IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v88y2018icp245-254.html
   My bibliography  Save this article

How brand concept affects consumer response to product recalls: A longitudinal study in the U.S. auto industry

Author

Listed:
  • Topaloglu, Omer
  • Gokalp, Omer N.

Abstract

This paper investigates the effect of recall announcements on product sales and how brand concept moderates this relationship. We argue that severe recalls adversely impact product sales, and that in the event of such recalls, products with a functional brand concept are more adversely impacted than products with a luxury brand concept because functional brand-choice risk expectations are violated. Data from the United States auto industry during the period from 2003 to 2014 support our hypotheses. Our findings provide insights into the product recall literature by highlighting the effect of brand concept on consumers' behavioral outcomes following undesirable events. Furthermore, our post-hoc analysis suggests that, among the car models with a functional brand concept, those with higher reliability ratings lose more sales following severe recall announcements. We discuss the theoretical and managerial implications based on our findings.

Suggested Citation

  • Topaloglu, Omer & Gokalp, Omer N., 2018. "How brand concept affects consumer response to product recalls: A longitudinal study in the U.S. auto industry," Journal of Business Research, Elsevier, vol. 88(C), pages 245-254.
  • Handle: RePEc:eee:jbrese:v:88:y:2018:i:c:p:245-254
    DOI: 10.1016/j.jbusres.2018.03.035
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296318301632
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Barber, Brad M & Darrough, Masako N, 1996. "Product Reliability and Firm Value: The Experience of American and Japanese Automakers, 1973-1992," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1084-1099, October.
    2. Homer, Pamela Miles, 2008. "Perceived quality and image: When all is not "rosy"," Journal of Business Research, Elsevier, vol. 61(7), pages 715-723, July.
    3. Sriram Thirumalai & Kingshuk K. Sinha, 2011. "Product Recalls in the Medical Device Industry: An Empirical Exploration of the Sources and Financial Consequences," Management Science, INFORMS, vol. 57(2), pages 376-392, February.
    4. Jones, Michael A. & Reynolds, Kristy E. & Arnold, Mark J., 2006. "Hedonic and utilitarian shopping value: Investigating differential effects on retail outcomes," Journal of Business Research, Elsevier, vol. 59(9), pages 974-981, September.
    5. Kaitlin D. Wowak & Christopher A. Boone, 2015. "So Many Recalls, So Little Research: A Review of the Literature and Road map for Future Research," Journal of Supply Chain Management, Institute for Supply Management, vol. 51(4), pages 54-72, October.
    6. De Maeyer, Peter & Estelami, Hooman, 2011. "Consumer perceptions of third party product quality ratings," Journal of Business Research, Elsevier, vol. 64(10), pages 1067-1073, October.
    7. Francesca Magno & Fabio Cassia & Marta Ugolini, 2017. "Impact of voluntary product recalls on utilitarian and hedonic attitudes: Is it the same for all brands?," Australian Journal of Management, Australian School of Business, vol. 42(1), pages 161-174, February.
    8. Newey, Whitney K & West, Kenneth D, 1987. "Hypothesis Testing with Efficient Method of Moments Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 777-787, October.
    9. Mitchell A. Petersen, 2009. "Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches," Review of Financial Studies, Society for Financial Studies, vol. 22(1), pages 435-480, January.
    10. Suresh Govindaraj & Bikki Jaggi & Beixin Lin, 2004. "Market Overreaction to Product Recall Revisited--The Case of Firestone Tires and the Ford Explorer," Review of Quantitative Finance and Accounting, Springer, vol. 23(1), pages 31-54, July.
    11. Dall'Olmo Riley, Francesca & Pina, José M. & Bravo, Rafael, 2013. "Downscale extensions: Consumer evaluation and feedback effects," Journal of Business Research, Elsevier, vol. 66(2), pages 196-206.
    12. Frank Germann & Rajdeep Grewal & William Ross & Rajendra Srivastava, 2014. "Product recalls and the moderating role of brand commitment," Marketing Letters, Springer, vol. 25(2), pages 179-191, June.
    13. Yan Liu & Venkatesh Shankar, 2015. "The Dynamic Impact of Product-Harm Crises on Brand Preference and Advertising Effectiveness: An Empirical Analysis of the Automobile Industry," Management Science, INFORMS, vol. 61(10), pages 2514-2535, October.
    14. Fama, Eugene F & MacBeth, James D, 1973. "Risk, Return, and Equilibrium: Empirical Tests," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 607-636, May-June.
    15. Park, C Whan & Milberg, Sandra & Lawson, Robert, 1991. " Evaluation of Brand Extensions: The Role of Product Feature Similarity and Brand Concept Consistency," Journal of Consumer Research, Oxford University Press, vol. 18(2), pages 185-193, September.
    16. Laufer, Daniel & Coombs, W. Timothy, 2006. "How should a company respond to a product harm crisis? The role of corporate reputation and consumer-based cues," Business Horizons, Elsevier, vol. 49(5), pages 379-385.
    17. Overby, Jeffrey W. & Lee, Eun-Ju, 2006. "The effects of utilitarian and hedonic online shopping value on consumer preference and intentions," Journal of Business Research, Elsevier, vol. 59(10-11), pages 1160-1166, October.
    18. Bian, Qin & Forsythe, Sandra, 2012. "Purchase intention for luxury brands: A cross cultural comparison," Journal of Business Research, Elsevier, vol. 65(10), pages 1443-1451.
    19. Ni, John Z. & Flynn, Barbara B. & Jacobs, F. Robert, 2014. "Impact of product recall announcements on retailers׳ financial value," International Journal of Production Economics, Elsevier, vol. 153(C), pages 309-322.
    20. Kashmiri, Saim & Brower, Jacob, 2016. "Oops! I did it again: Effect of corporate governance and top management team characteristics on the likelihood of product-harm crises," Journal of Business Research, Elsevier, vol. 69(2), pages 621-630.
    21. Dawar, Niraj & Lei, Jing, 2009. "Brand crises: The roles of brand familiarity and crisis relevance in determining the impact on brand evaluations," Journal of Business Research, Elsevier, vol. 62(4), pages 509-516, April.
    22. Mooweon Rhee & Pamela R. Haunschild, 2006. "The Liability of Good Reputation: A Study of Product Recalls in the U.S. Automobile Industry," Organization Science, INFORMS, vol. 17(1), pages 101-117, February.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:88:y:2018:i:c:p:245-254. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.