The Halo Effect for Marketing Products

The Halo Effect of Associated Brands




Will the brand equity of ABC Car Rental Group, Inc. (ABC) create a halo effect on the new market the company intends to enter? Scott Brown is optimistic of success and has persuaded key allies within ABC’s executive management group to champion his cause. The “halo effect” as Scott Brown, the Executive Vice President of Marketing, explained, involves leveraging the popularity and image of one brand to enhance the value of another brand. Scott illustrated the halo effect by citing the example of Apple computers increased sales due to the popularity of the IPod music player. ABC’s executive management staff believed that the “halo effect” justified entering a new business venture.



ABC traditionally targets the leisure traveler in vacation destinations such as Florida and Hawaii. Customers often write letters to corporate headquarters praising ABC location staff for assisting them with a personal emergency situation during their vacation. Additionally, ABC offers an incentive bonus award to employees for offering suggestions for improvements to company operations. Rental agents from many locations have submitted suggestions that ABC offer travel arrangements information. The rental car agent is the first point of contact for many travelers in an unfamiliar location. Many customers arriving at the rental counter from the airport request assistance from the agents. Additionally, on line reservations agents have submitted suggestions that ABC offer travel information for customers.



ABC performed consumer research to determine the type and scope of the travel assistance which would benefit ABC customers. The marketing department identified several areas of assistance including tickets to theater or sporting events, travel directions, nanny services, suggestions for restaurants, technical assistance with computers, translation services, lost cell phones or blackberries, shopping suggestions, and information on local attractions. The marketing department developed a suggested package which would fulfill most of these needs. ABC rental car customers could pay an extra charge for the services of a personal concierge for their visit to a vacation destination. The personalized package could be designed on line when the reservation is made or on site when the reservation is paid for. Changes to the package can be made at any time and flexibility is emphasized. Combined with ABC’s partnership with key airlines, ABC is positioned to align itself as the traveler’s vacation solution.



The marketing department will market the new Smart Concierge or Speedy Concierge service along with the Smart and Speedy brands on the web sites and in other advertising venues. ABC will train telephone reservations agents as well as counter agents to answer questions concerning the new service. The ABC Application Development Department is currently developing Software to capture and manage the new information. A 24 hour telephone service will answer calls about the service and handle any emergency situations.



Training for personal concierges for each city will be developed along with job responsibilities. The key to the training and job responsibilities will be emphasizing the personal touch, mentioned in customer letters to headquarters year after year. The personal touch distinguishes ABC from the competition and creates a market niche for the company in an increasingly competitive market.



Conversely, Enterprise, the market share leader in the rental car industry targets off airport locations, traditionally lower cost due to lower rental costs for the locations and less taxes and fees added by airport and city authorities. Consumers have also realized that rental rates are cheaper outside of airport areas and have in some cases switched to off airport locations. Hertz, another market leader in the industry, is also targeting off airport locations, creating an even greater need for ABC to create a market niche and brand loyalty through creative means.



As Scott Brown, EVP of marketing said “The Smart and Speedy brands, will associate our new concierge service with our Smart Every Time motto” in the consumer’s mind and create synergy between the two services.” Consumers create memories through experiencing vacation memories with their families by attending the theater, dining at prestigious restaurants, or viewing sporting events. These positive memories, arranged by a personal concierge, will enhance brand loyalty for the Value and Speedy brands and the concierge services. The revenue generated from the new service is projected to increase revenues and net income and ultimately our market share price.



CFO, Steve Smith, agreed that increased revenue from added services would be beneficial to ABC and its shareholders, assuming the customers are satisfied with the service, and the service generates above minimum threshold returns on investment. However, he expressed some reservations concerning the risks of utilizing the “halo” strategy. If problems emerge with execution of the concierge venture in the initial stages, consumers could become dissatisfied and discontinue usage of the service. The logistics of implementing such a service are daunting and include software development, implementation, and development, employee screening, hiring and training, and marketing development.



In addition John Thompson, Vice President of Risk Management was concerned that as customers utilize the concierge service unexpected issues could arise which erode brand loyalty. An example could be software down time issue, causing the system to be inaccessible for an indeterminate amount of time. Unanticipated usage of the system could cause inadequate planning for the number of personnel needed to service the customer. Complications could occur involving customers’ vacation plans, creating animosity toward ABC. If tickets are promised to a Broadway plan and at the last moment are not available, customers will inevitably be disappointed. Legal issues could result from arranging events for customers resulting in personal injury to the customer or his family.



However, the Business Continuity Coordinator, Michelle Thompson, mentioned that risks referred to above can be reduced to an acceptable level through the risk assessment process and the development of business continuity plans. Risks will be identified and controlled when possible, transferred through the use of insurance or other methods, and mitigated. The Risk Management group will investigate and purchase insurance coverage necessary to cover the service. Software designed for the concierge program will be housed off-site at a secure site and will have a redundant server in a geographically dispersed site. Staffing levels for the concierge position will be determined by pre-booked reservations data available in ABC’s online reservations system.



The benefits of increased share value outweigh the risks associated with the new concierge service according to ABC executive staff. The synergies of the two services, both rental car and concierge services, complement each other and provide the traveler with a solution to their travel problems by a familiar and trusted provider in an unknown city. Careful planning by all functional areas of the company will create the opportunity the enhance shareholder value for ABC.