Effect of Product-harm Crisis on Customer's Based Brand Equity: The Moderating Role of Attitude towards Brand

Muhamamad Bilal,Muhammad Idrees

doi:10.13189/aeb.2017.051104

Abstract

A company importance can be changed by product-harm crisis (PHC). There are so many cases of PHC where weak response of the company's has resulted in negative effect on brand equity. Still less research studies were conducted on the effect of product-harm crises. The objective of this research is to investigate (a) the effect of PHC on customer's based brand equity (BE) (b) the moderating role of attitude towards brand (ATB) between PHC and BE. The population of this study consists of nine universities of Peshawar district offering business programs. Two universities were purposively selected. A sample of 200 undergraduate business students has been selected. After reading self-designed newspaper article by sampled undergraduate business students, questionnaires were filled on five and seven points' likert-scales. To investigate the effect of PHC on BE, simple linear regression was used. In order to measure the before and after effect of stone –walling response of a company on the relationship between PHC and BE, Wilcoxon signed-rank test was used. Also moderating effect of ATB was measured through SPSS. The overall results demonstrated that relationship between PHC and BE is statistically significant and negative. Additionally, the inclusion of ATB as a moderator has lessened the negative effects of PHC on BE. The effect of PHC on BE before stonewalling response was less negative as compared to after.

Highlights

Still more studies are needed to investigate the relationship of product-harm crisis, attitude towards brand and its effects on brand equity
The first study will focus on the effect of product-harm crisis on brand equity, examining the attitude towards brand as a key moderator
The second study will examine the effects of firm response i.e. stone-walling as a component of product-harm crisis related information on customer’s based brand equity

Summary

Introduction

Kotler and Keller [1], in their researches stated that established brands are the key assets to a business as those brands are the source of revenue for companies and customers are willing even to pay extra sum of money in order to get their desired brands and showing no hesitation while making purchase decisions, which help in the reduction of marketing costs of a company as well. For many centuries, these mysteries soul have been investigated in the compass of consumer behavior and marketing; it looks orderly and wholesome ending is not yet gained

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Conclusion