The Halo Effect Literature Review - Running head THE HALO...

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Running head: THE HALO EFFECT: A LITERATURE REVIEW The Halo Effect: A Literature Review Karla De Jesus July 5, 2016 Dr. Bartholomew Liberty University 1
THE HALO EFFECT: A LITERATURE REVIEW Abstract The halo effect is a term that has significantly affected the way that consumers perceive brands. With the increase in social media, reviews, and customer satisfaction surveys, businesses must be able to understand how the halo effect works and how to properly implement an effective marketing strategy that addresses issues with halo effects. A company can impact the halo effect positively or negatively by how they choose to respond to incidents of recalls, through proper employee interpersonal training and appropriate corporate social responsibility practices. Further studies suggest that there are most aspects to the halo effect that can be addressed, such as the possibility of changing a negative halo effect within a customer’s perception. Key words: Halo effect, brand equity, customer perception. 2
THE HALO EFFECT: A LITERATURE REVIEW Introduction and History The halo effect concept is a psychological term that can be used to describe the notion that a person’s perception of a person or thing in one area is affected by their perception of that thing in another area. The Encyclopedia of Social Psychology (2007, para. 1) describes the characteristics of the halo effect by stating that, “It seems as if known personal characteristics radiate a positive or negative halo (hence the name halo effect), influencing a person’s expectations about other as yet unknown qualities”. Halo effects transpire because human social perception is an extremely constructive development. While humans formulate impressions of individuals, they do not merely rely on neutral evidence, but they actively create an image to go along with what they already know. While the idea of the halo effect is typically applied to a personal bias, it can certainly apply to the business world. The aim of this paper is to evaluate Thorndike’s halo effect concept via a literature review. Much of the business world is governed by the halo effect and the responses that it creates among consumers who are guided by the principle, whether consciously or unconsciously. This paper will review important topics such as the importance that the halo effect has on branding and how it affects consumer purchasing decisions. Furthermore, a look at research of how a company can create the halo effect in the eyes of consumers through corporate social responsibility and employee morale and behavior, will help understand how it the halo effect functions in the business world. There are however, some misconceptions that can be attributed to the halo effect, which also cause the reviewer to suggest that further studies on the results that businesses have received from implementing a marketing strategy based on this behavioral theory. The question lies in whether a business can ultimately benefit from a marketing tactic that includes a strategy to reverse any negative halos.

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