Behind the product-harm crisis

Product-harm crises have become increasingly common in today’s markets (Cleeren et al.

2013), and there can be different factors in the background affecting the formation of a product-harm crisis. Consumers are more demanding, and, also, products become more and more complex in the market (Dawar & Pillutla 2000; van Heerde, Helsen & Dekimpe 2007; Cleeren et al. 2017). The pressure of competitive markets and various governmental legislations and regulations (Cleeren et al. 2017) combined with the demands and complexity can make it challenging for the companies to meet all the expectations and requirements. Moreover, policymakers and manufacturers are executing closer examinations (van Heerde et al. 2007;

Cleeren et al. 2017), production is more global, outsourcing is increasing, and, therefore, quality control becomes more difficult (Cleeren et al. 2017). According to Ahluwalia, Burnkrant and Unnava (2000), the negative publicity about brands and companies is extensively common in the market, and, due to a raised attention in the media, crises are more apparent to the general public, as well (van Heerde et al. 2007; Cleeren et al. 2017).

As mentioned before, some of the causes behind a crisis concerning company’s products are purely accidental and unintentional, whereas others have occurred because of intentional actions by the company itself leading to a product-harm crisis. Coombs and Holladay (2002) have grouped different types of organization-related crises into three clusters based on the attributions of responsibility that, in turn, lead to reputational threats with different levels of

Table 1. Research on product-harm crises

Authors Research methods Main results/conclusions (in literature

reviews)

If the company responds appropriately to the crisis, it is regarded more highly than the company with an inappropriate response.

Laufer and Coombs 2006 Literature review When choosing a crisis response, consumer-based cues and corporate reputation should

A product-harm crisis may cause a quadruple jeopardy regarding company’s sales and marketing-mix instruments.

Cleeren, Dekimpe and Helsen 2008 Case study Hazard model

Strong equity before a crisis creates a buffer against product-harm crises and makes company’s communication after a product recall more effective.

Chen, Ganesan and Liu 2009 Event study analysis T-test familiarity moderate the effects of a brand crisis. Product-harm crises are likely to affect negatively consumers’ brand evaluations.

Dutta and Pullig 2011 Experimentation ANOVA

The nature of the crisis affects the relative effectiveness of crisis response strategies.

Rubel, Naik and Srinivasan 2011 Market data State-space model

When the probability of a crisis increases, the optimal advertising before the crisis brand trust than a public perception of risk does.

Zhao, Zhao and Helsen 2011 Scanner panel data set Model estimation Experimentation

Product-harm crisis can add consumers’

uncertainty about the affected brand in the category. Strong reputation helps brands overcome a crisis more effectively than weak reputation. A company can manage a product-harm crisis effectively with a proactive approach.

Table 1. (Continued)

Authors Research methods Main results/conclusions (in literature

reviews) Lei, Dawar and Gürhan-Canli 2012 Experimentation

ANOVA

Crises affect less brands with positive beliefs. Attributions for brands with positive prior beliefs are more affected by base-rate information than brands with negative prior

There will be more price sensitivity of the category if the media attention increases.

Advertising becomes more effective with increased media attention.

Rea, Wang and Stoner 2014 Experimentation T-test

After a product-harm crisis, brands with high equity are likely to be perceived more favorably than brands with low equity.

When the product hazard is more serious, companies tend to use full remedy more probably. Making decisions about remedies decrease the amount of blame attributed to the brand.

Cleeren, Dekimpe and van Heerde 2017

Literature review No brand is safe from a product-harm crisis.

Product-harm crisis can have various effects sensemaking may explain the success of the trust recovery campaign.

Liu, Shankar and Yun 2017 Secondary data Event study

Calendar-time portfolio analysis

Recall volume has a long-term effect on company value. a product failure impact on consumer brand perceptions and memory effects.

Trust and blame are affected by perceived severity of the crisis. Consumers’ purchase intentions are affected by perceived risk, blame and trust.

Khamitov, Grégoire and Suri 2019 Literature review Literature on brand transgression, service failure and recovery and product-harm-crisis complement each other, and the general discipline of negative events in marketing could go beyond these three streams.

severity (Coombs 2007). The three clusters are the victim cluster, the accidental cluster and the preventable cluster (Coombs and Holladay 2002), which Coombs (2007) has alternatively named as intentional cluster, too. The victim cluster includes the crises in which not only the stakeholders but also the organization itself is a victim of the crisis (Coombs and Holladay 2002; Coombs 2007). According to Coombs and Holladay (2002) and Coombs (2007), workplace violence and natural disasters are examples of the crisis within the victim cluster. In this study, these kinds of crises are, however, excluded from the closer inspection due to the different perspective used. Organization’s unintentional actions that can lead to a crisis belong to the accidental cluster, which includes the cases where the company is moderately responsible for the crisis (Coombs and Holladay 2002; Coombs 2007). Coombs (2007) names technical-error accidents, challenges and technical-technical-error product harm as crisis types belonging to the accidental cluster. Coombs and Holladay (2002), in turn, use the concepts of technical breakdown-accidents, megadamage, challenges and technical breakdown-recalls when talking about crisis types of the accidental cluster. Consequently, it can be stated that the product-harm crises caused by unintentional actions by the company are part of the accidental cluster. In the technical-error product harm or technical breakdown-recall, product recall is caused by equipment or technology failure (Coombs and Holladay 2002; Coombs 2007).

Crisis types included to the preventable/intentional cluster are caused by the intentional actions by the company that knowingly places stakeholders at risk, takes inappropriate actions or violates laws and regulations (Coombs and Holladay 2002; Coombs 2007). In this case, the company is strongly responsible for the crisis, and, therefore, the reputational threat is serious (Coombs 2007). The preventable cluster includes crises types of organizational misdeed with no injuries, organizational misdeed – management misconduct and organizational misdeed with injuries (Coombs and Holladay 2002; Coombs 2007). Human-error accidents and human-error product harm (Coombs 2007), or human breakdown accidents and human breakdown recalls, as Coombs and Holladay (2002) name them, are also included to the preventable cluster because those errors could have or might have been avoided.

Cleeren et al. (2017) also mention Volkswagen in their article as an example of the case in which a company tries to meet the governmental regulations in an illegal way. Volkswagen tried to meet the emission standards by manipulating the emission measurements with a software that was installed to its diesel cars. Samsung, in turn, faced problems with its Galaxy Note 7 model’s batteries. According to Cleeren et al. (2017), this incident occurred due to Samsung’s attempt to develop even more thinner smartphone and lead the competition when

trying to meet the consumer demands in an environment where competitive pressure is remarkable. Thus, there are various causes leading to product-harm crises. Accidents happen occasionally, but sometimes companies do wrong knowingly. Whatever the cause is, these incidents can have many consequences. On the other hand, it is interesting to examine the differences and similarities in the effects caused by the crisis types with different backgrounds.