Cause and (halo) effect

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To what extent are our purchasing decisions based on the way products are packaged?

If a person is good-looking, does that mean he or she is also honest, kind and intelligent? Any rational individual will tell you the answer is "no".

Good looks have absolutely no relation to one's honesty or intelligence.

However, in real life, when we meet a good-looking person, research has shown that we will assign traits such as intelligence or honesty to the individual.

Researchers call this the halo effect.

The halo effect, a fairly common phenomenon, essentially refers to the tendency to generalize feelings or evaluations of an object, such as the way it looks and its packaging, and associate these evaluations with other aspects of the brand, such as the perception of its quality.

It is a form of cognitive bias prevalent in many aspects of people's lives. It may affect a teacher's judgment of a student's performance, a boss's evaluation of an employee and, of course, consumers' judgments of brands and products.

The halo effect may affect how we view products and brands in two ways.

Firstly, positive evaluations of a product's attribute may influence a person's judgment of the other attributes of the same product.

For example, liking a perfume bottle may also make one feel that the perfume smells better and is more appealing than other perfumes. Knowing that an apparel is produced in, for instance, Korea, may also make one think the garment is better designed and of higher quality.

Secondly, positive feelings towards or evaluations of an item may also be extended to the broader brand. For instance, one's positive evaluation of a product, for instance, the Sony VAIO laptop, may be extended to other products by the brand, such as its MP3 Player.

This is one of the main reasons why companies prefer to introduce new products under a parent brand. By using the same brand name, marketers hope consumers may transfer the positive associations they have about the parent brand to the new product.

This is especially so for companies with strong brands, as people are more willing to try the new products and services they offer. Taking advantage of the halo effect is also one of the reasons why we frequently see lesser-known brands mimicking the packaging of well-known brands.

Thus, the halo effect may lead us to make unsound judgments or judgments that are too heavily dependent on one or two factors.

So, why do people adopt such heuristics (or mental shortcuts)? For a start, many are generally unaware that they are engaging in such generalisations. They are unconscious of its effect.

Even when people are told that their judgments have been biased by the halo effect, research has shown that they are unable to discount it adequately. However, there is an upside to such heuristics.

Given the multitude of decisions one has to make each day, using heuristics is actually a good way to reduce one's cognitive load. It takes one's mind off the complicated evaluation process and simplifies the entire purchasing decision.

In essence, the halo effect is ubiquitous and to a large extent, unavoidable. The next time you make a decision, perhaps you should take a moment to figure out how much of your decision is affected by the halo effect.

This article is contributed by Associate Professor Sharon Ng. She is an associate professor at the division of marketing and international business, Nanyang Business School, Nanyang Technological University. Her research focuses primarily on two main areas: Cross-cultural differences in consumer behaviour and branding issues.

From TODAY, Business – Tuesday, 15-Sep-2009

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