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Main Dictionary H

Halo Effect

The halo effect is a prepossession towards a company’s product or service based on the previous interaction with the company. This effect is highly correlated with the strength of the company’s brand image, brand loyalty, and brand capital. If the effect is properly used in marketing, it can contribute significantly to the company’s success. But it has some negative consequences as well. The opposite side of the halo effect is otherwise known as the horn effect.

History of the Halo Effect 

The history of the halo effect started in 1920 with Edward Thorndike’s research on people's predispositions towards each other according to the characteristics derived from the previous experience of interaction with them. Thorndike was one of the first psychologists who studied animals’ and people’s behavior. He introduced the term “halo error” which later transformed to the “halo effect” and expanded to the marketing sphere.

The scientist conducted his research on military men and came to a conclusion that the first impression of a person leads to the halo effect of other prescribed characteristics of that person. For example, this study showed that more handsome men in perception of the participants also had to be more physically capable and smarter than others. However, these traits weren’t proved by anything except the participants’ perception.

At first, this effect was applied only to people, but then the range of its use became wider. When we use the term “halo effect” in marketing it leads us to the same people’s unproven assumptions about products of certain companies.

Benefits of the Halo Effect

If a company produces a successful product that gains a lot of positive feedback from consumers, then the halo effect is probably on. Now the company has an opportunity to use this effect to benefit itself. The company earned the consumers’ trust by the first release and now can produce another product relying on the customers’ loyalty. Due to the halo effect they are highly likely to see this new product positively because of the company’s previous performance. If the new product gets optimistic reviews, then brand loyalty of the company as well as its brand image and capital will increase even more.

When the brand is well-known and established the consumers can be predisposed to the products of this company even without having the actual experience of using some of them before. In this case the consumer’s prepossession and loyalty to the brand is high regardless of their personal experience. The trust in the company becomes “contagious”. For example, a lot of people will probably choose the cosmetics of L’Oreal Paris instead of some other unknown brand, because they’ve already heard about the first company and saw their advertisement. In other words, they’ve interacted with it somehow and their trust to this well-known brand is comparatively higher than to another one.

Besides that, the halo effect can help the company:

  • to be ahead of competitors;
  • to gain a significant capital by increasing the product’s price;
  • to win market share.

Conditions for reaching the Halo Effect

Note that the halo effect doesn’t work all the time and for all companies. However, it’s quite reachable, if a company aims to reach it. The company’s marketing strategy has to be focused on creating a so-called “cult product”. It takes time and effort, thereby often delaying the release of new products. The company has to become famous for its “cult product” first. For example, Chanel is well-known for their perfume “Chanel N°5”, which attracts a lot of consumers to this brand due to the halo effect.

Another way to start the halo effect is hiring a famous person to promote it. Celebrities represent a personal brand, which is also characterized by brand loyalty and capitalization. It can make your product look more trusted due to the celebrity endorsement. For example, when you see Robert Pattinson promoting a perfume you’re highly likely to believe that this perfume is good, because he considers it so.

However, the endorsement isn’t affordable for every company. There are other ways of reaching the halo effect such as development of the company’s presence on social media or improvement of the product itself.

Another side of the Halo Effect, or the horn effect

Each medal has a downside. Despite all the bonuses that the halo effect can bring, it also has undesirable consequences such as negative experience that consumers can get using a company’s product. Brand loyalty can be broken by one mistake, that’s why the halo effect requires its permanent maintenance even if sometimes it’s impossible due to circumstances.

The other side of the halo effect is also known as the horn effect. Let’s define it by the following example:

Suppose that the company fully relies on its brand loyalty and the halo effect and releases the product significantly inferior in quality to its previous line of products. Consumers are eager to buy this new product, therefore the first sales show a good result. But the quality of the product doesn’t go unnoticed for the buyers. They dislike the product and their trust in the brand decreases, negatively influencing the company’s previous efforts.

However, even if the company controls the quality of its products and works with social representation, there still is a possibility of failure. Every company meets the ups and downs. The halo effect and cult product can be a great helper to the company's attempts of releasing new products. They can level out possible negative consequences of unsuccessful products, and help the company to stay in business despite the failure.

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