Product recall, brand equity and choice - an exploratory study

There have been a number of well known major product recall incidents involving established brands over the last few years. These incidents have cost companies involved many millions of dollars in direct costs however 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 multistage choice based experiment to assess the impact of hypothetical product recall experiences on brand equity measures. Contrary to existing evidence we find that product recall experience has greater negative impacts for established strong brands than weaker non-established brands. Additionally, attributes of product recall such as the seriousness of the problem, personalized communication during the product recall incident and blame attribution can impact on measures brand equity pre and post product recall experience.