Impact of halo effect on business reputation

The “Prestige Trap”: Lessons from Online Learning, Executive Education, and Global Business Prestige is powerful, but overreliance on reputation alone is not a strategy. Recent examples from online learning, executive education, and global business show how biases like what we might call the Prestige Fallacy, the Institutional Halo Effect, and Brand Hubris undermine even the most respected organizations. 1. The Prestige Fallacy: Relying Too Much on Reputation When MIT and Harvard co-founded edX, it attracted millions of learners but some say diluted their brands. Meanwhile, competitors like Coursera scaled faster by targeting corporate and career-focused learners. Mercedes-Benz made a similar mistake in the EV market, assuming its luxury reputation would dominate. Tesla outperformed by focusing on user experience and innovation. At MIT Sloan Executive Education we’ve learned that while the MIT name is powerful, success requires clear differentiation, thoughtful marketing, and understanding market needs. 2. Institutional Halo Effect: Assuming Excellence Translates Across Domains Amazon’s e-commerce dominance didn’t translate to healthcare success. Amazon Care underestimated the complexities of healthcare and failed. Similarly, while MIT and Harvard excelled in research and traditional education, success in online education demands more than reputation. At MIT Sloan, we’ve found that reputation and great content alone aren’t enough—success also requires investments in user experience and accessibility. 3. Brand Hubris: Underestimating Market Demands Coursera and Udemy outscaled MIT and Harvard’s online efforts with affordable, flexible, career-focused courses. Mercedes-Benz similarly struggled in the EV market, as its luxury brand couldn’t match Tesla’s charging infrastructure and features. At MIT Sloan, we know prestige alone isn’t enough to compete in a fast-changing market. Avoiding the Prestige Trap 1. Validate Assumptions: Test strategies and gather feedback. 2. Focus on Differentiation: Prestige opens doors, but unique value sustains success. 3. Prioritize Execution: Marketing, user experience, and customer engagement matter. At MIT Sloan, we’re helping leaders navigate these challenges. What do you think? Have you seen these dynamics play out? #Leadership #Strategy #ExecutiveEducation #OnlineLearning #MITSloan #Innovation

Brand hype and sales don't always go together. For hype to work, brand and product need to be strong, and consumers need to want to line up for both. When hype becomes a motive and an activity in itself — constant media coverage, CEO’s LinkedIn posts, and PR noise — it can easily be mistaken for its end: the stable and sustainable sales. To prevent hype from wearing off, brands need to combine it with halo. Halo effect refers to positive perceptions of a brand image, its reputation for innovation, product quality, or retail experience influencing consumers’ overall perception of the entire brand. Brands that create halo are specialist brands. They know they don’t need to be the best at everything. They are the best in one area of their business, and are synonymous with it, and its halo helps them expand the rest of their categories forward. Hype is a spark that ignites a brand halo (if Jane Birkin wasn’t already such a legend and if the bag origin story was not so serendipitous, the Birkin would not have reached the level of myth that it enjoys today). Without halo, hype burns into Fyre. Read the full analysis on The Sociology of Business: https://lnkd.in/ehGsmy4Z

𝐏𝐨𝐩 𝐪𝐮𝐢𝐳: How did one simple gesture lead to a $4 billion drop in a company’s market value? Was it… 1. An inappropriate, obscene statement by the company spokesperson 2. A polarizing vocal opinion about a political candidate from the company president 3. Moving a bottle of soda If you guessed number 3, you are a genius (even if you read the caption photo). Sure, the first two would also likely result in a PR nightmare. 𝐁𝐮𝐭 𝐂𝐫𝐢𝐬𝐭𝐢𝐚𝐧𝐨 𝐑𝐨𝐧𝐚𝐥𝐝𝐨 𝐫𝐞𝐦𝐨𝐯𝐢𝐧𝐠 𝐂𝐨𝐜𝐚-𝐂𝐨𝐥𝐚 𝐛𝐨𝐭𝐭𝐥𝐞𝐬 𝐝𝐮𝐫𝐢𝐧𝐠 𝐚 𝐩𝐫𝐞𝐬𝐬 𝐜𝐨𝐧𝐟𝐞𝐫𝐞𝐧𝐜𝐞, 𝐜𝐚𝐮𝐬𝐢𝐧𝐠 𝐚 $4 𝐛𝐢𝐥𝐥𝐢𝐨𝐧 𝐝𝐫𝐨𝐩 𝐢𝐧 𝐦𝐚𝐫𝐤𝐞𝐭 𝐯𝐚𝐥𝐮𝐞, 𝐰𝐚𝐬 𝐚 𝐬𝐭𝐞𝐥𝐥𝐚𝐫 𝐞𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐇𝐀𝐋𝐎 𝐄𝐅𝐅𝐄𝐂𝐓. The halo effect refers to a psychological bias where our overall impression of someone (or something) influences how we feel about everything else related to them. The power of that first impression is immense. As copywriters, we can harness the halo effect by leading with the most compelling elements of our story. Here are 3 ways to make it work for you: 1️⃣ Emphasize Authority or Expertise Got a client with tons of experience or a killer testimonial from an industry expert? Lead with that. When you present your client as an authority, the rest of their offer automatically seems more credible. 2️⃣ Focus on a Key Benefit Pick one jaw-dropping feature or benefit. For example, if your client’s product is eco-friendly, make that front and center. People will subconsciously think, “Well, if they care about the environment, they must care about quality, too.” 3️⃣ Use Trust Indicators Things like social proof, awards, or design elements like a polished website can trigger a halo effect. When people see those trust indicators, they’re more likely to believe everything else you’re saying holds up. A word of caution: The halo effect is powerful persuasion. Use it wisely. Never use it to mislead. What other ethical ways have you used the halo effect successfully?