Taj Hotels, Resorts and Palaces

Group 1
- Aston Leo (B19010)
- Devagya Jha (B19014)
- Divya Mani Tripathi (B19016)
- Nikita Gulgule (B19031)
- Snehal Tiwari (B19055)
 1. What criteria should be used to determine how much the Taj brand could
be extended into sub brands

Answer
The following criteria can be used to determine the extension possible for the
Taj brand into its sub-brands;
Customer Experiences: Customer expects the same high-quality experiences
of Taj in all its properties. So extending the brand Taj to sub-brands has to take
care of this problem. But maintaining high quality in economic and upscale
brands will undercut the purpose for which they have been formed. So the Taj
brand has to be given to sub-brands that can associate with the high-quality
experience of its customers.
Dilution of Brand: While extending the tag to sub-brands measures should be
taken that the brand image is not diluted. Customers should be able to
associate with the brand image that is portrayed by the company. There
should be a consensus on what the name associates among the sub-brands
which carry the tag Taj. Also, the cases of brand abuses should be curbed if Taj
is to be seen as high quality.
Precise Positioning: There should be a clear positioning for the sub-brands.
One sub-brand should not be competing with the other sub-brand. Brand Taj is
associated with high quality and luxury. Sub brands carrying the tag should
also be able to provide these. Customers should be able to differentiate
among the sub-brands. Awareness of the Taj brand among international
travelers was prominent only if they have visited India once. Outside India
mostly Taj branded properties was associated as non-luxury. So there should
be a clear understanding of what the name Taj provides.
Levels of Brand Stretch: In general, fewer brands gives much more synergy.
But in the case of the hospitality industry, it’s complicated. Because of the way
the price and products are, it’s difficult for a brand to stretch. Ideally, a brand
can extend to three extensions, more than that leads to erosion of brand
equity and lesser would not be able to cover customer needs fully.
 2. What is your evaluation of the Sun and Planet model of branding (See
Exhibit 5)?
Answer
The sun and planet model of branding as proposed by Landor was a mix
between the branded house and the house of brands wherein THRP
segregated the entire gamut of hotels in four different brand identities. The
idea was to sharpen the focus of the Brand “Taj” which has been diluted,
clear the confusing customer expectations that were building around the
Brand and ultimately regain the missing emotional appeal necessary for a
top-end brand like THRP.
The newly developed model can be analysed by evaluating on multiple
parameters as follows:
1) Stakeholder reactions

Different stakeholders had different reactions on the Landor’s Sun

and Planet model that differentiated between the luxury brand and
the corporate entity

a) Customers :- For Customers of THRP, it was a highly desirable

model as the different brands catered to different target
segments ranging from luxury upscale brand, mid-market
business travel brand to economy stays offering much more value
to them as these new brands clarify tiers of service.

b) Employees: - The proposed model can be met by resistance from

employees working in the lower end spectrum of hotels/ budget
chains as they felt proud working for Taj Brand. However, the new
model, especially the Gateway and Ginger would have no
connection with “Taj” which could create a negative dissonance
amongst the employees working for those hotel chains.
 c) Management: - It is a lucrative model for the likes of the
management of THRP as there was fierce competition that was
being developed by International Brands having a much clearer
Brand identity as compared to THRP. By creating distinct brands
for other viable market segments and carefully managing and
limiting the use of “Taj” name, the management of THRP can
create as well as garner more value from their customers.

d) Shareholders: - They would have a neutral effect towards the

newer Brand Architecture proposed by Landor as the internal
brand extension would not have that much impact over the
parent’s company’s (Indian Hotels Company – IHC) operations and
therefore not having a substantial effect on shareholders
sentiments.

2) Competitive Scenario

There was a fierce competition from Indian and global hospitality

chains and therefore it was essential for the firm to protect the
luxury positioning of the “Taj” Brand that was created amongst its
users and not letting it dilute. By reserving the “Taj” brand for luxury
segment only, the luxury positioning could be safeguarded against
the intense competition.

3) Business Viability & growth potential

Owing to the great market opportunities because of good economic growth

leading to a higher disposable income, new and attractive segments like
mid-market and budget opened up, thus making business sense to consider
the Sun and Planet Brand Architecture model, as proposed by Landor.
Considering all the above parameters and taking in account the market
sentiments, company background, competitive scenario, changing market
dynamics and stakeholder reactions with respect to the new Brand Architecture
proposed by Landor, it makes complete sense to Brand THRP with the Sun and the
planet model as opposed to the mono-brand structure.

3. What challenges will the company face in domestic and international

expansion?
Answer
- Tata as a company, particularly under the leadership of Ratan Tata, has
been very passionate about the Tata name. And this reflects in the way
they have used the Tata brand. Similar has been the usage of Taj as a brand
as well. However, this has also been the cause of confusion among the
consumers. Taj has a very strong upmarket image and is associated with
luxury. The expansion of IHCL’s line of hotels created confusion in the
minds of the consumers since IHCL also involved non-luxury hotels.
Therefore, one of the major issues they were facing in domestic expansion
was bringing about a change in consumer perception with regard to IHCL
hotels and an image which was distinct from Taj.

- Expansion through acquisition of hotels also caused dissatisfaction amongst

the employees after the implementation of Landor’s recommendations of
sun and planets model. Used to as they were, seeing the Taj brand on their
business cards, they were slighted at its removal. Another issue for the
management was taking a final call for the creation of different pay
structures for employees below managerial level which varied based on the
category of hotels and union settlements.

- India still happens to be a developing market having only 100,000 hotel

rooms which is less than even Manhattan which itself has over 110,000.
 Therefore, Taj and Tata have not been able to leverage their brand as much
as they would have liked, allowing for entry of competition into the market
which is now showing better performance in comparison to the IHCL hotels.

[IHCL lags in profitability compared to EIH and Leela Venture which have
comparatively much smaller capacity (refer Exhibit 2)]

- The brand of Taj has become a burden internationally not allowing for
flexibility which was evident in the portfolio review of 2000 where a
number of hotels were divested simply because they detracted from the
brand promise.

- The expansion through acquisition that the senior management of IHCL had
in mind was also put on hold because of financial crisis and the attempt was
to conserve cash. There have also been multiple branding challenges which
have plagued not just Taj as a brand but also Tata as a company. The
question of whether Corus will become Tata Steel or Jaguar would become
Tata motors echoes in the current setup too. When Taj acquired a new
hotel, they failed in acquiring the goodwill that came attached with the
acquired hotels leaving just a tag of “A Taj Hotel”.