A real product scandal’s impact on a high-equity brand: a new approach to assessing scandal impact

Abstract

Purpose While product scandals generate many negative headlines, the extent of their impact on the scandalized brands’ equity remains unclear. Research findings are mixed. This might be because of the limitations of existing measurement approaches when investigating the effects of real crises after they occurred. This study aims to propose a new approach for measuring the impact of a real scandal on a high-equity brand using only post-crisis measures. Design/methodology/approach To overcome the challenge of comparing a priori and ex post outcome measures, this study draws on the brand management literature to evaluate a real scandal’s impact. Volkswagen’s emission scandal serves as a failure context. Two consumer experiments are conducted to examine its impact. Findings The results provide (longitudinal) support for the proposed evaluative approach. They reveal new evidence that building brand equity is a means to mitigate negative effects, and indicate that negative spillover effects within a high-equity brand portfolio are unlikely. Finally, this research identifies situations in which developing a new brand might be more beneficial than leveraging an existing brand. Practical implications This research has significant implications for firms with high-equity brands that might be affected by a scandal. The findings support managers to navigate their brands through a crisis. Originality/value This research adds to the discussion concerning the role of a brand’s equity in a crisis. Existing research findings are contradictory. This research provides new empirical evidence and another view on how to measure “impact”.

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