Perverse Spillover Effect of Product Recall

12manage is looking for
MBA students.

 
Brand Management > Forum Log in

Perverse Spillover Effect of Product Recall
Chloe Xu, Australia, Premium Member
Of course any product recall damages a firm’s 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 brand’s 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: 20-1-2019. All names ™ of their owners.