In recent years, brand crises are becoming increasingly prevalent in the global marketplace. Given that brand crises have many devastating effects, how to manage them effectively has become a hot topic among marketing researchers and practitioners. Based on the review of literatures concerned, this paper first analysed the concept and types of brand crises. Then this article summarized the response strategies that corporations can take during that hard time. Furthermore, this paper identified some factors that influence the effectiveness of those response strategies. Given all of this, the review highlights some promising directions for future research.
Brand crises are becoming increasingly prevalent in today’s marketplace. Some notable examples include Volkswagen’s emissions scandal, McDonald and KFC’s food scandal, labor violation of Apple’s suppliers in developing countries. Such brand crises can be extremely devastating for the involved brands. For example, after American’s Environmental Protection Agency ordered Volkswagen to recall about half a million vehicles, the company’s stock price fell nearly 20 percent and may well be slapped $18 billion in fines, according to Reuters. Except for the tremendous immediate loss from sales and costly compensation, brand crises can also have some far-reaching detriments on the involved brands in the long run such as consumer trust and brand equity (Van Heerde et al., 2007; Xu, 2015) [
To summarize and classify extant research and to better understand the past and present states of brand crisis management, this paper presents a comprehensive review of the literature, especially in Marketing. Starting with discussing the meaning and types of brand crises, this article systematically summarizes the response strategies that can be used during brand crises. Through reviewing the literature, we find four broad categories of crisis situational factors that may affect which crisis response to take and the effectiveness of the response. Finally, this article points out the implications for marketing researchers and practitioners, and proposes the further applications and extensions.
Although the term brand crisis often appears in the commercial media, it was not got many empirical researches until Dawar and Lei (2009) formally proposed it in academic journal. Initially Dawar and Lei (2009) define brand crises as instances of well-publicized claims that a key brand proposition is unsubstantiated or false [
Brand crises are among a firm’s worst nightmares, causing both short- and long-term negative effects such as immediate loss in own-brand sales, reduced effectiveness of marketing instruments, consumer trust (Van Heerde et al., 2007; Xie and Peng, 2009) [
There are two major theoretical perspectives to conceptualize brand crises into different types: 1) attribution theory perspective; 2) brand equity theory perspective.
According to the attribution theory (Weiner, 1985) [
According to the brand equity theory (Keller, 1993) [
After a brand crisis, how the firm responds eventually determines the extent to which the brand can be saved. However, there is no standardized response typology as firm response to crises varies a lot. For instance, McLaughlin et al. (1983) suggest all strategies can be arrayed along a mitigation-aggravation continuum as follows: silence, concession, excuse, justification and refusal [
As we can see, there is no consensus among researchers about the details of crisis response strategies, however, all those response strategies can be placed between a deny-apology continuum, where the involved brand accepts responsibility or not. Along this method, Dawar and Pillutla (2000) suggest firm response can be considered along a continuum from unambiguous support to unambiguous stonewalling. Unambiguous support consists of accept responsibility, an apology to consumers or other affected stakeholders, and some form of remedy, such as a voluntary product recall or free replacement. On the contrary, stonewalling consists of a denial of responsibility and absence of remedial measures or no communication at all [
Besides those broad response strategies mentioned above, some researchers also explored some specific response strategies further. Ahluwalia et al. (2000) discuss two kinds of deny strategies: counter argumentation and diagnosticity. The former response strategy focuses on providing consumers with counterarguments that argue against the brand scandal by questioning its validity. The latter one, in contrast, focuses on reducing the value of the negative information for discriminating between alternative brands in the product category [
As various response strategies have their own advantages and disadvantages, researchers have come to the agreement that the relative efficacy of response strategies depends on crisis situation. Through a comprehensive review of the literature, this paper identifies that there are four broad categories of crisis situational factors that affect which crisis response to choose and the effectiveness of the response. Managers should evaluate the situation to determine which crisis response is best for the situation (Coombs, 2007) [
The characteristics of the brand crisis, such as the crisis responsibility, involved domain of the crisis, may influence the best type of response.
According to Situational Crisis Communication Theory, there are three clusters of crisis types, differing in organizational responsibility and there are also three clusters of response strategies that match these crisis types, differing in the amount of responsibility that the organization takes for the crisis by means of communication (Coombs, 2007) [
For crises occurred in different domains, researchers also find corporates need to take different response strategies. Dutta and Pullig (2011) find that for performance-related crisis, corrective action is the best response strategy, but for values-related crisis, reduction of offensiveness has the same effect compared to the costly corrective action. They infer that is because consumers value functional benefits more than symbolic benefits when they consider buying a product [
As relationship principles have virtually replaced short-term exchange notions in both marketing thought and practice, branding theory has been built on relationship theory to a great extent (Fournier, 1998) [
Aaker et al. (2004) find consumers’ relationships with sincere brands suffered in the wake of transgressions (i.e., brand crisis), whereas relationships with exciting brands showed signs of reinvigoration after such transgressions. In other words, after apology and recovery, consumers’ relationship strength with exciting brands become even higher than the status before the transgression happened, but no signs of recovery with sincere brands despite subsequent reparation attempts [
Puzakova et al. (2013) find negative downstream consequences of brand humanization, that is, consumers’ brand evaluations toward humanizing brand will decrease more heavily than non-humanizing brand. This is because consumers perceive brands endowed with human features as being mindful and possessing intentions. Thus, after a brand crisis, consumers will attribute more responsibility to humanizing brand [
Besides the personality or human features of the brand, the brand reputation or brand equity may also influence the effectiveness of response strategies. For example, Brady et al. (2008) find that high brand equity lead to more favorable satisfaction evaluations and behavioral intentions than low brand equity. The brand equity effect is identified as a prevailing advantage that spans the entire failure and recovery sequence [
As the receiver of corporates’ response strategy, consumers have the right to determine whether to forgive the brand or not. Researchers have found some interesting characters of consumers that may influence the effectiveness of the corporate response strategies.
Laufer is the first scholar that systematically studies the role of demographic variables in sharping consumers’ reaction to brand crises. Laufer and Gillespie (2004) explore differences in blame attributions between men and women after brand crises. They find women blame a company more than men for that negative experience. What’s more, they discover the underlying mechanism is women feel more personally vulnerable to the crisis occurring to them [
Besides these demographic variables, researchers also have explored some individual factors that may play roles in brand crises. Monga and John (2008) explore the impact of consumers’ thinking style on the effects of brand crises. Through 3 studies, the results reveal that holistic thinkers are less susceptible to brand crisis than analytic thinkers. Thus, after a brand crisis, holistic thinkers’ brand attitude and beliefs are higher than analytic thinkers. This is because holistic thinkers are more likely to consider external context-based explanations for brand crises [
As mentioned earlier, recent research in consumer behavior indicates that consumers become attached to various brand and form relationships with them (Fournier, 1998) [
Ahluwalia et al. (2000) find that commitment of the consumer toward the crisis brand can moderate the negative effect of brand crisis. In their studies, they find that consumers who are high commitment toward the brand are more likely to counter argue the negative information than consumers who are low commitment toward the brand, thus high commitment consumers’ brand attitude are less likely to decrease. For corporate response strategies, the experiment results reveal that for high commitment consumers, a response strategy focusing on the perceived diagnosticity of the crisis information is more persuasive than the counter argumentation response. But for low commitment consumers, the counter argumentation response is more effective than the diagnosticity response [
Similarly, Dawar and Pillutla (2000) find that consumers interpret firm response on the basis of their prior expectations about the crisis firm. No matter which response strategy the firm takes, high expectation consumers are more likely to forgive the brand and the loss of brand equity are smaller than low expectation consumers [
Recently, researchers also find other relationship factors between consumers and the crisis brand, such as consumers’ brand trust and crisis involvement can affect the effectiveness of corporate response strategies (Hegner et al., 2014; Claeys and Cauberghe, 2014) [
In the uncertain markets, due to the increasing complexity of products, more demanding customers and more prevalent social media, brand crises occur more frequently (Dawar and Pillutla, 2000) [
The goal of the present article is to summarize and integrate the literature on brand crisis management in marketing. Our findings highlight a contingency-based view on brand crisis management, which suggests that the relative efficacy of responses depends on crisis situational factors. And through the literature viewing, this article identifies four broad categories of crisis situational factors, namely brand crisis related factors, brand or corporate related factors, consumer related factors and the relationship related factors. This is very meaningful for brand managers who need to be ready to respond to unpredictable negative brand publicity. The current article provides a framework for brand managers to craft just-right, just-in-time responses. It offers brand managers a systematic way to gauge what they should say and do during that hard time. Brand managers can analyze a brand crisis along the four broad crisis situational factors and then tailor their response according to the crisis situation.
Although previous researches reviewed in this paper have provided a great deal of insights to handle brand crises, this review highlights the fact that research on brand crisis in marketing is at a relatively early stage of development, especially considering the poor performance of so many brands in reality around the world. Thus, this review proposes some promising directions for future research.
As mentioned above, much of the research on corporate response strategy has almost unilaterally focused on the question of what the scandal brand should do after a brand crisis, namely the scandal brand should deny, or apologize, or compensate (Dutta and Pillutla, 2011; Puzakova et al., 2013) [
Thus, one direction for future research is investigating the best way that corporates execute one specific response strategy. Researchers can examine this question in various dimensions by asking what, how, when, who to execute one response strategy. For example, it’s very interesting to the role of message framing (emotional vs. rational) in crisis response (Claeys and Cauberghe, 2014) [
It’s worth noting that the four broad categories of crisis situational factors identified in this review is better to understand as a trial to form a contingency-based view on brand crisis management, but it may not be complete and perfect.
As we can observe from this review, characteristics of the brand/corporate and consumers are the two broad factors that are relatively less researched than other two broad factors. Future studies need to pay more attention to brand/corporate and consumer factors. For example, most existing research has overlooked the role of brand positioning in brand crisis context. But as we all know, there are some symbolic brands that highly focus on its symbolic values and also some functional brands that mainly focus on its functional benefits. It can be speculated that after a brand crisis, brands with different positioning may need different types of compensation (monetary compensation or emotional compensation). What’s more, consumer related factors, such as consumer mindset (growth mindset vs. fixed mindset) may also influence trust recovery following brand crises (Murphy and Dweck, 2016), because growth-mindset individuals believe in people’s ability to change, they were expected to perceive corporates’ response strategies, such as an apology or promise of change, as sincere and thus more likely to forgive the scandal brands than individuals with fixed mindset that believe human traits are relatively fixed and hard to change [
Beyond the four broad categories of crisis situational factors, future research can also explore other contextual factors. For instance, researcher can explore the function and meaning of specific response strategy across different cultures. Maddx et al. (2011) find apologies in individual-agency culture (such as United States) are understood as a way to accept responsibility. But apologies in collective-agency cultures (such as Japan) are understood as a way to express remorse rather than a means to assign culpability [
Inevitably, the findings of this review have limitations, considering we mainly analyzed research that focus on how to respond instantly when brand crises occur. Even these researches can offer sound advice for managers to deal with brand crises, they provide little direction for managers to prevent crises and recover from them in a long term.
Given that brand crises have enormous immediate and far-reaching detriments, future brand crisis management studies would benefit from further investigating how to manage brand pre-crisis and post-crisis. Take post-crisis advertising as an example, existing research just have examined the effectiveness of advertising after brand crises (Liu and Shankar, 2015) [
In closing, this review highlights that research on brand crisis management is in its infancy. Researchers have agreed on a contingency-based view of crisis response. And more research is needed to provide brand managers long-term solutions.
This research was funded by the National Natural Science Foundation of China (71372169; 71302151), the Natural Science Foundation of Guangdong (2014A030311022); the Fundamental Research Funds for the Central Universities (15JNLH005); and Institute of Enterprise Development in Jinan University.
MingLi,HaiyingWei, (2016) How to Save Brand after Crises? A Literature Review on Brand Crisis Management. American Journal of Industrial and Business Management,06,89-96. doi: 10.4236/ajibm.2016.62008