Effects of a Product Recall on Competitors

Brand Management
Knowledge Center

 

Next Topic

Brand Management > Forum > Effects of a Product Recall on Competitors

Effects of a Product Recall on Competitors
Chloe Xu, Director, Australia, Premium Member
Of course any product recall damages a firmís reputation and 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, as they may increase the damage by raising public attention about the incident.
  • Firms from the same country n (...) Read more? Sign up for free

Please register now to read all responses and to join this discussion yourself. It's easy and 100% free.

Sign up for free     Log in


   
Special Interest Group Leader

Are you an expert in this field? Sign up for free


Brand Management
Summary
Forum
How to Protect your Internet Domain Name?
Effects of a Product Recall on Competitors
Sub-Branding Strategy and Endorsed Branding Strategy
Brand Portfolio Strategy: Mono- and Multi-Brand Strategies
🔥Brand Roles and Scope
How to Maintain a Brand once it's Established?
Best Practices
🥇Managing Brand Hierarchy
🥈3 C's of Brand Positioning
🥉What is Brand Rivalry? Definition
Brand Comparison in Advertising
What is Orange Marketing? Definition
Brand Advertising versus Positioning


Brand Management
Knowledge Center

 

Next Topic



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2020 12manage - The Executive Fast Track. V15.5 - Last updated: 11-7-2020. All names ô of their owners.