A Disaster Is Contagious: How a Brand in

Crisis Affects Other Brands

MICAEL DAHLEN
Center for Consumer
Marketing
Stockholm School of
Economics
micael.dahlen@hhs.se
FREDRIK LANGE
Center for Consumer
Marketing
Stockholm School of
Economics
fredrik.lange@hhs.se
Negative publicity is increasing in frequency to become part of the everyday iives of
consumers and everyday business of brands. Previous research reports several
negative effects on the focal brand and tests strategies to cope with one's own brand
crisis. But one question needs examining: how does a brand crisis affect the product
category and competing brands? This article reports two studies showing that a brand
crisis changes consumer perceptions and the game rules of the entire product
category. The effects on competing brands differ depending on similarity to the brand
in crisis. Implications for advertising, positioning, and tracking are reported in the
study's findings.

INTRODUCTION negativity effect), meaning that consumers put

Tylenol poisonings, questionable ethics at Arthur
Andersen, defective Firestone tires, contaminated
Taco Bell products—the list of high-profile brand
crises in recent years is a long one. Flip through
the pages of any newspaper on a given day and
you can be sure to find reports of brands in crisis.
The authors perused four major newspapers on a
Thursday morning and found 19 articles relating
to brands—11 were negative. The frequency of
negative brand publicity is increasing in the every-
day lives of consumers and everyday business of
brands (cf. Dawar and Pillutla, 2000; Laczniak,
DeCarlo, and Ramaswami, 2001). In fact, an often-
cited study by DDB Needham Worldwide sug-
gests that, today, negative publicity is one of the
most important factors influencing consumers' buy-
ing decisions (e.g., Ahluwalia et al., 2000).
The potential impact of negative publicity is
unsurprising. First, publicity in general is a more
credible source of information than advertising and
is therefore more influential (Ahluwalia, Unnava,
and Burnkrant, 2000). Second, because the media
prefers reporting bad news, companies are more
likely to receive bad press rather than positive press
(Dean, 2004). Third, negative information is more
diagnostic than positive information (the so-called
greater weight on it in their brand judgments
(Ahluwalia, Burnkrant, and Unnava, 2001).
Accordingly, negative publicity receives a sub-
stantial amount of research interest. The negative
publicity research uncovers a number of effects on
the focal brand, such as reducing effectiveness of
the company's advertising (Stammerjohan, Wood,
Chang, and Thorson, 2005), damaging reputation
(Dean, 2004), reducing brand equity (Dawar and
Pillutla, 2000), negative attitudes (Ahluwalia et al.,
2000), and unfavorable associations (Ahluwalia et al.,
2001). However, no study to date examines the ef-
fects a brand in crisis might have on the product
category and competing brands. Are they exempt?
Or could reports on, for example, Tylenol poison-
ings, or the recent Tegenero medical test tragedy,
lead to an increased suspicion toward pain relief
pills in general, and alter the criteria by which con-
sumers evaluate competing brands? Could the re-
ports on driving problems with the Suzuki Samurai
affect how consumers evaluate and process adver-
tising for Land Rovers and other off-road vehicles?
Disaster is contagious, and brand crisis may affect
consumer perceptions of the entire product cat-
egory and perceptions and choices of competing
brands.

388 Of lyEBTISlOG RESEHRCH December 2 0 0 6 DOI: 10.2501/S0021849906060417


Today, negative publicity is one of tiie most important
factors infiuencing consumers' buying decisions.
The argument builds on categorization
and priming theories suggesting that the
competing brands that come to mind af-
fect consumers' perceptions of a product
category (cf. Ehrenberg et al., 2002). When
a brand receives negative publicity, it be-
comes more salient in consumers' minds
and may have a greater effect on their
perceptions of the product category than
previously. This salient brand may work
as a prime on consumer's evaluations of
other brands in the same product cat-
egory, so that consumers evaluate similar
brands more negatively and dissimilar
brands more positively. By testing these
assumptions, the study extends the liter-
ature on negative publicity beyond effects
on the brand in crisis to effects on cat-
egory competition. Moreover, this article
ties in with recent literature suggesting
that brand perceptions are continually re-
constructed (e.g., Cramphorn, 2004; Hall,
2002; Weilbacher, 2003) and provides em-
pirical evidence that marketing communi-
cations and market research must be
frequently updated and take the brand's
context better into account.
BRAND-IN-CRISIS EFFECTS ON PRODUCT
CATEGORY PERCEPTIONS
To minimize cognitive effort, consumers
group brands together in associative net-
works to form product categories (Meyers-
Levy and Tybout, 1989). These associative
networks contain all our knowledge of
the product category, such as category
members (brands), product attributes,
usage situations, and consumption expe-
riences. Product category knowledge pro-
vides an instant idea about what its
member products are about and helps
HOW A BRAND IN CRISIS AFFECTS OTHER BRANDS
consumers generalize knowledge about
brands they have encountered onto other,
similar, brands (Medin and Smith, 1984).
Categorization enables consumers to ef-
fortlessly form a set of alternatives in a
purchase decision and provides criteria
for choosing between the competing
brands (Ratneshwar, Barsalou, Pechmann,
and Moore, 2001).
Product categories are not fixed, but
are continually updated when consum-
ers encounter new information (Moreau,
Markman, and Lehmann, 2001). For ex-
ample, consumers may incorporate a new
brand into the sparkling water product
category and label yet another sparkling
water brand, or the new brand may add
a new subcategory in the form of, for
instance, flavored sparkling water. Ge-
neric advertising, new-product introduc-
tions, and newspaper stories can change
how much weight consumers place on
certain attributes (e.g., Chakravarthi and
Janiszewski, 2004; Shankar, Carpenter, and
Krishnamurthi, 1998). Thus, consumers
may update product categories with new
information that alters our decision crite-
ria, as when the Super Size Me movie
informed consumers about the nutri-
tional content of hamburger meals and
made meal size and calories more impor-
tant product attributes.
Whether new information updates con-
sumers' perceptions of the product cat-
egory or not depends on its accessibility
and relevancy (Braun, Gaeth, and Levin,
1997). Processing occurs easily for highly
accessible information. In fact, the mere
accessibility of information is an impor-
tant cue in itself (Menon and Raghubir,
2003). The easier an event comes to mind,
December
the more frequent consumers estimate the
event to be. For example, studies show
that the easier in memory it is to retrieve
AIDS-related behaviors, the higher peo-
ple judge their risk of contracting AIDS
(Raghubir and Menon, 1998). Similar re-
sults occur for a number of risks, such as
heart disease and sexual assault (Schwarz,
2004). Applied to negative publicity, the
easier consumers retrieve a brand in crisis
from memory, the higher they estimate
the risk (likelihood of brand crisis) in the
product category.
Not only does negative publicity in-
crease the accessibility of the brand in
crisis, such publicity also increases its rel-
evaricy. Research shows that publicity is
generally seen as more relevant than ad-
vertising (Dawar and Pillutla, 2000). Fur-
thermore, consumers perceive negative
information as more diagnostic and rele-
vant than positive information (Ahluwa-
lia, Burnkrant, and Unnava, 2001). Thus,
negative publicity is relevant almost by
definition.
In conclusion, a brand in crisis that
receives negative publicity increases its
accessibility and relevancy. Therefore, by
way of its association to the product cat-
egory, consumers use the new informa-
tion about the brand to update their
category perceptions. As a result, consum-
ers wiU reevaluate category attributes from
the associations to the brand in crisis (in
order to reduce the perceived category
risk induced by the brand).
HI: A brand crisis affects the evalua-
tion of category attributes.
CRISIS EFFECTS ON SIMILAR AND
DISSIMILAR COMPETING BRANDS
Consumers store information about brands
in individual brand schemas (Braun, 1999).
Challenging the traditional view of the
brand schema as a rather stable entity,
recent literature suggests that brand
2 0 0 6 JOURIIHL DF RDUERTISIOG RESERRCH 3 8 9
 HOW A BRAND IN CRISIS AFFECTS OTHER BRANDS
schemas change continuously (e.g., Braun-
Latour and Latour, 2005; Hall, 2002). A
brand evaluation at any moment is a tem-
porary construction; accessibility and sa-
lience of whatever attitude-relevant
information comes-to-mind influence a
brand evaluation (Reed, Wooten, and Bol-
ton, 2002). Therefore, the brand's context
may be as important as the brand itself
when consumers evaluate brands (Weil-
bacher, 2003).
By way of categorization and inference
making, information about a brand in cri-
sis should be both accessible and relevant
input in the temporary construction of
evaluations of competing brands. Re-
search shows that information is general-
izable between brands, so that, for example,
consumers perceive a new car as expen-
sive when one brand's car exposure oc-
curs together with other expensive cars,
and consumers perceive the car to be cheap
when exposure of a car with a lower price
occurs together with extremely expensive
cars (Herr, 1989). In the first case, consum-
ers assimilate the new car with the other
cars, and consumers incorporate expen-
sive price information into the brand
schema. In the second case, consumers
contrast the new car with the other cars,
and information about the brand as rela-
tively cheap occurs into the brand schema.
Expect similar mechanisms to be at play
when a brand in crisis provides the con-
text for evaluations of competing brands.
The degree of associative overlap be-
tween brands affects whether a brand is
assimilated or contrasted to a context brand
(Herr, 1989). A high degree of overlap
fosters assimilation and a low degree of
overlap fosters contrast (Meyers-Levy and
Sternthal, 1993). For example. Van Auken
and Adams (1998) find that the introduc-
tion of a toy store in the Montgomery
Ward department store assimilates the
brand with Toys 'r' Us and enables trans-
fer of desirable associations from Toys 'r'
390 DF RDOERTISIRG RESERRCH December 2 0 0 6
Us to Montgomery Ward. However, in
another study, they found that advertis-
ing for the Mazda Miata that compared it
with the BMW Z3 resulted in lowered
quality ratings for the Miata, because it
was perceived as being too different from
the BMW Z3 (Van Auken and Adams,
2005).
Applied to negative publicity, a brand in
crisis likely influences negative effects on
similar competing brands. When consum-
ers evaluate brands in the same product cat-
egory as the brand in crisis, the negative
publicity may be an input in the reconstruc-
tion of brand schemas. Negative associa-
tions can spill-over onto brands with
schemas that have a high degree of asso-
ciative overlap with the salient brand in cri-
sis (Hypothesis H2). Conversely, one would
expect positive effects on dissimilar brands.
These brands have a low degree of asso-
ciative overlap with the brand in crisis. Thus,
the salient information from the brand in
crisis produces a contrast effect on brand
evaluations (Hypothesis H3).
H2: A brand crisis affects evaluations
of similar brands negatively.
H3: A brand crisis affects evaluations
of dissimilar brands positively.
METHOD
To test the hypotheses, comparing cat-
egory and brand perceptions between con-
sumers exposed versus consumers not
exposed to a brand crisis in the same
product category must be possible. The
study includes creating an experimental
design to ensure complete control over
crisis exposures.
Banks were chosen as the product cat-
egory for two reasons. First, the bank
category comprises a number of highly
competitive and well-known brands.
Second, one can make a simple division
between traditional banks and new.
online-based, banks. The existence of two
subcategories enables comparisons be-
tween brands with both higher (similar)
and lower (dissimilar) associative over-
laps. Furthermore, banks make an inter-
esting product category because they are
subject to both much press coverage and
competing advertising.
Procedure
To ensure that our scenario would be rel-
evant to respondents, we used visitors to
an apartment showing as our sampling
frame because apartment transactions are
administrated and financed by banks. We
asked the three market-leading real estate
agents to give us a representative sample
of apartment showings in the Stockholm
area and were admitted to three show-
ings per agent. All 119 visitors were handed
questionnaires, and 100 complete ques-
tionnaires were returned, making a re-
sponse rate of 84 percent. The sample
consisted of 59 percent women and 41
percent men, and the average age was 39.
We used the common procedure in neg-
ative publicity research, in which respon-
dents are exposed to a scenario in the
form of a newspaper article and their
reactions are measured in a questionnaire
(e.g., Stammerjohan, Wood, Chang, and
Thorson, 2005). One group of respon-
dents was exposed to a negative scenario
in the form of a newspaper article about a
fictitious online bank in crisis (reports on
fraud and insolvency) before filling out
the questionnaire. We chose a fictitious
brand to avoid confounding effects due to
consumers' potential relationships with ex-
isting brands. The other group of respon-
dents worked as a control group and filled
out the questionnaire without previous
exposure to any newspaper article.
Respondents were randomly assigned
to one of the two conditions (newspaper
article/no newspaper article). The ques-
tionnaire included questions about the
 HOW A BRAND IN CRISIS AFFECTS OTHER BRANDS

respondent, about the bank category in
general, and about specific bank brands
that were similar or dissimilar to the brand
in crisis.
Research instrument development
The newspaper article was pretested on
20 respondents, who rated its valence
(negative /positive, unfavorable /favorable,
no crisis/crisis) and credibility (biased/
unbiased, subjective/objective, believable/
unbelievable) on a 7-point scale (Cronbach's
alpha for both indices >0.86). The average
valence was 1.9 and the average credibility
was 6.1, and the newspaper article was
deemed suited for simulating negative
brand publicity.
Three brands were chosen for the study,
two online bank brands and one tradi-
tional bank brand. The two online banks
represent similar brands and the tradi-
tional bank represents a dissimilar brand
(testing Hypotheses H2 and H3). The rea-
son for including two similar brands in
the study is that we expect similar brands
to suffer more from a brand crisis. For
exploratory purposes, we investigate
whether the effects are common for both
a weak (number five in the market) and
a strong (number one in the market)
brand. We chose the traditional bank based
on familiarity, ranking three in the mar-
ket and holding a top-place advertising
presence.
Measures
To measure category attributes (Hypothesis
HI), we first conducted a pretest, where
10 respondents retrieved attributes from
memory that they would use when choos-
ing a bank. Second, 20 respondents rated
the importance of these attributes on a
scale 1-7. The four attributes that rated
highest (M > 5) were selected for inclusion a quasi-experimental approach that mea-
in the questionnaire: price, competence,
information, and availability. In the main
study, respondents rated the importance
of each attribute on a Likert scale ranging
from 1 (not at all) to 7 (very important).
In the argumentation leading up to Hy-
pothesis HI, it was reasoned that a brand
crisis would probably increase perceived
risk. To account for this, we measured
category risk on a 1-7 scale with a three-
item measure (high risk/low risk, unsafe/
safe, not risky/risky). They were averaged
to form an index (Cronbach's alpha >
0.90). As an exploratory measure, we also
asked respondents to rate their category
attitude on a 7-point semantic differential,
comprised of three items: good/bad, favor-
able/unfavorable, attractive/unattractive.
They were averaged to form an index
(Cronbach's alpha > 0.86).
We measured brand evaluations (Hypoth- results confirm the hypotheses. Planned
eses H2 and H3) with a number of ques-
tions to get a comprehensive view of the
hypothesized effects: brand associations were
measured with the same items that we used
for the category attributes. Respondents
rated each brand on a 1 (not at all) to 7 (very
well) Likert scale regarding convenience,
price, competence, and information.
Brand attitude was measured on a 7-point
semantic differential with three items: good/
bad, favorable/unfavorable, attractive/
unattractive. They were averaged to form
an index (Cronbach's alpha > 0.92).
Brand trust was measured on a 7-point
Likert scale with four items: "I trust this
brand," "I rely on this brand," "this brand
is honest," and "this brand is safe." They
were averaged to form an index (Cron-
bach's alpha's > 0.96).
Ideal proximity was measured for each associated more strongly to the dissimilar
brand on a 1 (very far) to 7 (very close)
scale with the question: "Imagine a bank
that is perfect in every aspect; how close
to this ideal is the brand?"
Brand choice would ideally be tested in crisis. Conversely, the similar brands score
sures the impact of a real brand in crisis
on the sales of other brands in the cat-
egory (cf. Campbell, 1969). However, the
study's scenario-based approach did not
provide such an opportunity. Brand choice
was instead measured with an open-
ended question in the questionnaire: "what
brand would you choose if you were to
sign a bank loan today?" In addition, we
measured purchase intention for each
brand on a 1 (very unlikely) to 7 (very
likely) scale with one single question: "If
you were to sign a new bank loan, how
likely would you choose this brand?"
RESULTS
In order to test all hypotheses simulta-
neously, we ran a MANOVA (multivari-
ate analysis of variance) on all dependent
variables (see Tables 1 and 2). Overall, the
comparisons probe additional findings be-
tween the two groups.
Confirming the argumentation leading
up to Hypothesis HI, the brand crisis
increased consumers' perceived category
risk (although the category attitude re-
mained constant). Lending support to the
hypothesis, there is a difference in impor-
tance ratings between the groups on all
four attributes (Table 2). The consumers
that were exposed to the brand crisis rate
infoj-mation and competence higher, and
price and availability lower, compared to
the other consumers. Hypothesis HI is
supported: A brand crisis affects the eval-
uation of category attributes.
The attributes that gain importance on
the category level, information and com-
petence, are the same attributes that are
brand in the crisis condition (see Table 2).
This suggests that associations that are
more strongly tied to dissimilar brands
gain in importance in the event of a brand
lower on all four attributes (though not
statistically different on price and avail-
ability for the strong brand). Supporting
Hypothesis H2, that a brand crisis affects

December 2 0 0 6 JDyRllflL DF HDUERTISinG BESEflRCH 3 9 1

 HOW A BRAND IN CRISIS AFFECTS OTHER BRANDS

TABLE 1 ways: contact lenses are purchased more

Category and Brand Evaluations, Banks frequently and are perceived to be lower
" risk.
No Eta
Dependent Measure Crisis Crisis Squared Planned Comparisons CONTACT LENSES TEST
Category attitude 4.01 4.17 n.s. The measures were identical to the bank
study. Two online (number one and num-
Categoryrisk 6.12 5.21 0.13 t = 2.99,p<.01 u ( • .u r .N J
.•••• ber tour m the market) and one tradi-
Weak similar brand tional (number two in the market) contact
...Brand attitude 2.94 3.96 0.19 t = 4.73,p< .01 lens retailers were chosen for the study
Brand trust 3.14 4.01 0.16 t = 3.86, p < . 0 1 Ten plus 20 respondents elicited and rated
""ideal brand 3^00 3^66 OAO t = l 4 2 " p ' < "oi category attributes; the top-four chosen
for the study were: quality, reliability,
....Bra^d purchase intentiori 2.40 3.22 0.06 t. = .3;65;.P.<,-91 convenience, and price. The newspaper
Brand selected 0.02 0.07 article (reports on fraud and indiscretion)
Strong similar brand ^^^ pretested on 20 respondents, who
Brand attitude 5.01 5.45 0.03 t = 1.56, p < .10 ""^^^"^ '*® valence (negative/positive, un-
favorable/favorable, no crisis/crisis) and
Brand trust 4.70 5.15 0.03 t = 1.65, p < . 1 0 ,.,.,., ,i,- ^ , ,• , , • • ,
•••• credibility (biased/unbiased, subjective/
...Jdeal brand 4.28 5.16 0.03 f..=.l-68, P < .05 objective, believable/unbelievable) on a
Brand purchase intention 5.14 5.60 0.09 t = 1.73, p < . 0 5 7-point scale (Cronbach's alpha for both
Brand'ielected 0^59 0^69 indices >0.88). The average valence was
2.0 and the average credibility was 6.04
Dissimilar brand (^^1^^^ practically identical to the bank
....Brand attitude 5.05 4.51 0.09 t = 2.39, p < .01 crisis), and the newspaper article was
Brand trust 5.27 4.74 0.08 t = 2.47,p<.01 deemed suited for simulating negative
Ideal brand 4.98 4.42 0.09 t = 2.88, p < .01 ^''^''^ publicity
Respondents were recruited via inter-
Brand purchase intention 4.46 4.16 0.03 t = 1.63,p<.10 ^ . • J u c 11. > ,,-,•,
'-^ cept outside the Stockholm public library.
....?.';?"d .^.?'.®?.*^.d .9.-.-?9. .9-,24, Every tenth visitor was approached and
Note: F(i4,100) = 5.22, p < .01, Wiiks' iambda, 0.68. asked if they used contact lenses. Those
who answered "no" were screened out. A
total of 120 contact lens users were inter-
evaluations of similar brands negatively, the In summary, the findings support the cepted, out of which 102 completed the
results reveal a number of negative effects hypotheses. A brand crisis affects percep- questionnaire for a response rate of 85
on the similar brands (see Table 1): brand tions of the entire category and of compet- percent. The sample consisted of 58 per-
attitude and brand trust are lowered, they ing brands. To validate our findings, we cent men and 42 percent women, and the
are perceived to be less ideal, and consum- decided to repeat the study in a different average age was 23.
ers inclination to choose the brands de- product category. We chose contact lenses
crease. In contrast, evaluations are higher as the product category. The category re- Results
for the dissimilar brand in the crisis situa- sembles banks in two ways. First, the An initial MANOVA (muitivariate analy-
tion: when brand attitude and brand trust category comprises a number of highly sis of variance) on all dependent vari-
increase, it is perceived to be closer to the competitive and well-known brands. Sec- ables confirms the hypotheses on a general
ideal brand, and consumers are more in- ond, one can make a simple division be- level (see Tables 3 and 4). Similar to study
clined to choose the brand. This supports tween traditional (opticians) and new. 1, the brand crisis increased consumers'
Hypothesis H3: A brand crisis affects eval- online-based, retailers. However, the cat- perceived category risk (however, the ef-
uations of dissimilar brands positively. egory differs from banks in two important fect is smaller, and marginally significant

3 9 2 JOUBOHL OF HDOEfiTISlOG RESEflRCH December 2 0 0 6

 HOW A BRAND IN CRISIS AFFECTS OTHER BRANDS

2 brand choice are all directionally lower

Category Criteria and Brand Associations, Banks ' ° ' ^^^'"^'^^""^^^ (supportingHypoth-
esis H2) and higher for the dissimilar
No Eta brand (Hypothesis H3).
Crisis Crisis Squared Pianned Comparisons Overall, the results replicate the find-
ings in the first study. The effects of a
Attribute importance
^ r-r^ ^^ brand crisis on the product category and
Information 5.84 5.18 0.08 t = 3.53, p < .01 ^ ^ ^
on competing brands materialize over two
....?.°^P^t.?".^.? 9.B. ^;46 0.05 f.= 2,70, p < .05 different product categories and samples.
Price 6.16 6.60 0.06 t = 2.40, p < . 0 1 Category perceptions are changed, and
Availability 4.74 5.14 0.05 t = 1.73,p<.05 similar brands are evaluated more nega-
tively, whereas dissimilar brands are eval-
Weak similar brand associations ^ . ,.• ,
uated more positively.
Information 4.26 4.72 0.09 t = 3.20, p < .01
Competence 4.12 4.74 0.12 t = 3.35, p < .01 DiSCUSSiON
Price 4.80 5.38 0.07 t = 2.59, p < . 0 1 The introduction poses the question: are
the product category and competing
Avaiiabiiity 4.00 4.46 0.05 t = 2.41, p < . 0 1 ^ ^ ^ f b
brands exempt when there is a brand
Strong similar brand associations ^^igig? j^^ ^^^ studies provide an un-
...,!f?f°^[^.^^.'.°.". .?:3.? 3.80 0.05 t.=..l.-.66,.P <..O5 equivocal "no" as an answer. Our results
Competence 3.72 4.14 0.06 t = 2.38, p < .01 suggest that a brand crisis is contagious
Price 4.10 4.14 n.s. ^"'^ affects both the product category in
general and has specific effects on com-
Avaiiability 3.80 4.04 n.s. . , ,
•• petmg brands.
Dissimilar brand associations
Information 5.38 4.80 0.10 l=^.:^!^.:.P.'^..:9.^ Brands are becoming increasingiy
Compe1;ence 5.12 4.86 0.07 t = 2.41, p < .01 vuinerabie
Previous studies of negative publicity and
Price 4.16 4.22 n.s. b f y
reputation management have proven the
....AyailalDility 4.94 4.86 n.s. ^^-^^ that the brand is not really owned
Note: FC16, WO) = 3.99, p < .01, Wilks' lambda, 0.89. by the brand manager. The brand is in
fact in the hands of its consumers and the
media, who determine its reputation (e.g.,
Chaudhuri, 2002; Stammerjohan, Wood,
at p < .10). Furthermore, category atti- On the brand level, the similar brands Charig, and Thorson, 2005). Negative press
tude decreased, so that those exposed score directionally lower on all four asso- and word-of-mouth about a brand can
to a brand crisis held less favorable ciations. All differences are statistically sig- have severe effects on brand perceptions
attitudes toward the entire product cat- nificant for the strong brand, whereas only and brand performance. The present arti-
egory (see Table 3). Turning to Hy- quality differs significantly between con- cle adds the insight that the brand is also
pothesis HI, planned comparisons reveal ditions for the weak brand (see Table 4). in fact in the hands of its competitors,
differences between the conditions for Conversely, all four associations are per- Negative press and word-of-mouth about
all four attributes. The consumers that ceived more strongly (although price is them can have severe effects on brand
were exposed to the brand crisis rate not significantly different) for the dissim- perceptions and brand performance, too.
quality and reliability higher, and con- ilar brand in the brand crisis condition. Two facts make the notion of crisis con-
venience and price lower, compared to Similar patterns are found for the brand tagion crucial. First, one could expect that
the other consumers. Hypothesis HI is evaluations (see Table 3), where brand the frequency of brand crisis reports will
supported. attitude, brand trust, ideal proximity, and increase as a result of increasing product

December 2 0 0 6 J0URI1RL OF HDUERTISIOG RESERRCH 3 9 3

HOW A BRAND IN CRISIS AFFECTS OTHER BRANDS

TABLE 3 enough (Ehrenberg, Barnard, and Scriven,

Category and Brand Evaluations, Contact Lenses ^^^^' Ehrenberg, Barnard, Kennedy, and
Bloom, 2002). It does not really matter
No Eta what is said; the important thing is to
Crisis Crisis Squared Pianned Comparisons be seen (cf. Heath and Nairn, 2005). As
Category attitude 4.27 5.18 0.14 t = 3.00,p < .01
one can easily understand how a brand
Category risk 4.63 4.38 0.03 t = 1.51, p < . 1 0 •• . « . ^u ..• J
S.,.,-: :r tr. crisis may have effects on the entire prod-
Weak similar brand uct category and competing brands, as
Brand attitude 3.57 3.95 n.s. the negative publicity propels the brand
Brand trust 3.50 4.05 0.05 f = 1.70, p < .05 i"*° ^ prominent position in consumers'
minds.
Ideal brand 3.64 3.96 n.s.

?.-.9?. .3.-.26 n-s- Revisiting positioning

Brand seiected 0.14 0.19 The results show that similar brands suf-
Strong similar brar^d ^^
Brand attitude 4.35 5.19 0.07 t=2.43,p<.01 lar brands could actually gain from it.
This conclusion supports Van Auken and
Brand trust 4.07 4.99 0.06 t = 2.38,;..';.
p < . 0..t.
1 ,.
Adams > (1998)
naaQ\ argument^ for
c across-class
l

ideai brand 4.18 5.00 0.07 t = 2.38, p < . 0 1 positioning. By tying the brand closer to
Brand purchase intention 4.24 4.82 0.05 t = 2.34, p < .01 brands in other product categories and
positioning it in relation to them, the brand
Brand seiected 0.43 0.57
gains the advantage of becoming less
Dissimilar brand similar—and vulnerable—to competing
.....B.^and attitude 5.46 4.59 0.12 i=.^:33.P<.01 brands in the category. Thus, the brand is
Brand trust 5.83 4.80 0.10 t = 2.71, p < . 0 1 less likely to suffer from a competing
Ideai brand 4.86 4.26 0.09 t = 2.54, p < .01 e, as Van Auken
and Adams found that across-class posi-
Brand purciiase
•• intention 4.80 4.00 0.09 t = 2.93,.'..".
p<.01 .• • does
tioning J not. seem ..
to makei ^u
the u J
brand
Brand selected 0.43 0.23 similar enough to the target brands in
Note: F(U, 102) = 4.48, p < .01, Wilks' lambda, 0.77. °*her categories (rather, it makes it more
dissimilar to brands in its own category),
one could expect contrast effects from a
complexities of products, more stringent increasingly difficult to be unique and brand crisis in the other, targeted cat-
legislation, more demanding customers, virtually impossible to persuade consum- egory. In other words, an across-class po-
and an increased focus on (negative) brand ers to buy your product (Weilbacher, 2003). sitioned brand reduces the risk of crisis
news in the media (Dawar and Pillutla, The goal is rather to become a good contagion in its own product category
2000; Dean, 2004). Realizing that it does enough brand that comes to mind easily and might even enjoy a positive contrast
not have to be your brand in the news, it
becomes obvious that negative publicity
will affect your brand sooner or later as Realizing that it d o e s not have to be your brand in tiie news,
some brand in your product category is
bound to suffer some form of crisis sooner it b e c o m e s obvious tbat negative pubiicity wiii affect your
or later. Second, recent literature suggests
that brands are becoming more depen- brand sooner or iater a s s o m e brand in your product cat-
dent on publicity. In the massive mar-
ketspace and mindspace competition, it is egory is bound to suffer some form of crisis sooner or iater.
3 9 4 JOURIlflL OF HDOEBTISIHG BESEfleCH December 2 0 0 6
 HOW A BRAND IN CRISIS AFFECTS OTHER BRANDS

J A Dl p A tions from more health-oriented food (e.g..

Category Criteria and Brand Associations, Contact Lenses f^^'^'/'^^^•^-'^"^^^*>' ^'^f^^"'; ^^-S'
—— "^— delis or famous restaurants). Recently, new
1^0 Et3 beer$ with low glycemic index have been
Crisis Crisis Squared Pianned Comparisons introduced on the alcoholic beverage
market.
Attribute importance , , i . j-« .• ,
Another way brands can differentiate
Quality 6.48 5.78 0.11 t = 4.21,p<.01 , , . ., ,-, • u
••••••• •• themselves from similar competitors is by
Reliability 6.14 5.60 0.09 f..=..3;,99.'..P..'^..:9.^. using brand-specific personalities (Aaker,
Convenience 5.30 5.64 0.06 t = 1.70, p < .05 Foumier, and Brasel, 2004). These person-
/i or- c /I o r> r.e t o OQ ., ^ n-1 alities become inherent to the brand and
Price 4.86 5.48 0.06 t = 2.98, p < .01
may insulate them from crisis contagion.
Weak similar brand associations ^ ^^^.^^^ Fournier, and Brasel (2004), a
....Quality 3.92 4.50 0.03 t. = .l;65, P < .95 ^^^^^ ^.^^ ^.^^^^^ personality suffered
Reliability 3.89 4.12 n.s. from a crisis whereas a brand with an
Convenience 4.22 4.48 n.s. exciting personality was not negatively
affected to the same extent. Moreover, the
Price 4.16 4.42 n.s. . . . . . •• .
exciting brand recovered more easily from
Strong similar brand associations the crisis than the sincere brand. We be-
Quality 4-.56 5.08 0.09 lz.?d'^.:.!?..^..:9^. Ueve that nonattribute based brand asso-
Reliability 4.16 4.62 0.07 t = 2.38, p < .01 ciations, such as personality, may moderate
I^IIIIIIII^^ the effects of crisis contagion.
....^^ 4.40 4.90 0.07 t = 2.36p<.01 Category effects and consumer
Dissimilar brand associations involvement
Quality 6.06 5.58 0.08 .lZ.'^:^.h..P..^..:9^. Our study suggests that consumer involve-
Reliability 6.08 5.58 0.10 t = 2.76, p < .01 ment in the product category need not
be static. A brand crisis "rubs off" on the
Convenience 5.52 4.74 0.12 t = 4.13, p < .01 .
entire category and increases its per-
Price .^:^,^ ^;.?9 H:^.' ceived risk. Previously considered mainly
Note: F(16,102) = 4.23, p < .01, Wiiks' lambda, 0.88 a problem for the brand in crisis, engaged
and worried consumers would actually
be an issue for all brands in the category.
, . Consumers may have developed routin-
effect from a brand crisis in its target possibilities, and so forth) on its website ,, . . • ,
, ,. ized buymg behaviors and passive rela-
cateeorv arid in its advertising to enhance credi-
" •' tionships to category brands over time. In
For example, as an across-class posi- bility. Moreover, compact cars can com- ^ . .
^ the event of a crisis, consumers become
tioning strategy, an online contact lens municate that they use the same safety , , ,
° "•' more involved in the purchases and re-
retailer might emulate traditional opti- technology associated with larger cars. • , • u-
° gress toward a more active relationship,
cians (personal service, eve sight check-up Fast food restaurants can add associa-
'^ J '^ •^ where they scrutinize the brands more
closely: "Could this happen to 'my' brand
as well?"
Previously considered mainly a problem for the brand in The increased category involvement
could present opportunities for new
crisis, engaged and worried consumers would actually be brands and for new advertising strat-
egies, as engaged consumers are more
an issue for all brands in the category. December 2likely
0 0 6 JOUBOHL OFflDyERTiSinG
to process RESEflRCH 3and
new information 95
HOW A BRAND iN CRISIS AFFECTS OTHER BRANDS
In the event of a crisis, consumers become more in-
volved in the purchases and regress toward a more ac-
tive relationship, where they scrutinize the brands more
closely: "Could this happen to 'my' brand as well?"
tend to consider a greater number of al-
ternatives. It could also present a win-
dow of opportunity for brands that want
to reposition themselves. Research shows
that established brands experience diffi-
culties in communicating new positions
because consumers tend to rely on their
previous, more easily processed, percep-
tions of the brand (e.g., Jewell and Un-
nava, 2003). With increased involvement
comes greater engagement in the brands
and their communication; consumers want
to hear what is new with the brand.
Brand communication and tracking must
be frequently updated
The presented results lend support to the
literature suggesting that brand schemas
are continually reconstructed. The fact that
a brand crisis affects consumers' percep-
tions of competing brands proves that
brand schemas are not stable entities.
Brand perceptions are influenced by in-
formation that seems relevant at the time,
meaning that brand managers must con-
stantly monitor their brands (Hall, 2002).
Cramphorn (2004) suggests that advertis-
ing testing is problematic because it asks
the wrong (predetermined) questions—
what matters are consumers' spontaneous
reactions. This became evident for Fire-
stone, who withdrew their multimillion-
dollar advertising campaign celebrating
"100 years of reliability" in the midst of
their defective tires crisis. However, in the
recent (major insurance company brand)
Skandia crisis in Sweden, two competi-
tors did not withdraw their advertising
396 L OF BDOEBTISinG RESEHRCII December 2 0 0 6
campaigns. The campaigns failed. As brand
schemas are reconstructed, advertising and
brand managers must keep a close eye on
the competition and react on their behalf
as well.
Advertising/brand tracking and cus-
tomer satisfaction surveys rarely take into
account changes in attribute weights and
category risk/attitude. Inertia may lead to
unnoticed biases (negative or positive) when
measuring brand equity and advertising
effects. Advertisers and brand managers
need to continually update evaluative cri-
teria for brands and the category and must
make large revisions to their tracking in-
struments after dramatic category changes
(such as a brand crisis or a radically new-
product introduction). For instance, fast food
brands that have not incorporated health
attributes in their tracking are most cer-
tainly missing out on important and sa-
lient consumer decision-making criteria.
The present research tests exposure to
only one newspaper article. The effects are
likely to be greater in reality, where one
would expect consumers to be exposed to
several articles and/or newscasts over a pe-
riod of time. Laying low (and withdraw-
ing advertising campaigns) may be a good
idea as an immediate action, but a pro-
longed crisis may change the rules of the
game for future advertising as well. A pre-
dominantly hedonic category, such as fast
food, may need advertising with more util-
itarian content (calories, fat content, etc.)
when consumers are reacting to an "across-
the-board" brand crisis. A historically low-
involvement category may need advertis-
ing with more information when the cat-
egory risk is remarkably increased. Recent
real-life examples, such as the Enron-Arthur
Andersen crisis and the Super Size Me
attack on McDonald's, provide evidence
of how negative brand publicity may in
fact result in changes of practice of entire
industries.
MiCAEL DAHLEN is an associate professor of marketing
at the Stockholm Schooi of Economics. His research
focuses on innovative advertising and brand strat-
egies, with the ambition to join creativity, business,
and consumer value. Having been published in,
among others, the Journal of Advertising Research, the
Journal of Advertising, Psychology & Marketing, and the
Journai of Brand Management, he has taken the first
baby steps toward realizing that ambition.
FREDRIK LANGE is an assistant professor of marketing
at the Stockhoim School of Economics. His research
focuses on consumer behavior, branding, and market-
ing communication. He has published more than 10
articles in academic journals and cowritten a text
book on marketing communications.
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