[kevinpet]

A halo product is something that isn't there to be the real flagship that's driving the revenue, but instead to be the ultra-cool item that people really lust after, associate that with the brand, then buy one of the lower end models.

For example, the Ford Shelby GT500 http://www.ford.com/cars/mustang/trim/shelbygt500/ is probably not even turning a profit for Ford, but when someone picks up an automotive magazine with an article about the car, it makes them more likely to buy the entry level Mustang at 40% of the cost, or any other Ford product.

[TylerE]

The Dodge Viper is probably a better example, as it's a totally custom chassis, body, etc.

The GT500 still shares a LOT with a production Mustang, and al the economies of scale that imparts. It's also producded in very high quantities, 5000+ yearly. They're making money or they wouldn't buiild that many.

[rograndom]

The Ford GT (http://en.wikipedia.org/wiki/Ford_gt) is a better example than the GT500 as well.

I've heard it explained that halo cars help create brand loyalty with an instinctual response similar to "My dad can beat up your dad" fights on the schoolyard.

[nawariata]

Even better example is Bugatti Veyron, fastest production car in the world. Some analysts say that company is losing over $6m on every car sold, despite $2m price tag. Only 400 cars were sold to date.