For the following case titled “Sleepless Nights at Holiday Inn” (published in Business Week

and adapted here):

a. Identify the problem
b. Develop a theoretical framework
c. Develop at least four hypotheses

Sleepless Nights At Holiday Inn

Just a few years ago, Tom Oliver, the Chief Executive of Holiday Hospitality Corp., was
struggling to differentiate among the variety of facilities offered to clients under the Holiday
flagship—the Holiday Inn Select designed for business travelers, the Holiday Inn Express
used by penny pinchers, and the Crowne Plaza Hotels, the luxurious hotels meant for the big
spenders. Oliver felt that revenues could be quadrupled if only clients could differentiate
among these. Keen on developing a viable strategy for Holiday Hospitality, which suffered
from brand confusion, Tom Oliver conducted a customer survey of those who had used each
type of facility, and found the following. The consumers didn’t have a clue as to the
differences among the three different types. Many complained that the buildings were old and
not properly maintained, and the quality ratings of service and other factors were also poor.
Furthermore, when word spread that one of the contemplated strategies of Oliver was a name
change to differentiate the three facilities, irate franchises balked. Their mixed messages did
not help consumers to understand the differences, either. Oliver thought that he first needed to
understand how the different classifications would be important to the several classes of
clients, and then he could market the heck out of them and greatly enhance the revenues.
Simultaneously, he recognized that unless the franchise owners fully cooperated with him in
all his plans, mere face lifting and improvement of customer service would not bring added
revenues.
SLEEPLESS NIGHTS AT HOLIDAY INN

a. Identify the problem

How “clients could differentiate” and “cooperative franchise
owners” affect the differentiation?
b. Develop a conceptual model

Differentiation
(+)
IV
Gain more
revenue
(+)
DV
Improvement
Customer
Service
(+) (+)
IV
Client could Cooperative
differentiate franchise
owners

MV MV

1) Revenue is the total amount of money received by the company

for goods sold or services provided during a certain time period.
(www.investorwords.com).
2) Differentation is the process of distinguishing a product or
offering from others, to make it more attractive to a
particular target market. This involves differentiating it
from competitor’s products as well as a firm's own product
offerings (www.en.wikipedia.org). Product differentiation creates
customer preferences which allow companies to make above
normal profits.
According to the above explanation, there will be a positive
relationship between differentiation and gaining revenue.
 3) Customer service is all interactions between a customer and a
product provider at the time of sale, and thereafter. Customer
service adds value to a product and builds enduring relationship.
(www. Businessdictionary.com).
Based on the theory of customer service, customers will get
not only the products but also additional value that make them
be more satisfied in products and companies. Since the
companies give a good service to customers, the possibility that
customers will be satisfied and loyal to the company is higher.
Consequently, satisfaction and loyalty of customers will lead the
company gaining more revenue.
4) Client could differentiate. The ability of clients to see differences
between products offering by one company and the product of
one company compare to other companies. If customers could
differentiate products in both ways, they will be able to choose
the best product that suit them from all choices they have.
Customers’ satisfaction and loyalty will be a good consequence
from it which help companies gain more income. That is the
reason why the ability of customers to differentiate will make
differentiation has positive effect to gain more revenue.
5) Cooperative franchise owners. Every strategy in the company
always need support from its stakeholders. In this case, Tom
Oliver needs a support from franchise owners to make his
strategy sucessfully and achieve its goals (gain more revenue).
The support from all of stakeholders and franchise owners will
support the positive relationship between differentiation and gain
more revenue.

c) Develop at least four hypotheses

H1. Differentiation positively related with gain more revenue.
H2. Improvement customer service positively related with gain
more revenue.
H3. Client could differentiate will moderate the relationship
between differentiation and gain more revenue.
H4. Cooperative franchise owners will moderate the relationship
between differentiation and gain more revenue.