When a brand caught fire: the role of brand equity in product-harm crisis

Abstract

Purpose

The purpose of this study is to investigate differences in consumer reactions to high- versus low-equity brands in terms of consumer attitude toward the brand, involvement with the brand, company credibility and consumer purchase intentions.

Design/methodology/approach

Experimental procedure is conducted to test three hypotheses using 317 consumer participants. The experiment is carried out comparing a high-equity personal computer (PC) brand and a low-equity PC brand involved in product-harm crisis.

Findings

The results indicate that, in the case of product-harm crisis, negative consumer perceptions regardless of brand equity level; less negative perceptions for a high-equity brand than for a low-equity brand; and smaller loss in consumer perceptions for a high-equity brand than for a low-equity brand.

Research limitations/implications

The findings highlight the importance of brand equity in crisis management explained by covariation theory of attributions.

Practical implications

Although product-harm crisis is inevitable for many firms, continuous investment in brand equity can mitigate the negative consequences.

Originality/value

Product-harm crisis can pose serious consequences for firms on both financial and intangible dimensions. Given the occurrence of numerous product-harm crises involving both reputable and less known brands, it is important to consider potential influences of brand equity on consumer reactions to such crisis.

Citation

Rea, B., J. Wang, Y. and Stoner, J. (2014), "When a brand caught fire: the role of brand equity in product-harm crisis", Journal of Product & Brand Management, Vol. 23 No. 7, pp. 532-542. https://doi.org/10.1108/JPBM-01-2014-0477