The face of business in Asia is changing faster than one can blink one’s eyes. Asian companies that used to be back-end workhorses, manufacturing consumer goods cheaply for Western companies, are slowly realizing the benefits of branding.
In a market where competition implies slashing prices on their unbranded products, Asian businesses are slowly becoming more attentive to the power of branding in capturing consumers and returning larger profits on their investments. Firms are realizing that instead of wearing themselves down on razor-thin margins to compete with the next supplier, they could increase returns by investing in their brands.
This then creates the shift in thinking that is pushing boardrooms in Asia toward creating strong brands to differentiate themselves and consequently realize greater profits. Branding is an investment that must be perceived as such and is required to deliver ROI and shareholder value like any other feasible business activity.
Many Asian companies traditionally focused on asset-intensive industries. But it has been demonstrated that the most profitable Asian companies focus on intangibles such as human capital, exploiting network effects, and creating synergies based on brands or reputation, rather than investing in tangible assets.
Only a few Asian corporations have successfully built and sustained global brands with Asian roots. Mandarin Oriental is one of them – the firm has built a world-class luxury hotel brand based on its oriental heritage and service reputation.
Mandarin Oriental is one of the leading luxury hotel groups in the world and operates 29 luxury hotels and 8 residences in different countries across the globe. The hotel has close to 11,000 rooms in 19 countries. With over 12,000 employees, it is one of the most iconic and well-managed hospitality brands from the Asian region.
The Mandarin Oriental brand was started in 1963 in Hong Kong and in the early 70’s, was born out of collaboration between The Mandarin in Hong Kong and The Oriental in Bangkok. Both these hotels were landmarks and had a reputation for offering excellent service. In 1985, these two hotels and others in the region were merged into a single organization and brand under the name Mandarin Oriental Hotel Group.
A strong brand is characterized by a unique brand promise (the customer focus) and an outstanding brand delivery (the organizational system and performance behind the promise). The brand promise and the brand delivery must be consistently balanced in order to build and sustain strong brand equity. The modern brand-driven organization is characterized by three distinct characteristics which set it apart from less brand-focused organizations:
Mandarin Oriental has built its brand on service excellence with a stated mission “to delight its customers each and every day”. The core of the Mandarin brand is steeped in offering customers an unforgettable guest experience by blending local cultures with international expectations. It can be defined as twenty-first century luxury with oriental charm.
The brand equity of Mandarin Oriental was built by creating a very strong and distinct personality in line with the organization’s philosophy. The management team has ensured a continuous investment in all aspects of the brand to ensure consistent delivery of all the brand promises.
The fact that Conde Nast Traveler has rated Mandarin Oriental Hotel Group the number one hotel in many categories several times is a testament to the hotel brand’s success of delivering Asian service.
Mandarin Oriental has been running a consistent and long-term global advertising campaign based on top-notch celebrities endorsing the brand. It is not easy to get celebrity endorsement right. Before any brand signs on a celebrity, they should consider three main aspects:
Attractiveness of the celebrity: This principle states that an attractive endorser will have a positive impact on the endorsement. The endorser should be attractive to the target audience in certain aspects like physical appearance, intellectual capabilities, athletic competence, and lifestyle. It has been proved that an endorser that appears attractive as defined above has a greater chance of enhancing the memory of the brand that he/she endorses.
Credibility of the celebrity: This principle states that for any brand-celebrity collaboration to be successful, the personal credibility of the celebrity is crucial. Credibility is defined here as the celebrities’ perceived expertise and trustworthiness. As celebrity endorsements act as an external cue that enable consumers to sift through the tremendous brand clutter in the market, the credibility factor of the celebrity greatly influences the acceptance with consumers.
Meaning transfer between the celebrity and the brand: This principle states that the success of the brand-celebrity collaboration heavily depends on the compatibility between the brand and the celebrity in terms of identity, personality, positioning in the market vis-à-vis competitors, and lifestyle. When a brand signs on a celebrity, these are some of the compatibility factors that have to exist for the brand to leverage the maximum from that collaboration.
Even though these three major principles must be adhered to by any successful brand, practically it might be difficult to find celebrities that satisfy all these three conditions. Depending on the nature of the brand and the kind of product being used, companies can selectively emphasize one factor over the other.
However, Mandarin Oriental has been very successful in carefully selecting and utilizing top-notch celebrities to build and sustain their global brand – celebrity endorsements have been a main vehicle. Nonetheless, the brand acknowledged the problem with using celebrities – that most people remember the celebrities and not the brand – and strove to find a way to overcome this.
Thus, Mandarin Oriental’s multi-million dollar global print advertising campaign was launched in 2000. Since then, the campaign has gathered “fans” from around the world and is constantly celebrated for its style, simplicity and sheer genius. The campaign simply and elegantly connects the Group’s well-recognized symbol – the fan – with international celebrities who regularly stay at the hotels and are true fans of the Group. In many ways, it was a campaign of “firsts” – it was the first global print campaign that was shot using digital photography, and the first campaign that avoided using traditional hospitality images of grand hotel rooms.
Mandarin Oriental’s USD multi-million global print advertising campaign, which launched in 2000, continues to gather “fans” from around the world. The campaign simply and elegantly connects the Group’s well-recognized symbol – the fan – with international celebrities who regularly stay at the hotels and are true fans of the Group.
In 2006, Mary McCartney was appointed as the official photographer of the Group’s award-winning international advertising campaign, replacing the late Patrick Lichfield, world-famous photographer and British Royal. Ms McCartney has established a strong reputation for portrait photography and advertising campaigns for luxury brands internationally.
Each fan is in a location of their choice which, for them, best represents the feeling of well-being. In appreciation of their support, the Group makes a donation to each celebrity’s individual choice of charity. Besides just having the celebrities on-board as endorsers, each of them are also personally involved with the Mandarin Oriental brand. For example, Vivienne Tam designed the uniforms for the spa employees in New York and Hong Kong; Vanessa-Mae performed at the Las Vegas hotel opening; and Dame Edna compered and Bryan Ferry sang at the reopening of Mandarin Oriental in Hong Kong in 2006.
Today, the Group has a total of 29 celebrities endorsing the brand. Recent additions include Lin Chiling, the Taiwanese model and actress, Italian actress Caterina Murino, Italian opera singer, Cecilia Bartoli, British collage artist, Sir Peter Blake, and the award-winning US actor and director Morgan Freeman. They join Mandarin Oriental’s existing fans: Geoffrey Rush, Chen Kun, Isabelle Huppert, Lucy Liu, Karen Mok, Kevin Spacey, Christian Louboutin, Sophie Marceau, Harry Connick Jr., Hélène Grimaud, Sa Ding Ding, IM Pei, Michelle Yeoh, Jane Seymour, Kenzo Takada, Jerry Hall, Vanessa Mae, Vivienne Tam, Barry Humphries & Dame Edna, Frederick Forsyth, Darcey Bussell, Bryan Ferry, Helen Mirren, Maggie Cheung, Sigourney Weaver and Sir David Tang.
Branding enhances shareholder value, it can become a catalyst for better leadership, it enables to drive a shared vision throughout the organization, and it can help to balance short- and long-term perspectives and performance. It is the ability of a strong brand to price at a premium over its competition.
Mandarin Oriental has successfully demonstrated that strong Asian brands can be created and sustained on a global basis.
As Peter Drucker said, the only two functions of any organization are innovation and marketing. Irrespective how innovative a company is, how committed the employees are, and competent the top management is, unless the company connects with the customer, success will be elusive. The top management should constantly evaluate their strategic decisions in the context of customer feedback and how the customers can help the company in co-creating value. Innovation is therefore a key factor to the future of the Mandarin Oriental brand.
Think of Singapore Airlines, the leading global airline brand and one of the most profitable airlines. They decided on a fully branded product/service differentiation strategy from the very beginning. Innovation, best technology, genuine quality and excellent customer service were to become the major drivers of the Singapore Airlines brand.
Competition is intensifying across Asia, and in the upper end of the hospitality sector. More and more Asian hotel groups such as Aman, Banyan Tree, Shangri-La and other brands expand successfully around the world. What will earn these hotels the loyalty of customers and sustained profitability is a sustained and consistent adherence to the brand promises of service and quality.
Therefore, it is important for Mandarin Oriental to keep innovating and building new tangible differentiators.
The strong brand equity of Mandarin Oriental is one of the most valuable assets for the company and its market position. The Group is a leading business case from Asia demonstrating the importance of strategic branding, and Mandarin Oriental, which began as an Asian brand, but which not competes on a global stage, can easily serve as a great inspiration for other Asian firms trying to build and manage their own brands. It does however take time and investment!