In a study that will be published in Marketing Letters: A Journal of Research in Marketing,” a Professor of Marketing at Penn State Smeal College of Business observes that brand loyalty can harm companies as well as helping him. Professor Raj Grewal of Smeal, William T. Ross Jr. of the University of Connecticut, Rajendra K. Srivastava of the Singapore Management University, and Frank Germann of the University of Notre Dame are coauthors on the study “Product recalls and the moderating role of brand commitment”. Although the article has yet to be published, it is currently available online.
In the paper, the researchers examine brand loyalty in the specific context of consumer reactions to product recalls. The study found that when a company has to initiate a high-severity product recall, consumers who are more loyal to the company may respond more negatively than those who are less loyal to the company. This discovery is surprising, because conventional wisdom holds that brand loyalty, or a close relationship or attachment that consumers form to a particular brand, will help a company retain customers through a rough period, like a product recall or a negative media story. However, this wisdom does not hold when recalls involve products that could cause serious injury or death, as the paper observes: “[C]ommitted customers may come to expect more from the brand they like and thus feel especially disappointed when the brand gets recalled. Indeed, committed consumers might view a product recall as a ‘breach of contract’.”
However, brand loyalty can minimize fallout during low-severity or ambiguous product recalls, confirming conventional wisdom in less extreme cases. The authors point to previous research suggesting that consumers are resistant to negative information about beloved brands to explain this result.
