Effects of a Product Recall on Competitors


 
Brand Management > Best Practices

In the best practices section you will find the best forum discussions within this knowledge area.


Effects of a Product Recall on Competitors
Chloe Xu, Australia, Premium Member
Of course any product recall damages a firmís reputation and brand equity and leads to losses in sales and stock market performance. However, a recent study on four of car manufacturers indicated that a brandís recall may hurt its rivals as well. This is termed the "Perverse Spillover Effect".

FINDINGS
  • A brand recall often creates customer concern about the rival brands as well, hurting their sales and market value. This is particularly true when these brands are from the same country of origin.
  • Foreign competitors may benefit from a recall.
  • Highly dominant brands or products create a stronger perverse spillover effect than smaller ones.
  • The financial impact of a recall can be significant for all market players.
IMPLICATIONS
  • A firm hit with a recall should (re)consider apology ads carefully...Sign up
 

   
Special Interest Group Leader

Interested? Sign up for free.


Brand Management
Summary
Forum
Best Practices
Expert Tips

Resources

 



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2019 12manage - The Executive Fast Track. V15.0 - Last updated: 18-4-2019. All names ô of their owners.