Branding and the Gen X Factor

There is a fine line separating too many brands from too few. If companies are lazy with the brand shears they end up with the marketing confusion and poor economies of brand exemplified by General Motors and its overgrown brand architecture. In contrast, if firms are too conservative with brand creation and acquisition, they end up with the risk-averse culture and limited market penetration illustrated by Kodak.

The secret is to be somewhere in the middle. The fewer the brands, the better, but you have to make sure there are enough to target all the valuable segments in the market. So it is always interesting when a savvy company such as Hyatt decides to create a new brand. The hotel operator recently launched a hotel chain named Andaz. Personally, I would have followed in GE Life's footsteps and named the brand 'Tonight'. Alas, this time the Indians have triumphed: the name means 'personal style' in Hindustani.

Andaz's parent company, Global Hyatt Corporation, is no stranger to brand creation. The firm already owns and operates seven distinct hotelbrands. But on closer inspection, these existing brands - Park Hyatt,Grand Hyatt, Hyatt Regency, Hyatt Resorts, Hyatt, Hyatt Place and Hyatt Summerfield Suites - are all clearly aligned as sub-brands of the parent. Andaz, in contrast, will take only a shadow endorsement from the Hyatt brand and will be very different from its portfolio brethren.

Hyatt is positioning Andaz as an unpretentious upscale brand that offers 'casual elegance' and 'local identity'. Hyatt chief executive Mark Hoplamazian said in a statement that Hyatt's customer base was looking for fresh, uncomplicated luxury that is timeless and gimmick-free. 'Our launch of Andaz is based on demand expressed by both consumers and developers for a product and experience that they have not found within the industry,' he said.

Andaz is squarely aimed at the maturing Generation X market. Gen X'ers are now evolving from their grungy 20th-century adolescence and rapidly becoming the major market segment for business travel. Like all great demographic segments, they demand alternative brands to those patronised by their parents - the baby boomers - especially when these boomers continue to stay in these hotels into their retirement. It is a classic dynamic targeting problem - you can't have the fathers and the sons staying at the same place.

But there is more to Andaz than simple target marketing. X'ers are notoriously uncomfortable with generic global brands and prefer to seek out local specialties and experiences instead. While their parents might prefer hotels with identical bathrooms from Atlanta to Zurich, X'ers like to celebrate local differences. Andaz will attempt to cater to this by allowing each of its hotels to celebrate their local autonomy through different designs and offerings. Andaz will also cater to the X'er market by offering organic food and environmentally-sound operating principles.

Andaz will need all the differentiation it can muster; 24 hotel brands have opened in the past 24 months in the US alone. With more than half of all hotel rooms now booked through the internet, the relative cost of creating a successful hotel brand has substantially diminished, but that means that the market is now awash with newly launched, freshly positioned hotel brands. Hyatt is probably only halfway through its corporate brand strategy. Now that Andaz has been launched watch out for a major restructuring of the existing Hyatt sub-brands. In the world of brand architecture, new brand creation often goes hand in hand with old brand consolidation.

30 SECONDS ON ... US HOTEL LAUNCHES/HYATT ANDAZ

- During 2005 and 2006, 24 hotel brands were launched in the US - the highest number in a two-year period since 1989, according to PricewaterhouseCoopers.

- Of these, 10 were created by new companies and two were launched by international companies breaking into the US accommodation market.

- Four of the nine brands launched in the US in 2006 are aimed predominantly at 'Generation X'.

- Hyatt's global president and chief executive, Mark Hyatt said that the hotels were intended to cater to a 'worldwide customer base ... looking for fresh, uncomplicated luxury that is timeless and gimmick-free'.

- According to Hyatt, the brand will offer a 'highly functional environment characterised by sophistication, innovative design, local identity, casual elegance and service that is attentive but not pretentious and without attitude'.

Courtesy of: Marketing Magazine

Sponsored By: Brand Aid

Comments

[steve bateman]

Interesting Post. It reminds me of the tale of a recent US Hotel/Motel brand who decided to position themselves as low budget by cutting out all of the frills (no TV, mini-bar etc...) and just focusing on the one thing that truly mattered to the customer - ensuring a great bed to ensure a great night's sleep. Anyone got a clue who the brand was?

[Sam Knoll]

Great post Mark.

This is an issue that reaches far into most every market and product category.

This likens back to the issue of tens of thousands of products available in the average US grocery store, yet the average American household only buys 400-500 brands per year.

When is too much?

It is clear in Hyatt's case that they are niching themselves further and further in an attempt to offer the right something for everyone.

The danger is that of becoming a Jack of all trades and a Master of None.

Cheers!

Sam Knoll