Article ID: | iaor20082235 |
Country: | United States |
Volume: | 26 |
Issue: | 2 |
Start Page Number: | 230 |
End Page Number: | 245 |
Publication Date: | Mar 2007 |
Journal: | Marketing Science |
Authors: | Helsen Kristiaan, Dekimpe Marnik G., Heerde Harald van |
Keywords: | Brand management |
Product-harm crises are among a firm’s worst nightmares. A firm may experience (i) a loss in baseline sales, (ii) a reduced own effectiveness for its marketing instruments, (iii) an increased cross sensitivity to rival firms’ marketing-mix activities, and (iv) a decreased cross impact of its marketing-mix instruments on the sales of competing, unaffected brands. We find that this quadruple jeopardy materialized in a case study of an Australian product-harm crisis faced by Kraft peanut butter. We arrive at this conclusion by using a time-varying error-correction model that quantifies the consequences of this crisis on base sales, and on own- and cross-brand short- and long-term effectiveness. The proposed modeling approach allows managers to make more informed decisions on how to regain the brands’ pre-crisis performance levels.