The effects of product-harm crisis on brand performance

Abstract The purpose of this paper is to offer a better understanding of the effects of product-harm crisis on a brand's performance and market structure. This research is based on panel data on milk powder sales during the Nestlé product-harm crisis in China. The NBD-Dirichlet model is used to evaluate the performance of Nestlé and other leading milk powder brands before, during and after the crisis. Our data show that product-harm crises disturb the market structure and change customer behaviour. While a product-harm crisis had a negative effect on Nestlé’s brand performance, it created opportunities for other brands. Overall, our analysis shows that the NBD-Dirichlet model is a valid tool for monitoring the performance changes of both crisis brand and other non-crisis brands during a product-harm crisis. The managerial implications are also discussed.

(Source: Baolong Ma, Lin Zhang, Fei Li, Gao Wang, International Journal of Market Research, 2010, 52(4): 443-458)

 

 



Source : CRRC
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Time     : 2010-11-04

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