When a brand caught fire: the role of brand equity in product-harm crisis

Abstract

Purpose – The purpose of this study is to investigate differences in consumer reactions to high- versus low-equity brands in terms of consumer attitude toward the brand, involvement with the brand, company credibility and consumer purchase intentions. Design/methodology/approach – Experimental procedure is conducted to test three hypotheses using 317 consumer participants. The experiment is carried out comparing a high-equity personal computer (PC) brand and a low-equity PC brand involved in product-harm crisis. Findings – The results indicate that, in the case of product-harm crisis, negative consumer perceptions regardless of brand equity level; less negative perceptions for a high-equity brand than for a low-equity brand; and smaller loss in consumer perceptions for a high-equity brand than for a low-equity brand. Research limitations/implications – The findings highlight the importance of brand equity in crisis management explained by covariation theory of attributions. Practical implications – Although product-harm crisis is inevitable for many firms, continuous investment in brand equity can mitigate the negative consequences. Originality/value – Product-harm crisis can pose serious consequences for firms on both financial and intangible dimensions. Given the occurrence of numerous product-harm crises involving both reputable and less known brands, it is important to consider potential influences of brand equity on consumer reactions to such crisis.

Does Rebranding As Name Change Rebuild Or Destroy Brand Equity (Customer Loyalty And Brand Reputation) After Brand Crisis?: The Case of Malaysian Airline System (MAS)

“…Brand crisis on product harm has been defined as "discrete, well-publicized occurrences wherein products are found to be defective or dangerous" (Dawar & Pillutta, 2000). From a global perspective, the globalization of market influenced the increasing of brand crisis (Rea, Wang, & Stoner, 2014;Meulenberg et al, 2002). Brand crisis can be caused in many forms, either internally or externally such as natural disasters, technology defect, labour strike, terrorism, product corrupting and corporate espionage (Priporas & Vangelinos, 2008).…”

The Impact of Brand Crisis on Consumers’ Green Purchase Intention and Willingness to Pay More

“…Therefore, companies, even the greatest companies, can be damaged by brand crises. This type of crisis can cause serious damage to brand trust (Dawar & Pillutta, 2000;Ping et al;Dutta & Pullig;Dan, 2011), brand equity (Van Heerde et al, 2007;He & Run, 2015;Ahluwalia et al, 2000;Park & Lee, 2013;Ping et al, 2014), brand image (Jie, 2011;Cleeren et al, 2008) and purchase intentions (Ping et al, 2014;Lin et al, 2011;Rea et al, 2014;He & Run, 2015).…”

“…First, perceived brand crises negatively affect green brand image, green trust, green brand equity and green perceived value. As mentioned within the literature review, brand crisis can seriously damage to brand image (Jie, 2011;Cleeren et al, 2008), brand trust (Dawar & Pillutta, 2000;Ping et al;Dutta & Pullig, 2011;Dan, 2011), brand equity (Van Heerde et al, 2007He & Run, 2015;Ahluwalia et al, 2000;Park & Lee, 2013;Ping et al, 2014), and purchase intentions (Ping et al, 2014;Lin et al, 2011;Rea et al, 2014;He & Run, 2015). Therefore the acceptance of these hypotheses is an expected result and these findings are in well compliance with the literature for green consumers.…”

The Effect of Product-Harm Crises on the Financial Value of Firms under the Concept of Green Development

“…As shown in a previous study [8], the episode of a product-harm crisis includes initial negative event, firm's recovery strategy, and post-recovery. Much work has been done in the firm's recovery field, including the analysis of product recalls [9][10][11][12], the classification of firms' behavior [13][14][15], and the analysis of brand attributes [16][17][18][19]. However, limited work has been conducted in the stage of initial negative events, such as the type of crises or the severity of crises [8].…”