 marks] SECTION B Read the following case study carefully and attempt THREE (3) questions Banyan Tree: Branding the Intangible [Source: Lovelock, CL. Patterson, PG. & Walker, R 2015 Services marketing an Asia-Pacific and Australian perspective, 6 edin, Pearson Australia, NSW] Banyan Tree Hotels and Resorts had become a leading player in the luxury resort and spa market in Asia. As part of its growth strategy, Banyan Tree had launched new brands and brand extensions that included resorts, spas, residences, destination club memberships, retail outlets, and even museum shops. Now, the company is preparing aggressively to grow its global footprint in the Americas, Caribbean, Europe, and the Middle East while preserving its distinctive Asian identity and strong brand image of Banyan Tree. A brand synonymous with private villas, tropical garden spas, and retail galleries promoting traditional craft, Banyan Tree Hotels and Resorts received its first guest in 1994 in Phuket, Thailand. Since then, it had grown into a leading manager and developer of niche and premium resorts, hotels, and spas in the Asia-Pacific. Despite having minimal advertising, Banyan Tree achieved global exposure and a high level of brand awareness through the company's public relations and global marketing programs. Much interest was also generated by the company's socially responsible business values and practices caring for the social and natural environments. With a firm foothold in the medium-sized luxury resorts market, the company introduced a new and contemporary brand, Angsana, in 2000 to gain a wider customer base. As the resort market became increasingly crowded with similar competitive offerings, lured by the success of Banyan Tree, the company had to think about expanding its business and preserving its distinct identity. Banyan Tree and Angsana resorts were expanding geographically outside of Asia and also into the urban hotel market in major cities throughout the world. With around 34 hotels and resorts scheduled to open over the next three years, Banyan Tree faced the challenge of translating and maintaining the success of a niche Asian hospitality brand into various market segments on a global scale. Company backgroundBy early 2009 Banyan Tree Holdings Ltd (BTHR) managed and/ or had ownership interests in 25 resorts and hotels, 68 spas, 65 retail galleries, and two golf courses in more than 55 locations in 23 countries. Since its establishmen CHIC company's flagship niche Asian hospitality brand into various market segments on a global scale. Company backgroundBy early 2009 Banyan Tree Holdings Ltd (BTHR) managed and/ or had ownership interests in 25 resorts and hotels, 68 spas, 65 retail galleries, and two golf courses in more than 55 locations in 23 countries. Since its establishment in 1994, the company's flagship brand, Banyan Tree, had won some 400 international tourism, hospitality, design, and marketing awards, some of which included "Best Resort Hotel in Asia Pacific' (Phuket) for four consecutive years from Business Traveller Awards since 2002, 'Seychelles Best Resort and Seychelles' Best Spa' from World Travel Awards (2003), 'Best Hotels for Rooms' (Bangkok) from UK Conde Nast Traveller (2006), 'Best Hotel (Luxury)' (Lijiang) from Hospitality Design Awards (2007) and PATA Gold Award- Ecotourism Project Category (Bintan) from Pacific Asia Travel Association Gold Awards (2008).2 BTHR was founded by Ho Kwon Ping, a travel enthusiast and former journalist, and his wife Claire Chiang, a strong advocate of corporate social responsibility. Prior to entering the hotel and resort business, Ho spent some 15 years managing the family business, which was into everything imaginable, such as commodities, food products, consumer electronics, and property development. It competed mainly on cost and was not dominant in any particular country or industry. Meanwhile, Chiang was deeply involved in sociology and social issues. The closing of a factory in Thailand one year after its opening-because it lost out to other low-cost producers in Indonesia-was the last straw for Ho, who then realised that a low-cost strategy was not only difficult to follow but would also lead nowhere. Determined to craft out something proprietary that would allow the company to become a price maker rather than a price taker, Ho decided that building a strong brand was the only way for him to maintain a sustainable competitive advantage. The idea of entering the luxury resorts market was inspired by the gap in the hotel industry that giant chains such as the Hilton and Shangri-La could not fill. There was a market segment that wanted private and intimate accommodation but without the expectation of glitzy chain hotels. This was fuelled by the sharp price gap between the luxurious Aman Resorts and other resorts in the luxury resorts market. For example, in 2004 the Amanpuri in Thailand, one of Aman's resorts, charged a rack rate for its villas ranging from US$650 to over US$7000 a night, whereas the prices of other luxury resorts, such as the Shangri-La Hotel and Phuket Arcadia Beach Resort by Hilton in Thailand, were priced below US$350. Shangri-La Hotel and Phuket Arcadia Beach Resort by Hilton in Thailand, were priced below US$350. Noticing the big difference in prices between Aman Resorts and the other resorts in the luxury resorts market, Ho saw the potential for offering an innovative niche product that could also bridge the price gap in this market. Ho and Chiang had backpacked throughout the world in their youth and were seasoned travelers themselves. Their extensive travel experience is evident in their non-conforming beliefs that resorts should provide more than just accommodation. Ho and Chiang hit upon the idea of building a resort comprising individual villas, with locally inspired architectural design and positioned as a romantic and intimate escapade for guests. Banyan Tree moved its positioning into the higher end of the luxury market, and by 2008 its rack rates were typically between US$1200 and $7000 for the resort in Phuket, and between 1500 and 4200 for the resort in the Seychelles. Operations at Banyan Tree began with only one resort in Phuket, situated on a former mining site once deemed too severely ravaged to sustain any form of development by a United Nations Development Program planning unit and the Tourism Authority of Thailand. It was a bold decision, but the company, together with Ho, Chiang, and Ho's brother Ho Kwon Cjan, restored it after extensive rehabilitation works costing a total of $250 million. The Banyan Tree Phuket was so successful when it was finally launched that the company worked quickly to build two other resorts, one at Bintan Island in Indonesia and the other at Vabbinfaru Island in the Maldives. The company has never looked back since. Even though Asia's travel industry experienced periodic meltdowns such as during the Asian economic crisis in 1997-98, the 11 September attacks on the World Trade Center in 2001, the dot.com crisis in 2001-02, severe acute respiratory syndrome (SARS) in 2003 and the Indian Ocean tsunami on 26 December 2004, no employee was retrenched and room rates at Banyan Tree rose steadily. Brand originsknown as Yung Shue Wan in the local dialect, Banyan Tree Bay was a fishing village on Lamma Island in Hong Kong where Ho and his wife Chiang lived for three idyllic years before he joined the family business. Despite the village's modest and rustic setting, they remember it to be a sanctuary of romance and intimacy. The large canopies of the Banyan Tree also resembled the shelter afforded by Asia's tropical rainforests. Ho and Chiang thus decided to name their resort Banyan Tree, and position it as a sanctuary for the senses. as a sanctuary for the senses. The service offeringUnlike most other resorts then, Banyan Tree resorts comprised individual villas that came with a private pool, jacuzzi, or spa treatment room, each designed to offer guests exclusivity and utmost privacy. For example, a guest could skinny-dip in the private pool within his villa without being seen by other guests, putting him in a world of his own. All Banyan Tree hotels and resorts were designed around the concept of providing a sense of place to reflect and enhance the culture and heritage of the destination. This is reflected in the architecture, furnishings, landscape, vegetation, and the service offers. To create a sense of exotic sensuality and ensure the privacy of its guests, the resorts are designed to blend into the natural landscape of the surrounding environment and use the natural foliage and boulders as the privacy screen. The furnishings of Banyan Tree villas were deliberately native to convey the exoticism of the destination with its rich local flavour and luxurious feel. The spa pavilions in the Seychelles were constructed around large granite boulders and lush foliage which offered an outdoor spa experience in complete privacy. The resorts' local flavour was also reflected in the services offered, some of which were unique to certain resorts. Employees were allowed to vary the service delivery process according to local culture and practices, as long as these were consistent with the brand promise of romance and intimacy. Thus in Phuket, for instance, a couple could enjoy dinner on a traditional Thai longtail boat accompanied by private Thai musicians while cruising instead of dining in a restaurant. Banyan Tree Phuket also offered wedding packages in which couples were blessed by Buddhist monks. In the Maldives, wedding ceremonies could be conducted underwater among the corals. Guests could also choose to dine in a castaway sandbank with only their private chefs and the stars for company and watch the sunset, with champagne, on a Turkish gullet returning from a trip watching a school of spinner dolphins. Products and services were conceived with the desired customer experience in mind. One such product was the 'Intimate Moments' package, specially created for couples. This was presented as a surprise when guests returned to find their villas decorated with lit candles, incense oil lamps, flower petals spread throughout the room, satin sheets on the decorated bed, a chilled bottle of champagne or wine, and tidbits placed next to the outdoor bath which was decorated with flowers and candles and bath oils. The couple was presented with a variety of aromatic massage oils to further inspire those intimate Mmants. Another desdheartehase decorated bed, a chilled bottle of champagne or wine, and tidbits placed next to the outdoor bath which was decorated with flowers and candles and bath oils. The couple was presented with a variety of aromatic massage oils to further inspire those intimate moments. Another drawcard of the resorts was the Banyan Tree Spa, found at every Banyan Tree property. The pioneer of the tropical garden spas concept, Banyan Tree Spas offered a variety of aromatic oil massages, and face and body beauty treatments using traditional Asian therapies, with a choice of indoor or outdoor treatment. The spa products used were natural, indigenous products made from local herbs and spices. Non-clinical in concept, Banyan Tree Spas relied mainly on the human touch' instead of energy- consuming, high-tech equipment. The spa experience was promoted as a sensorial, intimate experience that would rejuvenate the body, mind and soul' and was mainly targeted at couples who would enjoy their treatments together. In line with Banyan Tree's ethos of conserving local culture and heritage and promoting cottage crafts, Chiang founded the Banyan Tree Gallery, a retail outlet showcasing indigenous crafts. Banyan Tree Gallery outlets were set up in each resort. Items sold were made by local artisans and included traditionally woven handmade fabrics, garments, jewelry, handicrafts, tribal art, and spa accessories such as incense candles and massage oils, which guests could use at home to recreate the Banyan Tree experience. Banyan Tree Gallery embarked on projects to support the various communities in the locations Banyan Tree resorts are situated, and worked closely with village cooperatives and not-for-profit craft marketing agents to provide gainful employment to the artisans. While acting as a marketing channel for Asian crafts like basket weaving, hill tribe cross-stitching, and lacquerware, Banyan Tree Gallery also educated its customers about the crafts with an accompanying write-up. In the course of Banyan Tree Gallery's operations, the community Outreach extended from across Thailand to Laos, Cambodia, India, Nepal, Sri Lanka, Indonesia, Malaysia, and Singapore. The result of Banyan Tree's efforts was a very exclusive, private holiday feeling', as described by one guest. Another guest commented, 'It's a treat for all the special occasions like honeymoons and wedding anniversaries. It's the architecture, the sense of place, and the promise of romance Marketing Banyan TreeIn the first two years after Banyan Tree was launched, the company's marketing communications were managed by an international advertising agency. The agency also designed the Banyan Tree logo shown below and, together with Geneame up with Marketing Banyan Treeln the first two years after Banyan Tree was launched, the company's marketing communications were managed by an international advertising agency. The agency also designed the Banyan Tree logo shown below and, together with the management, came up with the marketing tagline 'Sanctuary for the Senses." Though furnished luxuriously, Banyan Tree resorts were promoted as providing romantic and intimate 'smallish' hotel experiences, rather than luxurious accommodation as touted by most competitors then. 'Banyan Tree Experiences' was marketed as intimate private moments. The resorts saw themselves as setting the stage for guests to create those unforgettable memories. When Banyan Tree was first launched, extensive advertising was carried out for a short period of time to gain recognition in the industry. Subsequently, the company scaled down on advertising and kept it minimal, mainly in high- end travel magazines in key markets. The advertisements were visual in nature with a succinct copy or showcasing the awards and accolades won Brand awareness for Banyan Tree was generated simply through public relations and global marketing programs. For example, relationships with travel editors and writers were cultivated to encourage visits to the resorts. This helped to increase editorial coverage on Banyan Tree, which management felt was more effective in conveying the 'Banyan Tree Experience from an impartial third-party perspective. Its website, , increasingly drove online bookings and provided vivid information about the latest offerings of Banyan Tree's fast- growing portfolio. The management of marketing activities was centralised at its headquarters in Singapore in order to maintain consistency in brand building. BTHR appointed a few key wholesalers in each targeted market and worked closely with them to promote sales. Rather than selling through wholesale and retail agents that catered to the general market, BTHR chose to work only with agents specialising in exclusive luxury holidays targeted at wealthy customers. Global exposure was also achieved through Banyan Tree's membership of the Small Luxury Hotels and Leading Hotels of the World organisations. Targeting high-end consumers, it represents various independent exclusive hotels and has sales offices in major cities around the world. The end of 2007 marked a new stage of Banyan Tree's global expansion, with the launch of its own GDS code 'BY.' GDS is a Global Distribution System that is used by travel providers to process airline, hotel, and car rental reservations across 640 000 terminals of travel agents and other distribution partners around the world. Prior to By Raman Tewas represented but madratinato diotola Distribution System that is used by travel providers to process airline, hotel, and car rental reservations across 640 000 terminals of travel agents and other distribution partners around the world. Prior to BY, Banyan Tree was represented by its marketing partners, Leading Hotels of the World (LW) and Small Luxury Hotels (LX). Now, Banyan Tree had its unique identity on the GDS code, further strengthening its brand presence and customer ownership. Banyan Tree now had enough critical mass to ensure the economic feasibility of a GDS private label. The acquisition of its own GDS code meant that Banyan Tree was transitioning from a relatively small regional player to a global brand in the eyes of the travel industry Brand valuesBanyan Tree embraced certain values, such as actively caring for the natural and human environment, revitalising local communities, which in turn created pride and respect among staff. The company hoped to build the brand on values that employees and customers could identify with and support as part of their own life values. A dedicated corporate social responsibility committee, headed by Chiang and featuring general managers and valued associates from each resort, was formed to focus on these issues with both a regional overview and simultaneously local perspectives. Thus the company worked actively to preserve, protect and promote the natural and human environments in which Banyan Tree resorts were located. Preserving the environmentResorts were built using local materials as far as possible and, at the same time, minimising the impact on the environment. At Banyan Tree Bintan, for example, the 70 villas located in a rainforest were constructed around existing trees, cutting down as few trees as possible, to minimise the impact the resort had on the natural environment. The villas were built on stilts and platforms to avoid cutting trees and possible soil erosion. At Banyan Tree Maldives Vabbinfaru and Banyan Tree Seychelles, freshwater supply was obtained by the more expensive method of desalination, instead of extracting water from the underground water table, which risked long-term disruption of the ecological system. Toiletries provided in the resorts, such as shampoo, hair conditioner, bath foam, and body lotion, were non-toxic and biodegradable, and reusable containers made from celadon or ceramic were used. Refuse was recycled where possible and otherwise treated through an in-house incinerator. Waste water was also treated and recycled in the irrigation of resort landscapes. Through the retail arm Banyan Tree Gallery, human environment efforts were evident in the active sourcing of traditional crafts from indigenous tres w PIOVIDE our employment. uon UI Through the retail arm Banyan Tree Gallery, human environment efforts were evident in the active sourcing of traditional crafts from indigenous tribes to provide gainful employment. These employment opportunities provided a source of income for the tribes and, at the same time, preserved their unique heritage. In line with the Banyan Tree Group's Green Imperative initiative, Banyan Tree Gallery constantly used eco-friendly and recycled materials in the development of its merchandise. Examples included photo frames made using discarded telephone directories, elephant dung paper stationery, and lead-free celadon and ceramic spa amenities. Unique collections like the black resin turtles stationery range and leaf-inspired merchandise were created to promote environmental awareness and were accompanied by a write-up to educate the consumer on the targeted conservation campaign. In support of animal rights, the galleries did not carry products made from shell or ivory. Besides trying to conduct business in an environmentally responsible manner, BTHR actively pursued a number of key initiatives, including its Greening Communities program. Greening Communities was launched as a challenge to seven participating resorts. It planted 28 321 trees in the first two years of the program. Banyan Tree Lijiang, for example, planted some 20 000 fruit trees to create additional income for families of the supporting community. While trees will absorb carbon and improve the quality of the environment, the main goal of this program was to engage local communities, associates, and guests to share the causes of climate change and actions that can reduce our collective carbon footprint. Creating brand ownership among employeesAll Banyan Tree employees were trained to the basic standards of five-star service establishments, which included greeting guests, remembering their first names, and anticipating their needs. In addition, some employees got a taste of the 'Banyan Tree Experience as part of their training. The management believed that the stay would help employees understand better what guests will experience and, in return, enhance their delivery of special experiences for the guests. Although management imposed strict rules in the administration of the resorts, employees were empowered to exercise creativity and sensitivity. For example, the housekeeping teams were not restricted by a standard bed decoration. Rather, they were given room for creativity although they had general guidelines for turning the bed down to keep in line with the standards of a premium resort. Banyan Tree invested liberally in staff welfare: employees were taken to and from work in air- conditioned buses and had access to various line with the standards of a premium resort. Banyan Tree invested liberally in staff welfare: employees were taken to and from work in air- conditioned buses and had access to various amenities, including good-quality canteens, medical services, and childcare facilities. Staff dormitories had televisions, telephones, refrigerators, and attached bathrooms. The company's generous staff welfare policies apparently paid off. Ho said: The most gratifying response is the sense of ownership that our staff began to have. It's not a sense of financial ownership, but they actually care about the property. In our business, service and service standards do not always mean the same thing as in a developed country, where standards are measured by efficiency and productivity, by people who are already quite well versed in a service culture. We operate in places that, sometimes, have not seen hotels. People come from villages. What we need-more than exact standards-is for them to have a sense of hospitality, a sense that the guest is an honoured person who, by virtue of being there, is able to give a decent livelihood to the people who work. This creates a culture in which everybody is friendly and helpful.' Involving guests in environmental conservation Part of the company's corporate social responsibility initiatives was designed to encourage environmental conservation and help ecological restoration. TO create greater environmental awareness, Banyan Tree organised activities that involved interested guests in their research and environmental preservation work. In the Maldives, for instance, guests were invited to take part in the coral transplantation program. Guests who participated in the program were then encouraged to return several years later to see the progress of their efforts. Guests were also offered free marine biology sessions allowing them to learn more about the fascinating marine life and its conservation. Guests also had an opportunity to take part in the Green Sea Turtle Headstarting Projects. The response from guests was tremendously positive. In 2002 Banyan Tree established the Green Imperative Fund (GIF) to support further community-based and environmental initiatives in the regions where it has a presence. Guests were billed US$2 per room night at Banyan Tree properties and US$1 at Angsana properties (of which they could opt- out if they wished) and the company matched dollar for dollar. Details of the program were communicated to guests through various methods, including sand-filled turtles and in-villa turndown gifts. Guests were generally happy to know that their patronage contributed to meaningful causes, like the construction of new schools for the local community, the restoration of coral reefs, and ensuringute longevity of local turndown gifts. Guests were generally happy to know that their patronage contributed to meaningful causes, like the construction of new schools for the local community, the restoration of coral reefs, and ensuring the longevity of local village crafts. Involving the local communityIn addition to engaging local craftsmen to produce indigenous art and handicrafts for sale at its galleries, Banyan Tree also involved the local community in all aspects of its business, even as the resorts were being built. Villas were constructed with as much indigenous material as possible, most of which was supplied by local traders. Traditional arts and handicrafts that complemented the villas' aesthetics were also purchased from local artisans. The company believed in building profitable resorts thatwould benefit the surrounding environment and contribute to local economies through the creation of employment and community development projects. Thus, besides providing employment for the local community, the company brought business to the local farmers and traders by making it a point to purchase fresh produce from them. Whenever possible the company supported other regional tourism ventures that would benefit the wider local community and enhance the visitor's experience. The Banyan Tree Maldives Marine Laboratory is a prime example, being the first fully equipped private research facility to be fully funded and operated by a resort. The laboratory seeks to lead conservation efforts in the Maldives to protect and regenerate coral and marine life for the future of the tourism industry as well as to promote awareness and education of this field to the local community. Recognising that the disparity in lifestyles and living standards between guests and the local community might create a sense of alienation within the local community, a Community Relations Department was set up to develop and manage community Outreach programs. After consultations with community stakeholders, a number of funding scholarships for needy children were given, a school and childcare centre were built, lunches and parties for the elderly were hosted and local cultural and religious activities were supported. One of BTHR'S formalised programs was Seedlings, which from local communities by aimed to help young adults motivating them and providing the means for completing their education so they could successfully enter the labour force as adults. This program benefited the community at large, as it provided the next generation with educational opportunities to break the poverty cycle. Growing Banyan TreeIn 2002 BTHR took over the management of a city hotel in the heart of Bangkok from WESCITIVER Compeny. The hotel opportunities to break the poverty cycle. Growing Banyan TreeIn 2002 BTHR took over the management of a city hotel in the heart of Bangkok from Westin Hotel Company. The hotel was rebranded as Banyan Tree Bangkok after extensive renovation works were completed to upgrade the hotel's facilities and build new additional spa amenities and a Banyan Tree Gallery. This was the first Banyan Tree hotel to be located in a city area, unlike the other beachfront Banyan Tree properties. Banyan Tree planned to open city hotels in Seoul, Beijing, Shanghai, and Hangzhou, and expand Angsana into Dubai and London. As the Banyan Tree brand became established, the company began expanding its network of spas and retail outlets. Stand-alone Banyan Tree Spas and Banyan Tree Galleries were set up as separate ventures, independent of Banyan Tree hotels and resorts, in various cities such as Singapore, Shanghai, Sydney, India, and Dubai, operating either in other hotels or as stand-alone outlets. Its most recent spa was The World Spa by Banyan Tree, located onboard the ResidenSea, a residential cruise ship, offering Banyan Tree signature spa treatments to the world's only resort community traveling the globe. In addition to the Spa Academy in Phuket, which opened in 2001, and to support its fast-growing spa business, Banyan Tree opened two new spa academies in Lijiang, China, and Bangkok, Thailand, in 2007. After establishing a foothold in the luxury resort market, BTHR introduced the Angsana brand in response to the demand from hotel operators in Asia that were keen to introduce spa services in their hotels. As the positioning of these hotels did not fit that of Banyan Tree, the company decided to launch a new brand, Angsana, a more contemporary and affordable brand than Banyan Tree, to run as stand-alone spa businesses in other hotels The first Angsana Spa was opened in 1999 at Dusit Laguna, one of several hotels at Laguna Phuket, an integrated resort development with shared facilities located at Bang Tao Bay in Thailand. The Angsana Spa was so well received that the company quickly set up five other spas in various hotels in Thailand. In 2000 BTHR opened its first Angsana Resort & Spa, complete with an Angsana Gallery, located less than one erkilometer away from Banyan Tree Bintan in Indonesia. In 2003 Banyan Tree launched The Museum Shop by Banyan Tree, a joint partnership with Singapore's National Heritage Board to showcase Asia's rich and diverse cultural heritage through unique museum- inspired merchandise. Designed to inspire and educate shoppers, The Museum Shop by Banyan Tree makes history more accessible to the layperson. Lucateu Venus museums in cultural heritage through unique museum- inspired merchandise. Designed to inspire and educate shoppers, The Museum Shop by Banyan Tree makes history more accessible to the layperson. Located in various museums in Singapore, the merchandise is inspired by the iartifacts exhibited in the respective museums. By 2008 Banyan Tree had 65 retail outlets, ranging from Banyan Tree Galleries, Banyan Tree Spa Galleries, The Museum Shop by Banyan Tree, Elements Jewellery by Banyan Tree, and Angsana Galleries to Angsana Spa Galleries. Banyan Tree Galleries are the retail outlets supporting the hotels, while Banyan Tree Spa Galleries support the spa outlets, selling more spa-focused merchandise such as signature aromatherapy amenities, essential oils, candles, and body care products. The Elements Jewellery by Banyan Tree sells specialised merchandise such as jewellery and fashion items. The road ahead to diversify its geographical spread, Ho had started to venture into locations in South America (the first resort in Mexico opened in 2009), Southern Europe, and the Middle East, where he hoped to replicate Banyan Tree's rapid success. However, given the higher costs of doing business in the Americas and Europe, would the same strategy that had brought fame and success to Banyan Tree in Asia be workable in the rest of the world? Ho's ultimate vision was 'to string a necklace of Banyan Tree Resorts around the world; not quantity, but a number of jewels that form a chain around the world. In 2008 alone, Banyan Tree signed management contracts that would expand its operations to at least an additional 50 Banyan Tree and Angsana properties by 2011. Of the properties under development, the majority were resorts and/or integrated resorts, and approximately 10 were city hotels. While expanding the company's network of hotels and resorts, spas, and retail outlets, Ho had to be mindful of the brands' focus and be careful not to dilute the brands. He also had to consider the strategic fit of the company's portfolio of brands, which comprised Banyan Tree and Angsana. Banyan Tree certainly stood out among its competitors in the resort industry when it was first launched. Since then, its success had attracted various competitors that offer similar products and services. Thus it was imperative that Banyan Tree retained its competitive advantage to prevent losing its distinctive position in the market. Required 2. Demonstrate your understanding of points of difference, points of contention, and points of parity. What are the five questions for developing an errective posidoning strategy? sider the Os. He also had strategic fit of the company's portfolio of brands, which comprised Banyan Tree and Angsana. Banyan Tree certainly stood out among its competitors in the resort industry when it was first launched. Since then, its success had attracted various competitors that offer similar products and services. Thus it was imperative that Banyan Tree retained its competitive advantage to prevent losing its distinctive position in the market. Required 2. Demonstrate your understanding of points of difference, points of contention, and points of parity. What are the five questions for developing an effective positioning strategy? Evaluate Banyan Tree's brand positioning and communication strategies. Can Banyan Tree maintain its unique positioning in an increasingly overcrowded resort market? [10 marks) 3. What is service branding? Discuss whether the brand portfolio comprising Banyan Tree, Angsana, and Colours of Angsana, and the product portfolio of beach resorts and city hotels, spas, galleries, and museum shops, fit as a family. What are your recommendations to Banyan Tree for managing these brands and products in the future? (10 marks] Continued... BMA258 - Services Marketing 4. Describe Parasuraman, Zeithaml, and Berry's five dimensions of service quality. What effect does the practice of corporate social responsibility have on service quality and brand equity? (10 marks) 5. What are the main factors that contributed to Banyan Tree's success? What potential problems do you foresee in bringing Banyan Tree to the Americas, Europe, and the Middle East? How could Banyan Tree address those issues? Can the goodwill Banyan tree gathered through their corporate social responsibility efforts in Asia be transferred to other parts of the world? (10 marks] (Section B = 30 marks] 13 [Section A = 10 marks] SECTION B Read the following case study carefully and attempt THREE (3) questions Banyan Tree: Branding the Intangible [Source: Lovelock, CL. Patterson, PG. & Walker, R 2015 Services marketing an Asia-Pacific and Australian perspective, 6 edin, Pearson Australia, NSW] Banyan Tree Hotels and Resorts had become a leading player in the luxury resort and spa market in Asia. As part of its growth strategy, Banyan Tree had launched new brands and brand extensions that included resorts, spas, residences, destination club memberships, retail outlets, and even museum shops. Now, the company is preparing aggressively to grow its global footprint in the Americas, Caribbean, Europe, and the Middle East while preserving its distinctive Asian identity and strong brand image of Banyan Tree. A brand synonymous with private villas, tropical garden spas, and retail galleries promoting traditional craft, Banyan Tree Hotels and Resorts received its first guest in 1994 in Phuket, Thailand. Since then, it had grown into a leading manager and developer of niche and premium resorts, hotels, and spas in the Asia-Pacific. Despite having minimal advertising, Banyan Tree achieved global exposure and a high level of brand awareness through the company's public relations and global marketing programs. Much interest was also generated by the company's socially responsible business values and practices caring for the social and natural environments. With a firm foothold in the medium-sized luxury resorts market, the company introduced a new and contemporary brand, Angsana, in 2000 to gain a wider customer base. As the resort market became increasingly crowded with similar competitive offerings, lured by the success of Banyan Tree, the company had to think about expanding its business and preserving its distinct identity. Banyan Tree and Angsana resorts were expanding geographically outside of Asia and also into the urban hotel market in major cities throughout the world. With around 34 hotels and resorts scheduled to open over the next three years, Banyan Tree faced the challenge of translating and maintaining the success of a niche Asian hospitality brand into various market segments on a global scale. Company backgroundBy early 2009 Banyan Tree Holdings Ltd (BTHR) managed and/ or had ownership interests in 25 resorts and hotels, 68 spas, 65 retail galleries, and two golf courses in more than 55 locations in 23 countries. Since its establishmen CHIC company's flagship niche Asian hospitality brand into various market segments on a global scale. Company backgroundBy early 2009 Banyan Tree Holdings Ltd (BTHR) managed and/ or had ownership interests in 25 resorts and hotels, 68 spas, 65 retail galleries, and two golf courses in more than 55 locations in 23 countries. Since its establishment in 1994, the company's flagship brand, Banyan Tree, had won some 400 international tourism, hospitality, design, and marketing awards, some of which included "Best Resort Hotel in Asia Pacific' (Phuket) for four consecutive years from Business Traveller Awards since 2002, 'Seychelles Best Resort and Seychelles' Best Spa' from World Travel Awards (2003), 'Best Hotels for Rooms' (Bangkok) from UK Conde Nast Traveller (2006), 'Best Hotel (Luxury)' (Lijiang) from Hospitality Design Awards (2007) and PATA Gold Award- Ecotourism Project Category (Bintan) from Pacific Asia Travel Association Gold Awards (2008).2 BTHR was founded by Ho Kwon Ping, a travel enthusiast and former journalist, and his wife Claire Chiang, a strong advocate of corporate social responsibility. Prior to entering the hotel and resort business, Ho spent some 15 years managing the family business, which was into everything imaginable, such as commodities, food products, consumer electronics, and property development. It competed mainly on cost and was not dominant in any particular country or industry. Meanwhile, Chiang was deeply involved in sociology and social issues. The closing of a factory in Thailand one year after its opening-because it lost out to other low-cost producers in Indonesia-was the last straw for Ho, who then realised that a low-cost strategy was not only difficult to follow but would also lead nowhere. Determined to craft out something proprietary that would allow the company to become a price maker rather than a price taker, Ho decided that building a strong brand was the only way for him to maintain a sustainable competitive advantage. The idea of entering the luxury resorts market was inspired by the gap in the hotel industry that giant chains such as the Hilton and Shangri-La could not fill. There was a market segment that wanted private and intimate accommodation but without the expectation of glitzy chain hotels. This was fuelled by the sharp price gap between the luxurious Aman Resorts and other resorts in the luxury resorts market. For example, in 2004 the Amanpuri in Thailand, one of Aman's resorts, charged a rack rate for its villas ranging from US$650 to over US$7000 a night, whereas the prices of other luxury resorts, such as the Shangri-La Hotel and Phuket Arcadia Beach Resort by Hilton in Thailand, were priced below US$350. Shangri-La Hotel and Phuket Arcadia Beach Resort by Hilton in Thailand, were priced below US$350. Noticing the big difference in prices between Aman Resorts and the other resorts in the luxury resorts market, Ho saw the potential for offering an innovative niche product that could also bridge the price gap in this market. Ho and Chiang had backpacked throughout the world in their youth and were seasoned travelers themselves. Their extensive travel experience is evident in their non-conforming beliefs that resorts should provide more than just accommodation. Ho and Chiang hit upon the idea of building a resort comprising individual villas, with locally inspired architectural design and positioned as a romantic and intimate escapade for guests. Banyan Tree moved its positioning into the higher end of the luxury market, and by 2008 its rack rates were typically between US$1200 and $7000 for the resort in Phuket, and between 1500 and 4200 for the resort in the Seychelles. Operations at Banyan Tree began with only one resort in Phuket, situated on a former mining site once deemed too severely ravaged to sustain any form of development by a United Nations Development Program planning unit and the Tourism Authority of Thailand. It was a bold decision, but the company, together with Ho, Chiang, and Ho's brother Ho Kwon Cjan, restored it after extensive rehabilitation works costing a total of $250 million. The Banyan Tree Phuket was so successful when it was finally launched that the company worked quickly to build two other resorts, one at Bintan Island in Indonesia and the other at Vabbinfaru Island in the Maldives. The company has never looked back since. Even though Asia's travel industry experienced periodic meltdowns such as during the Asian economic crisis in 1997-98, the 11 September attacks on the World Trade Center in 2001, the dot.com crisis in 2001-02, severe acute respiratory syndrome (SARS) in 2003 and the Indian Ocean tsunami on 26 December 2004, no employee was retrenched and room rates at Banyan Tree rose steadily. Brand originsknown as Yung Shue Wan in the local dialect, Banyan Tree Bay was a fishing village on Lamma Island in Hong Kong where Ho and his wife Chiang lived for three idyllic years before he joined the family business. Despite the village's modest and rustic setting, they remember it to be a sanctuary of romance and intimacy. The large canopies of the Banyan Tree also resembled the shelter afforded by Asia's tropical rainforests. Ho and Chiang thus decided to name their resort Banyan Tree, and position it as a sanctuary for the senses. as a sanctuary for the senses. The service offeringUnlike most other resorts then, Banyan Tree resorts comprised individual villas that came with a private pool, jacuzzi, or spa treatment room, each designed to offer guests exclusivity and utmost privacy. For example, a guest could skinny-dip in the private pool within his villa without being seen by other guests, putting him in a world of his own. All Banyan Tree hotels and resorts were designed around the concept of providing a sense of place to reflect and enhance the culture and heritage of the destination. This is reflected in the architecture, furnishings, landscape, vegetation, and the service offers. To create a sense of exotic sensuality and ensure the privacy of its guests, the resorts are designed to blend into the natural landscape of the surrounding environment and use the natural foliage and boulders as the privacy screen. The furnishings of Banyan Tree villas were deliberately native to convey the exoticism of the destination with its rich local flavour and luxurious feel. The spa pavilions in the Seychelles were constructed around large granite boulders and lush foliage which offered an outdoor spa experience in complete privacy. The resorts' local flavour was also reflected in the services offered, some of which were unique to certain resorts. Employees were allowed to vary the service delivery process according to local culture and practices, as long as these were consistent with the brand promise of romance and intimacy. Thus in Phuket, for instance, a couple could enjoy dinner on a traditional Thai longtail boat accompanied by private Thai musicians while cruising instead of dining in a restaurant. Banyan Tree Phuket also offered wedding packages in which couples were blessed by Buddhist monks. In the Maldives, wedding ceremonies could be conducted underwater among the corals. Guests could also choose to dine in a castaway sandbank with only their private chefs and the stars for company and watch the sunset, with champagne, on a Turkish gullet returning from a trip watching a school of spinner dolphins. Products and services were conceived with the desired customer experience in mind. One such product was the 'Intimate Moments' package, specially created for couples. This was presented as a surprise when guests returned to find their villas decorated with lit candles, incense oil lamps, flower petals spread throughout the room, satin sheets on the decorated bed, a chilled bottle of champagne or wine, and tidbits placed next to the outdoor bath which was decorated with flowers and candles and bath oils. The couple was presented with a variety of aromatic massage oils to further inspire those intimate Mmants. Another desdheartehase decorated bed, a chilled bottle of champagne or wine, and tidbits placed next to the outdoor bath which was decorated with flowers and candles and bath oils. The couple was presented with a variety of aromatic massage oils to further inspire those intimate moments. Another drawcard of the resorts was the Banyan Tree Spa, found at every Banyan Tree property. The pioneer of the tropical garden spas concept, Banyan Tree Spas offered a variety of aromatic oil massages, and face and body beauty treatments using traditional Asian therapies, with a choice of indoor or outdoor treatment. The spa products used were natural, indigenous products made from local herbs and spices. Non-clinical in concept, Banyan Tree Spas relied mainly on the human touch' instead of energy- consuming, high-tech equipment. The spa experience was promoted as a sensorial, intimate experience that would rejuvenate the body, mind and soul' and was mainly targeted at couples who would enjoy their treatments together. In line with Banyan Tree's ethos of conserving local culture and heritage and promoting cottage crafts, Chiang founded the Banyan Tree Gallery, a retail outlet showcasing indigenous crafts. Banyan Tree Gallery outlets were set up in each resort. Items sold were made by local artisans and included traditionally woven handmade fabrics, garments, jewelry, handicrafts, tribal art, and spa accessories such as incense candles and massage oils, which guests could use at home to recreate the Banyan Tree experience. Banyan Tree Gallery embarked on projects to support the various communities in the locations Banyan Tree resorts are situated, and worked closely with village cooperatives and not-for-profit craft marketing agents to provide gainful employment to the artisans. While acting as a marketing channel for Asian crafts like basket weaving, hill tribe cross-stitching, and lacquerware, Banyan Tree Gallery also educated its customers about the crafts with an accompanying write-up. In the course of Banyan Tree Gallery's operations, the community Outreach extended from across Thailand to Laos, Cambodia, India, Nepal, Sri Lanka, Indonesia, Malaysia, and Singapore. The result of Banyan Tree's efforts was a very exclusive, private holiday feeling', as described by one guest. Another guest commented, 'It's a treat for all the special occasions like honeymoons and wedding anniversaries. It's the architecture, the sense of place, and the promise of romance Marketing Banyan TreeIn the first two years after Banyan Tree was launched, the company's marketing communications were managed by an international advertising agency. The agency also designed the Banyan Tree logo shown below and, together with Geneame up with Marketing Banyan Treeln the first two years after Banyan Tree was launched, the company's marketing communications were managed by an international advertising agency. The agency also designed the Banyan Tree logo shown below and, together with the management, came up with the marketing tagline 'Sanctuary for the Senses." Though furnished luxuriously, Banyan Tree resorts were promoted as providing romantic and intimate 'smallish' hotel experiences, rather than luxurious accommodation as touted by most competitors then. 'Banyan Tree Experiences' was marketed as intimate private moments. The resorts saw themselves as setting the stage for guests to create those unforgettable memories. When Banyan Tree was first launched, extensive advertising was carried out for a short period of time to gain recognition in the industry. Subsequently, the company scaled down on advertising and kept it minimal, mainly in high- end travel magazines in key markets. The advertisements were visual in nature with a succinct copy or showcasing the awards and accolades won Brand awareness for Banyan Tree was generated simply through public relations and global marketing programs. For example, relationships with travel editors and writers were cultivated to encourage visits to the resorts. This helped to increase editorial coverage on Banyan Tree, which management felt was more effective in conveying the 'Banyan Tree Experience from an impartial third-party perspective. Its website, , increasingly drove online bookings and provided vivid information about the latest offerings of Banyan Tree's fast- growing portfolio. The management of marketing activities was centralised at its headquarters in Singapore in order to maintain consistency in brand building. BTHR appointed a few key wholesalers in each targeted market and worked closely with them to promote sales. Rather than selling through wholesale and retail agents that catered to the general market, BTHR chose to work only with agents specialising in exclusive luxury holidays targeted at wealthy customers. Global exposure was also achieved through Banyan Tree's membership of the Small Luxury Hotels and Leading Hotels of the World organisations. Targeting high-end consumers, it represents various independent exclusive hotels and has sales offices in major cities around the world. The end of 2007 marked a new stage of Banyan Tree's global expansion, with the launch of its own GDS code 'BY.' GDS is a Global Distribution System that is used by travel providers to process airline, hotel, and car rental reservations across 640 000 terminals of travel agents and other distribution partners around the world. Prior to By Raman Tewas represented but madratinato diotola Distribution System that is used by travel providers to process airline, hotel, and car rental reservations across 640 000 terminals of travel agents and other distribution partners around the world. Prior to BY, Banyan Tree was represented by its marketing partners, Leading Hotels of the World (LW) and Small Luxury Hotels (LX). Now, Banyan Tree had its unique identity on the GDS code, further strengthening its brand presence and customer ownership. Banyan Tree now had enough critical mass to ensure the economic feasibility of a GDS private label. The acquisition of its own GDS code meant that Banyan Tree was transitioning from a relatively small regional player to a global brand in the eyes of the travel industry Brand valuesBanyan Tree embraced certain values, such as actively caring for the natural and human environment, revitalising local communities, which in turn created pride and respect among staff. The company hoped to build the brand on values that employees and customers could identify with and support as part of their own life values. A dedicated corporate social responsibility committee, headed by Chiang and featuring general managers and valued associates from each resort, was formed to focus on these issues with both a regional overview and simultaneously local perspectives. Thus the company worked actively to preserve, protect and promote the natural and human environments in which Banyan Tree resorts were located. Preserving the environmentResorts were built using local materials as far as possible and, at the same time, minimising the impact on the environment. At Banyan Tree Bintan, for example, the 70 villas located in a rainforest were constructed around existing trees, cutting down as few trees as possible, to minimise the impact the resort had on the natural environment. The villas were built on stilts and platforms to avoid cutting trees and possible soil erosion. At Banyan Tree Maldives Vabbinfaru and Banyan Tree Seychelles, freshwater supply was obtained by the more expensive method of desalination, instead of extracting water from the underground water table, which risked long-term disruption of the ecological system. Toiletries provided in the resorts, such as shampoo, hair conditioner, bath foam, and body lotion, were non-toxic and biodegradable, and reusable containers made from celadon or ceramic were used. Refuse was recycled where possible and otherwise treated through an in-house incinerator. Waste water was also treated and recycled in the irrigation of resort landscapes. Through the retail arm Banyan Tree Gallery, human environment efforts were evident in the active sourcing of traditional crafts from indigenous tres w PIOVIDE our employment. uon UI Through the retail arm Banyan Tree Gallery, human environment efforts were evident in the active sourcing of traditional crafts from indigenous tribes to provide gainful employment. These employment opportunities provided a source of income for the tribes and, at the same time, preserved their unique heritage. In line with the Banyan Tree Group's Green Imperative initiative, Banyan Tree Gallery constantly used eco-friendly and recycled materials in the development of its merchandise. Examples included photo frames made using discarded telephone directories, elephant dung paper stationery, and lead-free celadon and ceramic spa amenities. Unique collections like the black resin turtles stationery range and leaf-inspired merchandise were created to promote environmental awareness and were accompanied by a write-up to educate the consumer on the targeted conservation campaign. In support of animal rights, the galleries did not carry products made from shell or ivory. Besides trying to conduct business in an environmentally responsible manner, BTHR actively pursued a number of key initiatives, including its Greening Communities program. Greening Communities was launched as a challenge to seven participating resorts. It planted 28 321 trees in the first two years of the program. Banyan Tree Lijiang, for example, planted some 20 000 fruit trees to create additional income for families of the supporting community. While trees will absorb carbon and improve the quality of the environment, the main goal of this program was to engage local communities, associates, and guests to share the causes of climate change and actions that can reduce our collective carbon footprint. Creating brand ownership among employeesAll Banyan Tree employees were trained to the basic standards of five-star service establishments, which included greeting guests, remembering their first names, and anticipating their needs. In addition, some employees got a taste of the 'Banyan Tree Experience as part of their training. The management believed that the stay would help employees understand better what guests will experience and, in return, enhance their delivery of special experiences for the guests. Although management imposed strict rules in the administration of the resorts, employees were empowered to exercise creativity and sensitivity. For example, the housekeeping teams were not restricted by a standard bed decoration. Rather, they were given room for creativity although they had general guidelines for turning the bed down to keep in line with the standards of a premium resort. Banyan Tree invested liberally in staff welfare: employees were taken to and from work in air- conditioned buses and had access to various line with the standards of a premium resort. Banyan Tree invested liberally in staff welfare: employees were taken to and from work in air- conditioned buses and had access to various amenities, including good-quality canteens, medical services, and childcare facilities. Staff dormitories had televisions, telephones, refrigerators, and attached bathrooms. The company's generous staff welfare policies apparently paid off. Ho said: The most gratifying response is the sense of ownership that our staff began to have. It's not a sense of financial ownership, but they actually care about the property. In our business, service and service standards do not always mean the same thing as in a developed country, where standards are measured by efficiency and productivity, by people who are already quite well versed in a service culture. We operate in places that, sometimes, have not seen hotels. People come from villages. What we need-more than exact standards-is for them to have a sense of hospitality, a sense that the guest is an honoured person who, by virtue of being there, is able to give a decent livelihood to the people who work. This creates a culture in which everybody is friendly and helpful.' Involving guests in environmental conservation Part of the company's corporate social responsibility initiatives was designed to encourage environmental conservation and help ecological restoration. TO create greater environmental awareness, Banyan Tree organised activities that involved interested guests in their research and environmental preservation work. In the Maldives, for instance, guests were invited to take part in the coral transplantation program. Guests who participated in the program were then encouraged to return several years later to see the progress of their efforts. Guests were also offered free marine biology sessions allowing them to learn more about the fascinating marine life and its conservation. Guests also had an opportunity to take part in the Green Sea Turtle Headstarting Projects. The response from guests was tremendously positive. In 2002 Banyan Tree established the Green Imperative Fund (GIF) to support further community-based and environmental initiatives in the regions where it has a presence. Guests were billed US$2 per room night at Banyan Tree properties and US$1 at Angsana properties (of which they could opt- out if they wished) and the company matched dollar for dollar. Details of the program were communicated to guests through various methods, including sand-filled turtles and in-villa turndown gifts. Guests were generally happy to know that their patronage contributed to meaningful causes, like the construction of new schools for the local community, the restoration of coral reefs, and ensuringute longevity of local turndown gifts. Guests were generally happy to know that their patronage contributed to meaningful causes, like the construction of new schools for the local community, the restoration of coral reefs, and ensuring the longevity of local village crafts. Involving the local communityIn addition to engaging local craftsmen to produce indigenous art and handicrafts for sale at its galleries, Banyan Tree also involved the local community in all aspects of its business, even as the resorts were being built. Villas were constructed with as much indigenous material as possible, most of which was supplied by local traders. Traditional arts and handicrafts that complemented the villas' aesthetics were also purchased from local artisans. The company believed in building profitable resorts thatwould benefit the surrounding environment and contribute to local economies through the creation of employment and community development projects. Thus, besides providing employment for the local community, the company brought business to the local farmers and traders by making it a point to purchase fresh produce from them. Whenever possible the company supported other regional tourism ventures that would benefit the wider local community and enhance the visitor's experience. The Banyan Tree Maldives Marine Laboratory is a prime example, being the first fully equipped private research facility to be fully funded and operated by a resort. The laboratory seeks to lead conservation efforts in the Maldives to protect and regenerate coral and marine life for the future of the tourism industry as well as to promote awareness and education of this field to the local community. Recognising that the disparity in lifestyles and living standards between guests and the local community might create a sense of alienation within the local community, a Community Relations Department was set up to develop and manage community Outreach programs. After consultations with community stakeholders, a number of funding scholarships for needy children were given, a school and childcare centre were built, lunches and parties for the elderly were hosted and local cultural and religious activities were supported. One of BTHR'S formalised programs was Seedlings, which from local communities by aimed to help young adults motivating them and providing the means for completing their education so they could successfully enter the labour force as adults. This program benefited the community at large, as it provided the next generation with educational opportunities to break the poverty cycle. Growing Banyan TreeIn 2002 BTHR took over the management of a city hotel in the heart of Bangkok from WESCITIVER Compeny. The hotel opportunities to break the poverty cycle. Growing Banyan TreeIn 2002 BTHR took over the management of a city hotel in the heart of Bangkok from Westin Hotel Company. The hotel was rebranded as Banyan Tree Bangkok after extensive renovation works were completed to upgrade the hotel's facilities and build new additional spa amenities and a Banyan Tree Gallery. This was the first Banyan Tree hotel to be located in a city area, unlike the other beachfront Banyan Tree properties. Banyan Tree planned to open city hotels in Seoul, Beijing, Shanghai, and Hangzhou, and expand Angsana into Dubai and London. As the Banyan Tree brand became established, the company began expanding its network of spas and retail outlets. Stand-alone Banyan Tree Spas and Banyan Tree Galleries were set up as separate ventures, independent of Banyan Tree hotels and resorts, in various cities such as Singapore, Shanghai, Sydney, India, and Dubai, operating either in other hotels or as stand-alone outlets. Its most recent spa was The World Spa by Banyan Tree, located onboard the ResidenSea, a residential cruise ship, offering Banyan Tree signature spa treatments to the world's only resort community traveling the globe. In addition to the Spa Academy in Phuket, which opened in 2001, and to support its fast-growing spa business, Banyan Tree opened two new spa academies in Lijiang, China, and Bangkok, Thailand, in 2007. After establishing a foothold in the luxury resort market, BTHR introduced the Angsana brand in response to the demand from hotel operators in Asia that were keen to introduce spa services in their hotels. As the positioning of these hotels did not fit that of Banyan Tree, the company decided to launch a new brand, Angsana, a more contemporary and affordable brand than Banyan Tree, to run as stand-alone spa businesses in other hotels The first Angsana Spa was opened in 1999 at Dusit Laguna, one of several hotels at Laguna Phuket, an integrated resort development with shared facilities located at Bang Tao Bay in Thailand. The Angsana Spa was so well received that the company quickly set up five other spas in various hotels in T