Inherent biases aid the perception of humans. One such bias is known as the “Halo effect”. This is particularly observed in our decision-making abilities.
The Halo effect simply means the 1st impression of a brand/person will influence the way we will interpret further information about that brand/person. Remember the “Complan ad”. The moment we read “Complan”, our mind starts associating the brand with the word ‘tall’. This is the inherent bias that we as humans persist. Even if “Complan” comes out with a new product, which is somewhat unrelated to its previous product, it will be difficult for the organisation to change people’s perception of the brand. This shows that the position of the brand, might not always translate to an effective perception of the brand (as deemed by the marketing managers). Another example would be if “Mcdonalds” were to launch a healthy diet meal or a whole range of Tea variety being offered by “Starbucks”. The quality of products offered by these brands might be unquestionable, but the halo effect would prevent most people from buying them.
Therefore, a brand’s positioning strategy plays a very crucial role. Organisations should invest significant resources in developing the positioning strategy. It should also relate to the products that could be launched in the foreseeable future. One of the ways to overcome this challenge is to have different brands under their umbrella. This can be achieved in two ways. Firstly, it could be an extension of an existing brand, e.g. “Café Coffee Day” operates “Coffee Day Express”, which has low-cost offerings. Secondly, it could be a separate brand altogether, e.g. “Maruti Suzuki” has promoted “Nexa”, for its premium offering. Both these brands, retained their original “brand equity” while positioning the new products that impart a perception that is different from their original offering.
Although a note of caution as these strategies might prove to be adverse, if the competition in the target segment is strong and not enough brainstorming is done to access the market segment. E.g., “Café Coffee Day” had also promoted the “Coffee Day lounge”, which failed miserably. It was launched to compete with the likes of “Starbucks”. This demonstrates the need for effective identification of the market segments. This occurs because of the conflict between the two business-level strategies of “Low cost” and “Differentiation”. “Starbucks” follows a “Differentiation” strategy, wherein it offers a unique quality experience along with a cup of coffee. Whereas “Café Coffee Day” had been traditionally following a “Low cost” strategy when compared to “Starbucks”, wherein “CCD” offers quality coffee at relatively cheaper costs. Furthermore, when “CCD” ventured into the market segment of “Starbucks”, consumers found themselves in a state of confusion and hence could not change their original perception of “CCD”. Therefore, it is important to have a definite business-level strategy; else it is bound to hurt the newly launched brand.
Accordingly, the “Halo effect” is an imperative aspect to acknowledge while formulating a positioning strategy along with a distinct business-level strategy. It would alleviate the marketing manager’s actions to overcome the major challenge of new brand positioning.