Press "Enter" to skip to content

Halo effect: Why it matters in business?

0

Let us say that you went to the nursery and are thinking of buying an attractive-looking ornamental tree.

Some leaves of the tree were a bit brown, but you ignored them, thinking that the tree truck looks solid, the rest of the leaves are lush green and that the few brown leaves are due to the natural process of them dying and drying.

Since you had purchased plants from the same person in the past, that turned out nicely, so you go ahead and purchase this expensive tree. However, within a few days, more than half of the leaves of the tree have turned brown and withered away. After some research, you find that the tree had fungus, and now it has spread all across its branches.

Unfortunately, there are a lot of times when we fall into the trap of judging something based on its outer appearance and do not test its quality first. Additionally, this tendency has an impact on our judgment as well. The culprit here is the halo effect.

Index:

What is the Halo effect?

Some studies have suggested that the attractiveness of an object undermines our ability to accurately recognize and assess it. This is the halo effect.

It is a cognitive bias in humans that makes us have a positive and good impression of people, products, and brands, in all other areas if we have a positive reaction to one particular aspect or feature. One positive aspect further positively influences our reaction on another aspect.

The halo effect can lead to people’s opinion on one aspect of a thing to influence their opinion on other aspects of it too. We often see an example of the halo effect in our everyday life; when we meet new people, we often allow one trait of their personality to influence our opinion of them.

halo effect example

Why does the Halo effect happen?

We encounter the halo effect in various aspects of our life. But when the effect takes over our decision-making power, it can alter our ability to think rationally. As a result, we can make a mistake when judging a person or circumstances.

The Halo effect not only impacts the person making flawed decisions but creates a systematic chain of wrong decisions and their consequences. Therefore it is essential for a business to understand how the halo effect takes control.

  • The constructive process of perception:

The effect manifests due to the fundamental way in which human beings perceive other people and things. The process through which we perceive is a constructive process.

When we formulate an opinion or impression of other people and things, we do not necessarily base our decisions and conclusions on objective information.

On the contrary, we base our judgment on images and things that fit into our boxes of ideal features and attributes. So as surprising as it may sound to some people, we often judge a person’s personality based on their physical attractiveness.

  • The rules of attraction:

The fundamental law of attraction applies to people and things alike. While multiple factors contribute to the halo effect, the fact that we are attracted to something or some attributes more than other is a significant reason why we have this cognitive bias.

Often physical and tangible attributes contribute to our perception of attractiveness. Thus our perception of attractiveness influences and enhances the trap of the halo effect.

  • The halo in itself:

The term “halo” is referred to a glowing circle crowning the heads of saints in a religious context. The same context applies to the positive light or impression of people and things due to their external factors and characteristics.

We consider these positive features like a halo and overestimate the worth and quality of that particular thing or person. Thereby we become a victim of the halo effect.

Example of Halo effect:

An example of the halo effect comes from our daily life. Often we judge a person based on their external appearance and physical attributes without trying to understand their personalities, mental abilities, social behavior, etc.

See also  Shark Tank India Episode 3: What Happened in the Show?

For example, a person might look and seem perfectly fine from the outside, but there is a chance that they are suffering from various insecurities and drawbacks from the inside.

What are its effects? How does it impact business?

The halo effect is like a double-edged sword. Even though the halo effect is ideal for creating brand loyalty and generating a wider customer base, it can backfire and spoil your image as well. Therefore it is important to be aware of the impact that the effect may have on business. 

  • Making bad decisions: 

When we become a victim of the halo effect, we are blinded by our bias towards what we are attracted to. We often overestimate the value and worth of something simply because we like one of its attributes. This is likely to lead a person to make a bad decision. This can lead to faulty recruitment, bad financial investments, etc.

  • Complacency:

Having a good market image and a solid user base might make us complacent. This can reflect poorly on the business’s performance and output, as they take their brand following for granted and do not put the efforts and time into work and products that they used to do before.

Additionally, for upcoming businesses, this is a massive hurdle because if one of their product is successful, they might not put any effort into the upcoming projects, which might take down its newly established reputation in the segment.

  • Spoiling the brand image: 

The halo effect can be a double-edged sword. One bad experience with a brand or product can make customers averse to it and destroy its credibility and market share. Therefore beware of the halo effect.

How can we avoid it?

Whether we are trying to analyze or evaluate a person, product, or brand, being aware that you may be overestimating their value or capabilities is very important. Therefore having an awareness of the halo effect can help us deal with it and fight it. 

Additionally, you must take the help of industry experts and professionals before analyzing and assessing the value of a thing. This will allow a person to get a better idea and make a sound evaluation.

Overall, the best way to avoid the halo effect is by keeping an open mind and not jumping to conclusions. Allow the events to occur, personality traits to come through, and product features to function before making up a mind about circumstances, people, and products/. 

A final word:

The Halo effect often leads us to overestimate people, things, and circumstances. We are blinded by our incapacity to think rationally and make decisions mistakenly, leading us to form opinions without a logical reason.

Therefore before the halo effect leads us to make wrong and incorrect observations and decisions, make sure that the next time you meet someone, or you have to try something new, you do so with an open mind and not form a particular opinion. Take time and let things unfold.

Do Share Your Thoughts:

Do tell us all your thoughts in the comments section below, we look forward to reading all the comments in the section below.

Also, do check useful Startup Resources and Tools below and join our newsletter 📰 for free for more interesting Business Case Studies 💰, Startup Insights 🚀, and Startup founders podcast 🎙️ delivered to your inbox every Sunday morning.

Related Articles:

What is Halo effect?

It is a cognitive bias in humans that makes us have a positive and good impression of people, products, and brands, in all other areas if we have a positive reaction to one particular aspect or feature.

Whats the example of Halo effect?

An example of the halo effect comes from our daily life. Often we judge a person based on their external appearance and physical attributes without trying to understand their personalities, mental abilities, social behavior, etc.

Leave a Reply

You cannot copy content of this page