Product recall and future choices - an exploratory study

Major product recall incidents involving established brands over the last few years have increased markedly. Although the direct costs have been evaluated in these cases (typically in the millions) the indirect costs to brand equity and subsequent loss of market share are harder to evaluate. Although many case studies and some limited theoretical research have examined the impact of product recall on some of the above measures, there does not appear to be a framework that can be useful for generalisation. This paper applies a simulated multi-stage choice based experiment to assess the impact of hypothetical product recall experiences on brand equity measures and importantly future brand choice. Contrary to existing evidence we find that product recall experience has greater negative impacts for established strong brands than weaker nonestablished brands. Additionally, attributes of product recall such as the seriousness of the problem and speed of initial action impact on pre and post recall differences in consumer evaluations of brand equity. Differences in brand equity evaluations for the established strong brand significantly impact on post recall choice.