Weathering product-harm crises
AbstractProduct-harm crises can seriously imperil a brand's performance. Consumers tend to weigh negative publicity heavily in product judgments, customer preferences may shift towards competing products during the recall period, and competitors often increase their advertising spending in the wake of a brand's misfortune. To counter these negative effects, brands hope to capitalize on their equity, and often use advertising as a communication device to regain customers' lost trust. We develop a multiple-event hazard model to study how consumer characteristics and advertising influence consumers' first-purchase decisions for two affected brands of peanut butter following a severe Australian product-harm crisis. Buying a recently affected brand is perceived as highly risky, making the trial purchase a first hurdle to be taken in the brand's recovery. Both pre-crisis loyalty and familiarity are found to form an important buffer against the product-harm crisis, supporting the idea that a brand's equity prior to the crisis offers resilience in the face of misfortune. Also heavy users tend to purchase the affected brands sooner, unless their usage rate decreased significantly during the crisis. Brand advertising was found to be effective for the stronger brand, but not for the weaker brand, while competitive advertising delayed the first-purchase decision for both brands affected by the crisis.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Katholieke Universiteit Leuven in its series Open Access publications from Katholieke Universiteit Leuven with number urn:hdl:123456789/121040.
Date of creation: 2006
Date of revision:
Contact details of provider:
Web page: http://www.kuleuven.be
(pro-environmental) attitudes; Behavior; Claim; Cognitive; Consumption; Control; Control theory; Decision; Decisions; Demand; Ecological consumer behaviour; Effects; Ego depletion; Implications; Marketing; Model; Performance; Research; Self-control; Self-perception theory; Social marketing; Studies; Theory; Product; Judgments; Preference; Recall; Advertising; Brands; Communication; Trust; Characteristics; Loyalty;
Other versions of this item:
- Cleeren, Kathleen & Dekimpe, Marnik & Helsen, Kristiaan, 2008. "Weathering product-harm crises," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/205823, Katholieke Universiteit Leuven.
- Cleeren, K. & Dekimpe, M.G. & Helsen, K., 2008. "Weathering product-harm crises," Open Access publications from Tilburg University urn:nbn:nl:ui:12-321393, Tilburg University.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shimp, Terence A & Hyatt, Eva M & Snyder, David J, 1991. " A Critical Appraisal of Demand Artifacts in Consumer Research," Journal of Consumer Research, University of Chicago Press, vol. 18(3), pages 273-83, December.
- Leeflang, P.S.H. & Wittink, Dick R., 2000. "Building models for marketing decisions: past, present and future," Research Report 00F20, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Nitin Mehta & Surendra Rajiv & Kannan Srinivasan, 2004. "Role of Forgetting in Memory-Based Choice Decisions: A Structural Model," Quantitative Marketing and Economics, Springer, vol. 2(2), pages 107-140, June.
- Ackerberg, Daniel A, 2001. "Empirically Distinguishing Informative and Prestige Effects of Advertising," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 316-33, Summer.
- Ahluwalia, Rohini, 2002. " How Prevalent Is the Negativity Effect in Consumer Environments?," Journal of Consumer Research, University of Chicago Press, vol. 29(2), pages 270-79, September.
- Goering, Patricia A, 1985. " Effects of Product Trial on Consumer Expectations, Demand, and Prices," Journal of Consumer Research, University of Chicago Press, vol. 12(1), pages 74-82, June.
- Dekimpe, Marnik & Parker, PM & Sarvary, M, 2000. "Global diffusion of technological innovations: A coupled-hazard approach," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/118920, Katholieke Universiteit Leuven.
- Gregg A. Jarrell & Sam Peltzman, 1984.
"The Impact of Product Recalls on the Wealth of Sellers,"
University of Chicago - George G. Stigler Center for Study of Economy and State
33, Chicago - Center for Study of Economy and State.
- Jarrell, Gregg & Peltzman, Sam, 1985. "The Impact of Product Recalls on the Wealth of Sellers," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 512-36, June.
- Steenkamp, J-B.E.M. & Nijs, V.R. & Hanssens, D.M. & Dekimpe, M.G., 2002. "Competitive Reactions and the Cross-Sales Effects of Advertising and Promotion," Research Paper ERS-2002-20-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
- Steenkamp, J & Nijs, V & Hanssens, D & Dekimpe, Marnik, 2002. "Competitive reactions and the cross-sales effects of advertising and promotion," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/224295, Katholieke Universiteit Leuven.
- Avi Goldfarb, 2006. "The medium-term effects of unavailability," Quantitative Marketing and Economics, Springer, vol. 4(2), pages 143-171, June.
- Helsen, Kristiaan & Schmittlein, David, 1994. "Understanding price effects for new nondurables: How price responsiveness varies across depth-of-repeat classes and types of consumers," European Journal of Operational Research, Elsevier, vol. 76(2), pages 359-374, July.
- Berman, Barry, 1999. "Planning for the inevitable product recall," Business Horizons, Elsevier, vol. 42(2), pages 69-78.
- De Alessi, Louis & Staaf, Robert J, 1994. "What Does Reputation Really Assure? The Relationship of Trademarks to Expectations and Legal Remedies," Economic Inquiry, Western Economic Association International, vol. 32(3), pages 477-85, July.
- Laroche, Michel & Kim, Chankon & Zhou, Lianxi, 1996. "Brand familiarity and confidence as determinants of purchase intention: An empirical test in a multiple brand context," Journal of Business Research, Elsevier, vol. 37(2), pages 115-120, October.
- Herr, Paul M & Kardes, Frank R & Kim, John, 1991. " Effects of Word-of-Mouth and Product-Attribute Information on Persuasion: An Accessibility-Diagnosticity Perspective," Journal of Consumer Research, University of Chicago Press, vol. 17(4), pages 454-62, March.
- Folkes, Valerie S, 1984. " Consumer Reactions to Product Failure: An Attributional Approach," Journal of Consumer Research, University of Chicago Press, vol. 10(4), pages 398-409, March.
- Toker Doganoglu & Daniel Klapper, 2006. "Goodwill and dynamic advertising strategies," Quantitative Marketing and Economics, Springer, vol. 4(1), pages 5-29, March.
- Chintagunta, Pradeep K & Prasad, Alok R, 1998. "An Empirical Investigation of the "Dynamic McFadden" Model of Purchase Timing and Brand Choice: Implications for Market Structure," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(1), pages 2-12, January.
- Campo, Katia & Gijsbrechts, Els & Nisol, Patricia, 2000. "Towards understanding consumer response to stock-outs," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/97096, Katholieke Universiteit Leuven.
- Gonul, F. & Srinivasan, K., 1993. "Consumer Purchase Behavior in a frequently Bought Product Category: Estimation Issues and Managerial Insights from a Hazard Function Model with Heterogeneity," University of Chicago - Economics Research Center 93-1, Chicago - Economics Research Center.
- Dipak C. Jain & Naufel J. Vilcassim, 1991. "Investigating Household Purchase Timing Decisions: A Conditional Hazard Function Approach," Marketing Science, INFORMS, vol. 10(1), pages 1-23.
- Peter S. Fader & James M. Lattin & John D. C. Little, 1992. "Estimating Nonlinear Parameters in the Multinomial Logit Model," Marketing Science, INFORMS, vol. 11(4), pages 372-385.
- George, Jennifer & Mercer, Alan & Wilson, Helen, 1996. "Variations in price elasticities," European Journal of Operational Research, Elsevier, vol. 88(1), pages 13-22, January.
- Steenkamp, Jan-Benedict E M & Gielens, Katrijn, 2003. " Consumer and Market Drivers of the Trial Probability of New Consumer Packaged Goods," Journal of Consumer Research, University of Chicago Press, vol. 30(3), pages 368-84, December.
- Moshe Givon & Dan Horsky, 1990. "Untangling the Effects of Purchase Reinforcement and Advertising Carryover," Marketing Science, INFORMS, vol. 9(2), pages 171-187.
- Dmitri Byzalov & Ron Shachar, 2004. "The Risk Reduction Role of Advertising," Quantitative Marketing and Economics, Springer, vol. 2(4), pages 283-320, December.
- Seetharaman, P B & Chintagunta, Pradeep K, 2003. "The Proportional Hazard Model for Purchase Timing: A Comparison of Alternative Specifications," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(3), pages 368-82, July.
- Kristiaan Helsen & David C. Schmittlein, 1993. "Analyzing Duration Times in Marketing: Evidence for the Effectiveness of Hazard Rate Models," Marketing Science, INFORMS, vol. 12(4), pages 395-414.
- Sven Tischer & Lutz Hildebrandt, 2012. "Brand equity – how is it affected by critical incidents and what moderates the effect," SFB 649 Discussion Papers SFB649DP2012-062, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- Sven Tischer, 2012. "Measuring the impact of critical incidents on brand personality," SFB 649 Discussion Papers SFB649DP2012-064, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- Dutta, Sujay & Pullig, Chris, 2011. "Effectiveness of corporate responses to brand crises: The role of crisis type and response strategies," Journal of Business Research, Elsevier, vol. 64(12), pages 1281-1287.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carl Demeyere).
If references are entirely missing, you can add them using this form.