The impact of a product-harm crisis on customer perceived value

The purpose of this research is to help better understand the effects of a productharm crisis on crisis and non-crisis brands’ customer perceived value and market competitive structure in the auto industry.

The impact of a product-harm crisis on customer perceived value

Baolong Ma

Beijing Institute of Technology

Lin Zhang

Truman State University

Gao Wang

China Europe International Business School

Fei Li

Tsinghua University

Introduction

The term product-harm crisis refers to well-known incidents when a firm’s products are found to be defective, harmful or even dangerous (Mullan 2004). A product-harm crisis is often associated with costly product recall, in which the implicated 2009). One example is the recent 2009–2010 Toyota product-harm crisis, which was triggered by a deadly accident in 2009 when the accelerator in a Lexus got stuck and the car eventually crashed, killing the driver and all three passengers (Johar 2010). Following this accident, Toyota Moto Corp. became the target of extensive and adverse media coverage for an extended period. Toyota had to issue a massive product recall, totalling 8.5 million vehicles recalled by February 2010 (ABC News 2010). It experienced huge financial loss during this crisis and its brand reputation also took a serious battering (Johar . 2010). More product-harm crises are likely to occur in the future due to the greater complexity of products, more rigid legislation and more demanding customers (Dean 2004; Dahlen & Lange 2006). Therefore, understanding the impact of product-harm crises has become a top priority for many firms and an interesting topic for academicians (Chen . 2009).

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