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Running Head: Halo Effect1The Halo EffectRichard RayLiberty University – Spring 2016 BUSI 600-D01May 13, 2016
Halo Effect2AbstractThe halo effect is a psychological phenomenon.The halo effect is an influence that manycompanies strive for, because it can lead to or promote customer loyalty.For most consumers,the halo effect is the bias that they consumers exhibits towards products based on their previousexperience with that same company.Perception by the consumer is extremely important andcompanies will go to great lengths to obtain that positive perception thru the use of the haloeffect.
Halo Effect3IntroductionThe halo effect is a term used in psychology to describe the effects of a person’simpressions and how those impressions influence their behavior/decision making.Thephenomenon can be applied to the business world in relation to marketing.The halo effect iswhere a person’s impression will influence that person’s thoughts.The halo effect can also beknown to be a stereotype.For example, you have heard of the principle “what is pretty is good”.This stereotype as well as others describe people’s tendency to assume that beautiful people aremore likely to be nice than ugly people.These assumptions though can be completely wrong.From a business standpoint an example of this stereotype would be, a company makes a greatproduct so that must mean that all of their products are great.Again, this assumption may not betrue. This effect however is what companies are striving to accomplish.By accomplishing this,companies are creating loyal customers who return; they are creating a positive reputation, andcreating brand equity.Bechger gives an example of the halo effect “judges may form a generalimpression after having seen a few performances and subsequent judgments may be heavilyinfluenced by this first impression” (Bechger, et al, 2010).Marketing and the Halo EffectIf used properly the halo effect can greatly influence the revenue for a company.In 2005when Apple launched their iPod they did an overabundance of marketing for it.The saturatedthe market with television ads, billboards, and print ads.They put just about everything they hadbehind marketing their iPod and left the rest of their product line alone.They ended up withgreat results.“Apple’s overall fiscal year 2005 sales were up 68%, profits were up 384%, andthe company stock jumped 177%.Yet the iPod line, including iTunes, only accounted for 39%ofApple’s total sales in fiscal year 2005” (Ries, 2006).That is amazing.It shows that if used
Halo Effect4correctly the halo effect can benefit a company.Ries also discussed how imprinting could havean effect on consumers.If a company is the first to release a new product and they market thatproduct correctly, they could imprint on the consumer to the extent that when consumers think ofsimilar items they always think about that product.An example could be the iPod.Apple wasthe first to come out with a portable MP3 player.