What are the halo effects?

Consumers appreciate a range of items due to positive experiences with previous products from the same producer, known as the halo effect. The halo effect increases brand strength, loyalty, and equity.

The horn effect, called the devil’s horns, opposes the halo effect. After a bad experience, customers connect a brand with everything terrible.

Halo Effects Mechanism

Companies generate the halo effect by leveraging their strengths. Focusing marketing on successful goods and services boosts exposure, reputation, and brand equity.

Consumers develop a brand loyalty bias towards highly prominent brands when they have significant encounters with their products. This notion transcends the consumer experience. If a corporation excels in one area, it will also excel in another. This assumption will help a brand launch new items.

The halo effect boosts brand loyalty, image, and equity. The halo effect helps companies become industry leaders. Success spreads to other products when one product impresses buyers. By offering a top-notch product, firms may grow market share and revenues, even preventing customers from switching to competitors.

Companies gain from the halo effect by leveraging their strengths.

History of the Halo Effects

American psychologist Edward L. Thorndike coined the term “halo effect” in 1920 to describe his observations of military superiors ranking their subordinates.

Many military superiors thought physically beautiful guys were brighter, more capable, and more leaders than the others without talking to them. Thorndike’s work, “The Constant Error in Psychological Ratings,” suggests that a single impression might produce a “halo effect” that influences other aspects of an individual.

Special Considerations

Brand loyalty and a halo effect for a company’s broader products or services are difficult to develop; only a few household companies have achieved this. Companies that aim for “cult products” or “cult status” are more likely to profit from the halo effect on future items. These firms often focus on one great product and become famous for it before expanding to others.

Employing a celebrity to promote a product is a simple way to use the halo effect. Celebrities like George Clooney may lend their positive image to a company or product, making it seem nice (“If George Clooney endorsed it, it must be good.”)

Traditional strategies to accomplish the brand halo effect include building a curated social media presence to increase a business’s external image, reach, and exposure and concentrating on the product and user experience.

Pros and Cons of the Halo Effect

A business with a favorable image may carry over into its new items and improve client loyalty. A halo effect doesn’t make a brand impenetrable; one poor encounter will turn customers off.

The Classic Coke vs. New Coke marketing instance illustrates the risks of altering a cherished “halo brand.” Despite its cult status, Coca-Cola rebranded its traditional product in 1985 by introducing “New Coke” to taste sweeter and more like Pepsi, then began to close the gap with its nearest competition. The business overestimated Coke users’ emotional loyalty to the previous recipe, even though blind taste testing had shown the sweeter New Coke formula. Their outrage led Coca-Cola to return to its original recipe.

Introducing a new formula threatened Coca-Cola’s halo effect and brand image, highlighting the need to sustain it consciously.

Pros

• Halo effects boost brand loyalty and retention.
• Consumers pay more for a trusted brand.
• Brands’ halo effect benefits their subsequent items.

Cons

• The “horn effect” of the halo effect can extend unpleasant perceptions.
• A brand’s halo effect can also be challenging to maintain.
• Brand image may make or break a product, making the halo effect harder to regulate.

Example of Halo Effect

The halo effect affects individuals, organizations, ideas, and brands.AAPL benefits significantly from the halo effect. The popularity of the iPod led to market anticipation that Apple’s Mac laptop sales would also rise.

A halo surrounds the brand. Effectively expands product offerings. Apple developed the Apple Watch, iPhone, and iPad after the iPod’s popularity. If the subsequent product fails to stand out, the leading product’s success will help compensate rather than change brand perception. Brand extension aids Apple in maintaining its popularity despite other challenges. Few remember Apple’s AirPower or Newton’s failures.

Apple’s positive impact on another product is a near-perfect illustration of the halo effect. Since iPod purchasers returned, iPhone sales have remained stable, perpetuating the cycle.

Bottom Line

The halo effect may boost brand strength, loyalty, and equity, making it a vital asset. This “cult status” is challenging to achieve.

Conclusion

• The halo effect builds brand loyalty and repeat customers, so companies pursue it.
• In 1920, American psychologist Edward L. Thorndike published a study on the “halo effect.”
• The halo effect helps companies become industry leaders.
• A business with a favorable image may carry over into its new items and improve client loyalty. If not, future items might inherit a bad brand image.
• The horn effect occurs when a corporation produces a substandard product that damages loyalty and market perception.