Crisis response strategies and post crisis brand equity

Stuck in a crisis
An experimental study of the relationship between crisis
response strategies and post crisis brand equity in the
fashion industry
CBR 2013, Orlando
28. September 2013
Sabrina Hegner
Ardion Beldad
Sjarlot Kamphuis op Heghuis
* *

Why studying crises in the fashion industry?
*
http://reputation-
metrics.org/tag/abercrombie-fitch-analysis-
crisis/

Why brand equity as an outcome variable?
Brand Equity is one of the main indicators of brand success and
therefore one of the most important intangible assets for an
organization (Christodoulides & Veloutsou, 2010)
*

Situational Crisis Communication Theory (SCCT) by
Coombs
Crisis type
Victim
Accidental
Intentional
*
 Response type
 denying
 diminishing
 bolstering
 rebuilding

Trust as a buffer in times of crises?
*

Research questions
1. research question. What is the effect of various crisis response
strategies on post-crisis brand equity (including its dimensions,
namely brand awareness/associations, perception of brand quality,
and brand loyalty)?
2. research question: What is the impact of consumers’ prior trust in
the brand on the relationship between crisis response and the
company’s post-crisis brand equity?
*

Research design
Brand Trust was measured first
6 scenarios (denial, diminish, bolstering, rebuild, no-response, and
a control group) – between subject design
Dutch newspaper article stating that an independent 3rd party found
carcinogenic chemicals in T-Shirts of the brand
The newspaper article was shown to every participant (except
control group) and the brand response to the accusation was
manipulated
Brand equity was measured afterwards
Control questions
*

Scenarios
response Explanation The Reaction of the company
Denial Claiming that there is no
crisis
“The CSPI thoughtlessly insinuates that the cotton we use in our t-
shirts is unsafe and it causes cancer among our consumers. The
blame for this incident cannot be attributed to our organization. Our
products are in line with the law”, the company said in a statement.
Diminish Minimizing the responsibility
by claiming inefficiency to
control the events and/or by
denying to do intentionally
harm.
“We don’t have any control over what our imported clothing
contains. That is why we did not know about these toxic chemicals.
We did not intend to do any harm”,...
Rebuild Declaring that the brand
takes the full responsibility
for the crisis and asks
stakeholder for forgiveness.
“We take full responsibility for the fabricated t-shirt containing the
toxic chemicals, therefore we will compensate this unpleasant
incident with an extra discount day. We also have stopped
immediately the fabrication of these t-shirts. We are so sorry for all
inconveniences triggered by this incident”, ....
Bolsterin
g
Telling the stakeholders
about the past good work of
the brand. Reminding the
stakeholders that the brand
is a victim of a crime too.
“We are known for our fashionable clothes and our good prices. Our
company never had any incidents before and we have had many
successes where you all benefited from. We also hope to have a lot
more of these successes in the future. We also wanted to remind
you that we are a victim of this incident as well”,…. *

Participants
187 Dutch respondents
Mean age: 28.1
Gender: 56% women, 44% men
Education: high 60%, low 40%
*

Results ANOVA
*
Denial
M (SD)
Diminish
M (SD)
Rebuild
M (SD)
Bolstering
M (SD)
No
Response
M (SD)
Control
Group
M (SD)
Brand equity 2.74 (.69) 2.95 (.72) 3.14 (.71) 3.00 (.77) 2.61 (.55) 3.21 (.73)
Brand awa/ass 3.39 (.91) 3.49 (.86) 3.73 (.87) 3.44 (.83) 3.43 (.73) 3.88 (.84)
Brand quality 2.18 (.78) 2.44 (.97) 2.66 (.71) 2.65 (.77) 1.93 (.68) 3.00 (.68)
Brand loyalty 2.04 (.90) 2.41 (1.01) 2.46 (1.01) 2.52 (1.01) 1.71 (.75) 2.23 (1.03)
Brand Equity (F(5, 181)=3.181, p=.009)
Brand quality (F(5, 181)=7.401, p=.000)
Brand loyalty (F(5, 181)=3.064, p=.011)
Brand awareness/associations (F(5, 181)=1.765, p=.122)

Results Post-hoc test
*
Denial
M (SD)
Diminish
M (SD)
Rebuild
M (SD)
Bolstering
M (SD)
No
Response
M (SD)
Control
Group
M (SD)
Brand equity 2.74 (.69) 2.95 (.72) 3.14 (.71) 3.00 (.77) 2.61 (.55) 3.21 (.73)
Brand awa/ass 3.39 (.91) 3.49 (.86) 3.73 (.87) 3.44 (.83) 3.43 (.73) 3.88 (.84)
Brand quality 2.18 (.78) 2.44 (.97) 2.66 (.71) 2.65 (.77) 1.93 (.68) 3.00 (.68)
Brand loyalty 2.04 (.90) 2.41 (1.01) 2.46 (1.01) 2.52 (1.01) 1.71 (.75) 2.23 (1.03)

The buffering effect of brand trust
Median split was performed in high truster and low truster
Comparison of high truster and low truster and CG for each
response strategy
For almost all comparisons, a significant difference between low-
trusting group and the control group on overall brand equity & single
dimensions.
the low-trusting respondents show significant lower values on
brand equity and the dimensions compared to the high trusting
respondents, while there is no significant difference between high
trusting group and the control group
1 exception: In the no-response scenario, no difference between
the high trusting and the low trusting group is found, while there is a
significant difference between these two groups and the control
group.
*

Discussion
Brands are susceptible to various forms of crises
But how a brand responds to a crisis is not out of its control!
Results indicate that the crisis response strategy a brand employs
can influence its brand equity.
Prior trust can serve as a buffer for a crisis-stricken organization
But: No response is always bad!!!
*

Thank you for your attention!
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Appendix trust as a buffer – overall brand equity
*
Mean (SD) low trust control group F sign.
Overall Brand Equity
denial high trust 2.98 (.55) -0.50* -0.23 5.375 .007
low trust 2.48 (.75) -0.73***
diminish high trust 3.38 (.93) -0.68*** 0.17 4.637 .013
low trust 2.70 (.41) -0.51**
rebuild high trust 3.49 (.81) -0.65** 0.29 3.556 .035
low trust 2.84 (.46) -0.37*
bolstering high trust 3.21 (.57) -0.46* 0.00 2.186 .121
low trust 2.75 (.92) -0.46*
no response high trust 2.82 (.45) -0.31 -0.39 7.187 .002
low trust 2.51 (.58) -0.70***
control group 3.21 (.73)

Appendix trust as a buffer – brand awareness/associations
*
Brand Awareness/Associations
denial high trust 3.64 (.67) -0.54* -0.24 4.224 .019
low trust 3.10 (1.09) -0.78***
diminish high trust 3.77 (.94) -0.45 0.11 2.920 .061
low trust 3.32 (.80) -0.56**
rebuild high trust 3.96 (.98) -0.42 0.08 1.241 .296
low trust 3.54 (.74) -0.33
bolstering high trust 3.69 (.52) -0.56** -0.19 4.575 .014
low trust 3.13 (1.03) -0.74***
low trust 3.26 (.82) -0.61***

Appendix trust as a buffer – brand quality
*
Perceived Brand Quality
denial high trust 2.19 (.68) -0.01 -0.81*** 9.449 .000
low trust 2.18 (.91) -0.82***
diminish high trust 2.88 (1.09) -0.70*** -0.13 6.713 .002
low trust 2.18 (.80) -0.83***
rebuild high trust 3.04 (.66) -0.68*** 0.04 6.187 .004
low trust 2.35 (.61) -0.65***
bolstering high trust 2.86 (.54) -0.46* -0.14 3.653 .032
low trust 2.40 (.93) -0.60***
no response high trust 2.05 (.50) -0.18 -0.95*** 18.802 .000
low trust 1.87 (.76) -1.13***

Appendix trust as a buffer – brand loyalty
*
Brand Loyalty
denial high trust 2.40 (.95) -0.75** 0.17 2.700 .076
low trust 1.64 (.67) -0.59*
diminish high trust 3.06 (1.07) -1.04*** 0.83** 4.687 .013
low trust 2.02 (.75) -0.21
rebuild high trust 3.02 (1.12) -1.02*** 0.79** 4.829 .011
low trust 2.00 (.64) -0.23
bolstering high trust 2.65 (.99) -0.29 0.42 .975 .383
low trust 2.36 (1.05) 0.13
low trust 1.67 (.73) -0.56**
control group 2.23 (1.02)

Crisis response strategies and post crisis brand equity

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