What is the Halo effect?
The halo effect is a term for the favoritism of a consumer towards a range of products due to positive experiences with other products of this manufacturer. The halo effect is correlated to strength and brand loyalty and contributes to brand equity.
The opposite of the halo effect is the horn effect, named after the devil’s horns. When consumers have an unfavorable experience, they correlate that negative experience with everything associated with a brand.
How the Halo effect works
Companies create the halo effect by capitalizing on their existing strengths. With the concentration of marketing efforts on high-performance products and services, the visibility of the company increases and the reputation and brand equity are strengthened.
When consumers have positive experiences with highly visible brand products, they cognitively form a brand loyalty bias in favor of the brand and its offers. This belief is despite the absence of positive experiences with other offers. The reasoning is that if a company is exceptionally good at one thing, it will undoubtedly be good at another.
Companies create the halo effect by capitalizing on their existing strengths.
The halo effect increases brand loyalty, strengthens the image and reputation of the brand and results in high brand capital. Companies are using the halo effect to establish themselves as leaders in their sectors. When a product prints positively in the minds of consumers, the success of that product infectiously affects other products. Ultimately, companies can gain market share and increase profits.
An example of the Halo effect
The halo effect applies to a wide range of categories, including people, organizations, ideas and brands. For example, Apple Inc. benefits greatly from the halo effect. With the release of the iPod, there was speculation in the market, sales of Apple’s Mac laptops would also increase due to the success of the iPod.
Figuratively, a halo forms and extends over the brand. It effectively widens the product offer. For example, Apple’s success on the iPod has led to the development of other consumer products such as the Apple Watch, iPhone and iPad. If the next product turns pale compared to the leading product, the success of the leading product will help to compensate for the failure.
This phenomenon of one product favorably impacting another – as is the case with Apple – considered as an almost perfect example of the halo effect. IPod buyers keep coming back and, as a result, iPhone sales are stable, continuing the cycle.
Key points to remember
- Companies are chasing the halo effect because it establishes both brand loyalty and loyal and loyal customers.
- Companies are using the halo effect to establish themselves as leaders in their sectors.
- The opposite of the halo effect is called the horn effect, that is to say when a company launches a bad product that destroys loyalty and positive perception of the market.