Effect Of Agricultural Product Harm Crises On Consumer Based Brand Equity From Consumers’ Moral Reputational Perspective

Product harm crises have become challenging issues in the business world today along with negative impact on company and brand, irrespective of the numerous prevention and management strategies implemented by companies. Damaging to the brand equity, nurtured over many years, is one of the major threats faced by the marketers today. This demands a new empirical search.. Ethical nature of product harm crises and the emergence of moral emotions during ethical situations demand this study to scrutinize this matter through a new empirical angle. Moreover, consumer perceptions have a cultural significance as marketing performs in the shade of one umbrella today. Therefore, the main purpose of the study is to explore the effect of product harm crises, and crises mitigating strategies on consumer based brand equity (CBBE) through consumers’moral reputational lens in a cross-cultural perspective. In addition, study examines the role of personal contacts in terms of close friends, in altering consumer decisions in a product harm crisis context. A fictitious product harm scenario related to a fictious yogurt brand in conjunction with seven different experimental situations, namely; valuation of CBBE in terms of consumer beliefs and behavior, company culpable crisis and CBBE, consumer culpable crisis and CBBE, voluntary response and CBBE, super effort response and CBBE, CSR and CBBE, and, celebrity endorsement and CBBE, were investigated with a control. Data were collected from806undergraduate marketing and business management students from Sri Lanka (401) and China (405) in2012. This is the first cross-cultural study which investigates the impact of product harm crises on CBBE from Asian consumers’moral reputational perspective. Statistical Package for Social Science (SPSS) version20was used to analyze data. Study reveals through consumers’moral reputational lens that the detrimental impact of product harm crisis on CBBE. Study discloses the existence of parity and disparity between Chinese and Sri Lankan consumers’perceptions in the face of a product harm crisis. When consumers are valuing CBBE based on their beliefs, Chinese and Sri Lankans yield different results. For instance, brand attitude reflects the most important facet that reflects the economic worth of CBBE in the Chinese context, whereas, brand trust reflects the whole picture of CBBE in the Sri Lankan context. In addition, when consumers are valuing CBBE based on their behavior, Chinese exhibit higher willing to pay (WTP) values and lower willing to accept (WTA) values than their Sri Lankan counterparts revealing their respective national ideology. However, in both countries male and female exhibit their moral reputation toward the affected company in a similar way. For instance, male exhibits higher WTP values and lower WTA values than their female counterparts. Related to the cause of the product harm crisis, study reveals that a product harm crisis has a significant detrimental effect on consumers’moral reputation toward the affected company regardless of the cause of the crisis, whether company culpable or consumer culpable. However, company culpable crises cause more detrimental impact on consumers’moral reputation toward the affected company than consumer culpable crises. Thereby product harm crisis yields detrimental effect on CBBE and purchase intention of the affected brand in these crises grounds accordingly. It is noteworthy that these perceptions vary significantly between China and Sri Lanka revealing their respective national ideologies. Moreover, Chinese and Sri Lankans demand entirely different response strategies in order to enhance their moral reputation toward the affected company. Chinese demand voluntary response strategy whereas Sri Lankans demand super effort strategy. Implementation of an inappropriate strategy causes significant negative financial and moral consequences. Related to corporate social responsible (CSR) strategies, Chinese expect legal CSR whereas Sri Lankans expect ethical, legal and philanthropic CSR in a combinable way to enhance their moral reputation toward the affected company. Both national cultures demand economic CSR at their least preference. Results of celebrity endorsement reveal that the usage of celebrity endorsement is an effective strategy to advertise the affected brand in order to remarket it in both countries in a product harm crisis. However, in the face of negative celebrity publicity, internal-stable-controllable negative celebrity publicity causes lower moral reputation toward the celebrity endorser than the external-unstable and uncontrollable negative celebrity publicity thereby shapes the CBBE and purchase intention of the affected brand accordingly. National culture and gender significantly shape consumers’ moral reputation toward the negative celebrity endorser. Furthermore, study shows that personal environment has a significant effect on consumer decisions in the face of a product harm crisis. For instance, close friends moderate the relationship between CBBE and consumers’purchase decisions in the Chinese context, but not in Sri Lankan context perhaps to the advancement of the communication system in China. Overall, study reveals through consumers’moral lens that product harm crisis causes a detrimental effect on CBBE. However, the detrimental effect is comparatively lower with respect to Chinese revealing their lower uncertainty avoidance and less risk-averse natrure than their Sri Lankan counterparts. This study provides useful guidance for product harm crises managers and for future research initiatives in the product harm crises domain.