Base-Rate Information in Consumer Attributions of Product-Harm Crises

Jing Lei, Niraj Dawar, and Zeynep Gürhan-Canli
Journal of Marketing Research (JMR)
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Executive Summary
Product-harm crises, or well-publicized instances of defective or dangerous products, are commonplace due to the increasing complexity of products and more stringent product-safety legislation. Although recalls are expensive for firms, the immediate expense of product replacement and consumer compensation may pale in comparison with the loss of consumer trust and damage to brand evaluations. The extent of such damage largely depends on the extent to which consumers attribute the blame to internal firm-related factors.

In this study, the authors examine the effect of the industry frequency of crises (base-rate information) on consumer attributions of a crisis. First, they show that industry frequency of crises is more effective in adjusting (reducing) consumers’ default attributions to brands with positive (vs. negative) prior beliefs. This result confirms that consumers’ positive brand beliefs contribute to brand resilience in case of an adverse event but also suggests that positive beliefs do not by themselves predict consumers’ attribution about the crisis. Rather, these positive beliefs make consumers more likely to consider contextual information (e.g., industry frequency of crises) in their attributions of the crisis.

Second, the authors show that high (vs. low) industry frequency of crises leads to less blame toward the brand and more favorable brand evaluations only when the focal crisis is said to be similar to other cases in the industry (referred to as the “discounting effect”), whereas low (vs. high) industry frequency of crises leads to less blame toward the brand and more favorable brand evaluations when such similarity information is absent (referred to as the “subtyping effect”). This result suggests that, in contrast to conventional wisdom, simply suggesting the industry-wide prevalence of a crisis does not help reduce the blame to the brand for the crisis. Unless there are clear, strong alternative explanations for the causes of the incident, consumers are unlikely to deflect attribution from the brand. In comparison, emphasizing the rarity of a crisis may dampen the negative impact of a crisis.

Third, the authors show that consumers who had discounted a previous crisis under the high base rate with similarity information present condition would still discount a subsequent crisis under the same condition but that consumers who had subtyped a previous crisis under a low base rate in the similarity information absent condition do not subtype a subsequent crisis. This result suggests that although brands with positive prior beliefs may be protected both through a discounting and a subtyping effect, the former sustains the protection afforded by the positive beliefs, whereas the latter consumes and depletes it. Thus, crises may require very different communication and handling depending on whether they are first or repeat incidents.

Biography
Jing Lei is Senior Lecturer in the faculty of Business and Economics at University of Melbourne. She completed her PhD in Marketing in the School of Business and Economics at Maastricht University. Her main research interests are in the areas of consumer evaluations of brand and line extensions, the effect of negative information (e.g., product-harm crises, brand crises) on consumer attributions of the crisis and evaluations of the brand and factors that bias consumers’ judgment and consumption volume in food consumption. She has published her research in journals such as Journal of Marketing, Journal of Retailing, Marketing Letters, and Journal of Service Research.

Niraj Dawar is the Barford Professor of Marketing in the Ivey Business School at the University of Western Ontario. His research is in the areas of consumer cognition and consumer behavior related to brands. His publications have appeared in Journal of Marketing Research, Journal of Marketing, and many other outlets. He served on the editorial board of International Journal of Research in Marketing. He has held previous positions at INSEAD (Associate Professor), University of Michigan (Davidson Visiting Research Professor), and Hong Kong University of Science and Technology (Visiting Scholar).

Zeynep Gürhan-Canli is Migros Professor of Marketing at Koç University, Istanbul, Turkey. She completed her PhD in Marketing in the Stern School of Business at New York University. Before joining Koç University, she was a faculty member in the Ross School of Business at the University of Michigan for nine years. Her recent research focuses on consumer information processing in relation to branding, corporate image, and consumer spending tendency. She has published several articles in leading journals such as Journal of Marketing Research, Journal of Consumer Research, and Journal of Consumer Psychology. She is on the editorial review boards of Journal of Consumer Research, Journal of Marketing, and Journal of International Marketing. She is an associate editor for International Journal of Research in Marketing and Journal of Consumer Psychology. She served as a faculty fellow at several doctoral consortia and is the director of the Graduate School of Business at Koç University.

Journal of Marketing Research, Volume 49, Number 3, June 2012
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Jing Lei, Niraj Dawar, and Zeynep Gürhan-Canli
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