Vrin Analysis of Banyan Tree
After applying the VRIN criteria to the resources given in the case, 3 key intangible resources have been identified in helping Banyan Tree (BT) achieve strategic competitiveness and above-average returns. The analysis is summarized in the below table. Resources| Valuable? | Rare? | Inimitable? | Non-substitutable? | 1. Brand| Yes – BT has successfully tapped into its target market segment because of its strategic brand positioning and image. | Yes – The only resort targeting the luxury premium market then, its differentiating “Banyan Tree experience” leads consumers to choose BT over its rivals. Yes – Difficult if impossible for other brands to build a reputation exactly similar to BT’s, especially since BT has first-mover advantage. | Yes – Proper replication of the BT brand and the human efforts that went into building it is impossible and consumers are unlikely to find an exact substitute for what the brand encompasses. | 2. Product Development & Innovation| Yes – Fresh, novel experiences attract new and old customers. | Yes – The types of innovative services and products are only available at BT and nowhere else. Yes – Complexity of innovations and necessary staff knowledge make duplications costly. | Yes – Hard to replicate the experimental and innovative culture at BT. | 3. Local Staff| Yes – BT lives up to their brand promise of exceptional service standards that creates loyal customers. | Yes – Consumers benefit from flexible service of high quality that emphasizes customer satisfaction at BT. | Yes – BT’s service culture and staff knowledge and training are tough to imitate. | Yes – Hard to recreate the same kind of service ideas and quality that BT staff have in place. | Table 1. Analysis using VRIN criteria
Brand The BT founders first identified a gap in the luxury resort market in Phuket that they sought to fill with their value proposition of a premium but not unaffordable luxury resort reaching out to consumers looking for romance, privacy, rejuvenation and intimacy. Their target market was well-off couples looking for romance in a sanctuary away from their stressful lifestyles, who appreciated the finer things in life and a high level of service. Strategic brand management was crucial to associate BT with the appropriate qualities that its target market would respond positively to.
Steps undertaken by its founders included careful choosing of the name “Banyan Tree”, a tree with its origins rooted in Asia and whose name evoked a calming sense of nature, as well as the tagline “Sanctuary for the Senses”, which implied that the resort was a safe haven away from the stresses of modern life. Management then built the brand around public relations and direct marketing programmes to connect with consumers emotionally rather than just spend advertising dollars on getting their name out.
BT gained exposure through editorial coverage and photo shoots to showcase the “holistic Banyan Tree experience”. The photographs and collateral materials published in target publications were always evocative, refined and low-key, reaching out to couples attracted to the qualities of romance, privacy and rejuvenation conveyed. The BT logo would be prominently displayed to associate those qualities with the BT brand. Its rate of expansion was also limited to make existing resorts seem more exclusive and private, since consumers had to be turned away given the resorts’ high occupancy rates.
Management then applied for and won a series of prestigious awards and accolades given by the travel industry and various publications, gaining international publicity and cementing its status as a top Asian resort chain with international standards. Such careful brand management efforts differentiated the BT brand from its rivals, gave it first-mover advantage making it difficult for competitors to emulate or even catch up with its success, and contributed to BT’s domination of the premium luxury resort market within five years of its start-up.
Product Development & Innovation Understanding the importance of keeping experiences “fresh” in any service industry, the BT founders knew that the ability to constantly surprise its guests and surpass their expectations was very valuable. Management held multiple brainstorm sessions in order to come up with new and novel ideas and also ways to improve existing product offerings. Also, collating feedback from guests, wholesalers and other business partners allowed management to adopt any worthy suggestions given.
New ideas and experiences would act as differentiating points that set BT apart from other luxury resorts and kept customers coming back. To continually provide novel experiences which guests had previously not tried, as well as to enhance customer experiences, BT made incremental product innovations and expanded the variety of services offered in order. For example, one of the bedroom suites of the two-bedroom villas was converted into a Spa Pool Villa, savings guests a trip to the spa complex and surprising guests with the added convenience.
Also, some product innovations successfully emphasized the resort’s winning attributes. For example, an unconventional dinner cruise on a traditional long tail boat created a more romantic and memorable dining experience for the many couples on holiday, enhancing their stay. In addition, staff at the individual resort level would come up with culturally-unique ideas so that each resort would have a special local touch, such as customized wedding packages according to each country’s traditions, differentiating even between BT resorts.
These product innovations blended in with the resort culture and involved staff’s personal expertise and knowledge in execution, so competitors were not able to replicate the concepts and ideas easily. The constant deluge of novel ideas, offered only by BT, keep guests surprised and delighted, reminding them that their experiences at BT are unique and non-substitutable. Its product innovations definitely contributed to BT’s success in the luxury resort industry. Local Staff
Because their target market are guests who want a high level of service, it was important to ensure that staff was able to meet and even surpass guests’ service expectations. This was done by having strict employee selection criteria, guaranteeing a certain level of staff caliber, and hiring based on the job scope required of the employees. For example, to reduce language barrier misunderstandings between staff and guests, only English-speaking locals were hired for guest-contact staff positions.
Also, staff was sometimes trained in-house to ensure they were adequately skilled for the roles they were to perform. BT set up its own spa training school in Phuket as they could not find many local staff with expertise in spa treatments. These efforts ensured that staff was adequately equipped with the relevant skills and experience to serve guests, adding value to guests’ experiences with BT. In addition, consistently high standards of service delivery were maintained by each resort’s service staff, the goal of which was guest satisfaction rather than rigid times and quantities.
In order to ensure there was no gap between staff service and guests’ expectations, management empowered staff to come up with innovative and exclusive service and gave them flexibility in handling service recovery. Not only were guests pleased with the individualized and prompt attention paid to them instead of being served in a standardized format, this empowerment motivated staff to come up with more creative ideas to please customers, so as to receive bigger tips.
Guests have a personal waiter who serves them throughout their stay and hence waiters have ample opportunities to exhibit their creativity and high service quality. Furthermore, staff was very proud to be part of BT. Ensuring that staff was happy with their jobs and instilling a sense of pride in the work they did led to more committed service and almost zero turnover. The creation of intimate customer relationships between repeat guests and staff who are familiar faces, which cannot be duplicated or substituted, fosters brand loyalty among customers who will consistently choose BT over its competitors.
