Halo Effect

Halo Effect

Halo effect is a term that was first used by Edward L Thorndike who was an American psychologist. The halo effect is a term that essentially refers to a pervasive tendency of the information processing system favoring a certain stimulus material as opposed to another. In other words it is a term that refers to a cognitive bias. In this scenario the perception of the one trait is directly influence by the perceptions of the traits prior to it, which comes in a form of interpretation sequence.

The cost of introducing a brand into a consumer market can be considerable, ranging above $50 million. (Keller L, 1993) It is a considerable investment and like most investments carries no guarantee of success. The recession of the early 1990s focused marketing managers on cost-saving tactics to increase competitiveness. One of the most important effects was to make brand extensions more compelling. Leveraging the brand equity of a successful brand promises to make introduction of a new entry less costly by trading on an established name.

Successful example such as Giorgio Armani, it has everything from perfumes, clothes, shoes, watches, jewelry and bags to hotels, five star resorts, cages, furniture, minimalist sofas, sunglasses and cell phones. The underlying basis of brand equity is consumer memory. Most of the widely accepted work involves a conceptualization of memory as consisting of a set of nodes and links. Nodes are stored information connected by links of varying strengths. When the consumer thinks about a product, or recognizes a problem, a spreading activation process connects node to node and determines the extent of retrieval. The Armani brand mainly stands for Absolute Premiumness, Italian Style, Fashion, Sophistication, Timelessness and Classiness. Armani started building the equity of his brand through clothes than expanded to other categories such as accessories and jewelry. Only when he achieved global success and recognition he went wild...