Mitigating negative spillover effects in a product-harm crisis: strategies for market leaders versus market challengers
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ORIGINAL ARTICLE
Mitigating negative spillover effects in a product‑harm crisis: strategies for market leaders versus market challengers Jun Zhang1 · Joon Soo Lim1 Revised: 25 November 2019 / Accepted: 16 October 2020 © Springer Nature Limited 2020
Abstract Prior research indicates that a brand’s product-harm crisis can lower consumer evaluations of competing brands within the same industry, which are known as negative spillover effects. Competing brands should proactively respond to the crisis to dissociate from the crisis-stricken brand. In the current research, two experiments were conducted to examine the relative efficacy of crisis response strategies (bolstering vs. differentiation vs. no response) in mitigating negative spillover effects on competing brands with different market positions (market leader vs. market challenger). The context of these experiments is a product-harm crisis in which a brand’s product is recalled due to food-borne illness. The moderated mediation analyses reveal that the bolstering strategy leads to similar positive indirect effects on brand attitude and purchase intention through message evaluations regardless of whether market leaders or challengers employ the strategy. In contrast, the differentiation strategy yields a more positive indirect effect on brand attitudes and purchase intentions through message evaluations when a market challenger employs the strategy rather than a leader. Keywords Product-harm crisis · Spillover effects · Market position · Crisis response · Bolstering · Differentiation
Introduction A brand crisis can have negative impacts on the reputation and sales of competing brands in the same business category as well as the crisis-stricken brand (Roehm and Tybout 2006; Borah and Tellis 2016; Dahlén and Lange 2006). For example, in 2018, E. coli outbreaks occurred in Arizona, leading to consumer panic that drove down nationwide sales of romaine lettuce by 45% and lowered the sales of other types of lettuce (Gray 2018, May 30). Recent studies have examined the transfer of negative evaluations of one brand to another during a product-harm crisis (Barlow et al. 2018; Roehm and Tybout 2006; Cleeren et al. 2013; Mackalski and Belisle 2015; Trump and Newman 2017). These transferred evaluations are known as negative spillover effects (Ahluwalia et al. 2001). Within the same product category, the perceived similarity of a competing brand with * Joon Soo Lim [email protected] Jun Zhang [email protected] 1
S.I. Newhouse School of Public Communications, Syracuse University, 215 University Place, Syracuse, NY 13244, USA
the crisis-stricken brand increases the competing brand’s risk of negative spillover effects (Janakiraman et al. 2009; Trump and Newman 2017; Roehm and Tybout 2006; Laufer and Wang 2018). The potential transfer of negativity during a product-harm crisis motivates competitors of a crisisstricken brand to protect their reputation and brand equity. However, few studies (Roehm and Tybout 2006; Laufer and Wang 2018) have attempted to explain how competitors
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