E. Scott Lathrop, professor of marketing practice at Syracuse University’s Martin J. Whitman School of Management, is available for comment on the massive Takata air bag recall and its effect on brand equity and sales in the auto industry. Below are his thoughts:
“Brands are sets of experiences and cognitive associations. Certainly an airbag recall will have a negative impact on a carmaker's brand image, but the extent and impact of the recall on overall brand evaluation will differ from market segment to market segment. Some consumers place a very high importance weight on safety. For those people, the airbag controversy will have a vivid impact and may have a strong negative impact on brand image for the brands involved. For others, features such as horsepower, styling or fuel economy might weigh more heavily and those factors may overshadow the importance of airbag safely.
“The bottom line is although airbag recalls have an overall negative effect on sales, the severity of the impact depends on how much importance the consumers in the brand's target market place on airbags in the first place. So, for example, since brands such as Volvo place so much emphasis on safety as part of their brand positioning, those are the brands that would be most hurt by a recall. Brands, such as Corvette, which appeal to a much different type of audience, would probably see less of an impact on sales.
“It should also be mentioned that since recalls these days have become almost commonplace, the airbag recall will likely make less of a splash and have less impact (pardon the pun) on consumers than if the recall was a very unusual occurrence.
“The strength of the relationship the brand has built with its target consumers also plays a role. If the relationship is strong and positive, and the brand has always treated the customer well in the past, loyal customers are likely to forgive a brand for a mistake once in a while because it is seen as out of character and just a small trip-up. Of course, if more than one recall happens for a brand in a short period, it really begins to hurt the relationship. (In this way, a brand's relationship with a customer is a lot like an interpersonal relationship between two people. A behavior that is out of the ordinary is often attributed to the environment, while behaviors that become habitual are eventually attributed to the individual's personality.)
“Moral of the story: by doing the right thing and communicating problems like airbag recalls, automakers can actually benefit by building their brand image as brands that genuinely care for the safety and well-being of their customers.”
Professor Lathrop is teaching in Seoul, South Korea, for the next several days and is available via email for comment on the above at [email protected].
RSS