What is the Halo Effect?
The halo effect is a phenomenon whereby consumers perceive the products or services from a certain company to be better than they really are.
How Does the Halo Effect Work?
Let's say Company XYZ makes the "Xphone." The Xphone has many functions and a nice design. Priced higher than the competition, it quickly becomes a status symbol, especially among hipsters and others who are image-conscious.
This group of consumers celebrates the Xphone publicly and even camp out in front of Company XYZ stores to get the latest version, despite the fact that competing devices are less expensive and have the same features. The Xphone is the victim of the halo effect.
Why Does the Halo Effect Matter?
The halo effect can cash flow for companies. It creates brand equity. However, because it is often an emotional rather than logical affinity, the halo effect is very fickle and can disappear quickly as fads come and go.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
Here are five things a successful investor must consider before investing in a newly public company: 1...Read More →
Buying a home -- especially your first home -- is one of the most exciting moments of your life. But it can also be one of the most expensive, especially if we're talking about mortgage lenders...Read More →