Mitigating negative spillover effects in a product-harm crisis: strategies for market leaders versus market challengers

Abstract

Prior research indicates that a brand’s product-harm crisis can lower consumer evaluations of competing brands within the same industry, which are known as negative spillover effects. Competing brands should proactively respond to the crisis to dissociate from the crisis-stricken brand. In the current research, two experiments were conducted to examine the relative efficacy of crisis response strategies (bolstering vs. differentiation vs. no response) in mitigating negative spillover effects on competing brands with different market positions (market leader vs. market challenger). The context of these experiments is a product-harm crisis in which a brand’s product is recalled due to food-borne illness. The moderated mediation analyses reveal that the bolstering strategy leads to similar positive indirect effects on brand attitude and purchase intention through message evaluations regardless of whether market leaders or challengers employ the strategy. In contrast, the differentiation strategy yields a more positive indirect effect on brand attitudes and purchase intentions through message evaluations when a market challenger employs the strategy rather than a leader.