Halo Effect

What is the Halo Effect?

The halo effect (also referred to as the halo error) is a form of cognitive bias that occurs when a consumer demonstrates favoritism towards a company’s product line. Such favoritism is caused by positive brand experiences and creates brand loyalty. It is referred to as the halo effect to symbolize an angel’s halo.

Example: If a consumer were to realize a positive experience with a product manufactured by Tesla, the consumer would be more likely to purchase another Tesla product compared to other competitors, such as Mazda or Acura.

What is the Horn Effect?

The horn effect is a form of cognitive bias that occurs when a consumer shows a dislike for a brand’s product line because of a negative experience associated with the brand. The phenomenon is referred to as the horn effect to symbolize the horns of a devil.

Example: If a consumer were to gain a negative experience with a product offered by Samsung, the consumer would be less likely to purchase another Samsung product. Instead, they would be more likely to try products offered by competitors, such as Apple.

How to Achieve Brand Halo Effect

In marketing, achieving the brand halo effect is key for a business because it creates brand loyalty and repeat customers. Shown below are some ways to achieve the brand halo effect.

1. Social Media Presence

Currently, social media is the most prevalent form of media. As such, it is extremely important to develop a social media presence. Developing a social media presence increases overall reach, visibility, and trustworthiness. If a brand maintains a good social media page, consumers are more likely to buy products from the brand due to its online presence.

2. Website

The exponential growth in e-commerce has made the design of a company’s website more important. To create a positive experience, a website should be easy to look at, informational, and should have quick loading times. If a consumer were to purchase a product from a company’s website that took three minutes to load, they may be less likely to buy products from the brand due to their experience.

3. Proof

Showing consumers proof of positive experiences can increase the halo effect. It is done through reviews, testimonials, product testing, and awards. When a consumer sees that other people are enjoying the product, they may be more inclined to try out the product themselves.

4. User Experience

First impressions are important; creating a positive user experience the first time will retain customers and generate lasting impressions.

5. Star Product

Extensively advertising a brand’s “star product” can create a halo effect. For example, the iPhone is socially regarded as an amazing product. It creates a halo effect by enticing non-Apple consumers to purchase Apple products because of the iPhone’s positive social recognition.

6. Target Demographic Research

In marketing, one of the most important procedures is to perform target demographics research. Performing target demographic research allows marketers to gain information on their consumers and advertise to them more effectively.

7. Focus on Strengths

Focusing on a product’s strength allows  marketers to differentiate their product and influence consumers to develop preference and loyalty.

Advantages of the Halo Effect

Listed below are the advantages of developing a halo effect for a brand:

• Brand loyalty and differentiation is achieved.
• Consumers are less likely to choose a competitor’s products.
• Consumers are likely to pay more for their desired brand.
• Positive experiences create lasting impressions.
• Companies achieve customer retention.
• Marketers can study customer trends due to repeat buyers.
• Companies obtain more marketing data.
• There is increased brand awareness through word of mouth.
• Customers with a halo effect for a brand are more likely to try other product lines offered by that brand.
• Overall equity of the brand is increased due to the “diehard” customers.

Related Readings

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In order to help you become a world-class financial analyst and advance your career to your fullest potential, these additional resources will be very helpful:

• Brand Equity
• Marketing Campaign
• Merchandising
• Product Differentiation
• See all wealth management resources