Spill-over: the effects of product recall on private labels versus national brands

This paper examines the impact of a product recall crisis on brand equity and brand choices by using a designed three stage experiment. In particular, it examines the spill-over impact of a product recall crisis for a given brand on other brands in the same product category and for the same brand in other product categories. The other categories examined included a closely related category and a less related category. Additionally, we examine whether the impact of a given product recall crisis depends on the strength of the brand, the seriousness of the problem or company response. The findings suggest that there are no spill-over effects to other brands within the product category but there are spill-over brand equity effects for the affected brand in other product categories. The results are ambiguous on whether brand strength influences the impact of the product recall. The spill-over brand equity effect is greater for the related category than the less related category. The spill-over impacts are also related to the level of company response to the product crisis. Managerially, it suggests the impact of a product recall crisis may need to be assessed over all product categories and response to a product recall incident carefully considered.