The Analysis Of Consumers’ Response To Vehicle Recall Crises And Firm’s Crisis Control Strategies

Product-harm crises usually lead to product recalls, which may cause consumers concern about the product quality and safety, and also will cause much negative impacts. This requires that enterprises should understand their consumers, and then release the relevant information, so as to effectively communicate with their consumers. Thus, this study will explore the enterprise consumers’ responses after a product recall crisis, and the influence of firms released post-crisis action message on consumers’perceptions and response behaviors. In addition, this study will also explore how different consumers’information processing styles influence their risk responses. Because of the recall of automobile market is the largest in scale, the most mature in management, thus this study focused on the automobile recall, and selected the Volkswagen automobile recall in China as the empirical background and conducted a questionnaire survey in the early weeks following the recall among customers at two Volkswagen dealerships to collect the data. Based on this empirical background, this study includes the following three aspects:(1) Researching customers’perceptions and behavior responses influenced by the recall crisis. Based on the Protective Action Decision Model (PADM), the study constructed a basic framework to examine customers’ responses to the recall crisis. By combining with the Heuristic-Systematic Model (HSM), customers’information processing strategies were integrated into the framework, and a new hypothetical model was constructed, which risk perception derived from combining risk contact with their pre-existing beliefs based on their product knowledge, triggers an assessment of information needs, further stimulates their information seeking and processing, and subsequent influences their behavioral intentions. The results show that customers’ product knowledge plays an important role in their responses to the crisis. With more knowledge would make them perceive a lower risk, and their concerns about the negative influences of their personal safety, property and daily life would be relatively low, but they might need more information about the product defects and crisis events, making them more likely to seek information through company official channels, and processing this information systematically. Customers who carefully and systematically process information would be more likely to present pro-firm behavioral intentions. (2) Researching the influences of different firm action (technical actions and ceremonial actions) messages on customers’perceptions and behavior responses after the recall crisis. Based on the PADM model, the study constructed a hypothetical model, and used structural equation modeling (SEM) to compare the customers’crisis response under different firm action messages. The results indicate that when a product recall crisis occurs, the subsequent action and relevant information disclosure of a firm are very important for crisis management. Firms could release information to influence customers’responses to the recall crisis, and the best strategy to release information should not only contain technical solutions, such as repair or upgrade, but also include the content of ceremonial actions, such as CSR Given that pure technical actions cannot reduce customers’ risk perception, despite increasing customers’ information-seeking intentions, the final behavioral intentions of these information-seeking customers cannot be predicted. Ceremonial actions can overcome the disadvantages of technical actions, but customers’information-seeking intentions should be met. That is, customers’ information need for technical solutions should be met. Moreover, information on these released technical solutions should be straightforward, easy-to-comprehend, and trustworthy to reduce customers’ risk perception and increase favorable behavioral intentions.(3) Researching how customers used different information processing strategies to process firm action (technical actions and ceremonial actions) messages influencing their risk perception. Based on the HSM model, the study constructed a customers’ information processing model, through analyzing the survey data of Volkswagen customers, the study obtained some results. The results show that customers’ perception is different when they faced the different messages released by Volkswagen. Professional technical actions messages may make customers feel confusion and differentiate into two categories, one category used systematic processing that increased risk perception; the other category used heuristic processing that decreased risk perception. This makes the effectiveness of the technical messages become not clear. On the whole, ceremonial actions messages were conductive to reduce customers’ risk perception, but there may be part of the customers’risk perception was unable to control. Therefore, the best announcements message that Volkswagen released should not only contain technical solutions, such as repair or upgrade; but also include the content of ceremonial actions, such as the CSR By releasing the information contained these messages, customers can better understand the solving measures that Volkswagen taken; meanwhile, the risk of customers perceived can be weakened, and thus maximum reduce the negative impact of product recalls.Originality of the study is that:First, this study extends the application range of the PADM from natural disasters to the threatening events that happened to a company, such as a product recall crisis. Second, this study integrated the information processing strategies from the HSM into the framework of the PADM, and constructed a new hypothetical model, which contains a more complete information flow. Third, this study examines the relative effectiveness of two types of firm action messages (technical and ceremonial actions). It also extends the research of Zavyalova et al.(2012) and focus on customer reactions influenced by two types of firm action messages. Forth, this study chooses a real event as the empirical background, and selects customers who involved in the recall crisis as the research sample rather than the general consumers. Those customers are direct user of the recall products, and their interests are directly associated with the recalled products and with the involved company. Because the current research on customers’reactions in a crisis is very limited, our study can effectively fill this gap.The practical implication is that:helping firms to better understand their customers’ perceptions and behavioral responses after product recall crises; helping to know more about their customers’ information need and information seeking intentions; helping to understand how customers’ information processing strategies influence their risk perceptions; helping firms to know what kind of information that firms should release to communicate with their customers, so as to influence their customers’ perceptions and behavioral responses, and reduce the negative effects of the recall crisis on customers.