The Dynamic Impact of Product-Harm Crises on Brand Preference and Advertising Effectiveness: An Empirical Analysis of the Automobile Industry

• 成果类型: Article
• 署名作者: Liu, Yan; Shankar, Venkatesh
• 署名单位: Texas A&M University System; Texas A&M University College Station; Mays Business School
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2014.2095
• 发表日期: 2015
• 页码: 2514-2535
• 关键词: Advertising; brand preference; product-harm crisis; Kalman filter; generalized method of moments (GMM)

摘要

Product-harm crises (recalls) carry negative product information that adversely affects brand preference and advertising effectiveness. This negative impact of product-harm crises may differ across recall events depending on media coverage of the event, crisis severity, and consumers' prior beliefs about product quality. We develop a state space model to capture the dynamics in brand preference, advertising effectiveness, and consumer response to product recalls; integrate it with a random coefficient demand model; and estimate it using a unique data set containing 35 automobile brands, 193 auto sub-brands, and 359 recalls during 1997-2002. Our results reveal that consumers respond more negatively to product recalls with greater media attention, more severe consequences, and higher perceived product quality. Furthermore, they show that sub-brand advertising effectiveness declines by a greater amount than parent-brand advertising and the decline in effectiveness of the recalled sub-brand's advertising spills over to other sub-brands under the same parent brand.