The preservation of loyalty halo effects: An investigation of the post-product-recall behavior of loyal customers

Abstract

This study examines the post-product-recall behaviors of previously loyal customers. Specifically, the study examines whether they stay with a product or leave it, and if they do stay, then how long they delay resumption of their regular purchase cycle. The investigation examines three types of influences on post-recall behavior: first, the behavioral characteristics of customers, including their levels of product loyalty and their strength of shopping habits; second, the use of post-recall promotions and loyal customers’ promotion sensitivity; and third, the recall characteristics, including its seriousness and its public announcement. Using 20,342 point-of-sale grocery scanner transactions by 1919 rewards card members, we found that loyal customers tended to stay with affected products while delaying repurchases of these products. Customers with strong shopping habits may leave the product but do not delay repurchases if they stay. The findings also suggest the differential effects of price promotions and non-price promotions on repurchase behaviors.