Range of Reactions

When Do Consumers Pardon Scandalized Brands?

Three factors that help determine if a brand will be forgiven

By Michelle Roehm (Kellogg PhD, Faculty at Wake Forest University) and Alice M. Tybout (Kellogg School, Northwestern University)

In recent years, the marketplace has been battered by an unending parade of scandals that involve individuals, such as Jared Fogle, Ryan Lochte, and Bill O’Reilly, and prominent consumer brands such as Toyota, Chipotle, Samsung and Wells Fargo. Negative fallout from such scandals can include loss of sponsorship opportunities and declines in sales, stock and brand values, More broadly, consumer cynicism about the integrity of brands is on the rise.

Still, consumers sometimes appear to pardon scandalized brands. Both Toyota and Samsung are among the top 10 brands on Forbes’ 2017 list of the World’s Most Valuable Brands despite extensive negative publicity stemming from products that malfunctioned in dramatic ways in recent years. Likewise, Nike weathered revelations in the early 2000s that it used child labor in manufacturing its shoes with little apparent damage to its brand value.

What might lead consumers to pardon brands that have become mired in scandals, independent of information about the firm’s response to the scandal? It may be noteworthy that the brands listed above, which have seemingly been pardoned, are familiar brands about which many consumers are likely to have developed favorable attitudes prior to the onset of the scandal. Such brands may have been pardoned because when thinking about the scandal, those favorable pre-scandal brand associations were retrieved and countered the effect of the scandal. Several academic studies support this view, reporting that consumers who are familiar with or committed to a brand respond to the negative publicity by retrieving positive associations, resulting in attitudes that are often unaffected by the scandal. In contrast, consumers who are less knowledgeable about a brand incorporate the negative scandal information into their attitudes.

However, the studies to date typically have presented scandals by having consumers read a newspaper article. Reading a print news article is a solitary activity that is likely to evoke a contemplative or reflective mindset, allowing consumers to associate the new information with prior knowledge they retrieved from memory. A 2012 Pew research report documents that increasingly people rely on online sources rather than print newspapers for their news. Online sources have been found to foster a mindset focused on interactivity due to the possibility of responding to or sharing the story read. This focus can channel thinking away from the story content per se. More specifically, when a scandal story is attributed to an online source, the focus on interactivity may divert attention away from retrieving favorable brand associations, thereby reducing the likelihood that a pardon will occur.

Further, to date, research has focused on scandals involving false or exaggerated brand claims or product-harm crises. However, many of the scandals that routinely appear in the news involve corporate misbehavior that does not directly impact consumers’ experience with a brand (e.g., Wal-Mart bribing officials in Mexico, Paula Dean’s alleged racial discrimination, The Gap’s Indonesian water-pollution scandal, and Apple’s poor oversight of worker conditions in China). These scandals threaten perceptions of the companies’ corporate social responsibility (CSR). Although such scandals seem likely to contribute to the general cynicism about brands, it is less evident that this type of scandal will directly impact brand attitudes in the same way that false claims and product-harm crises do.

Our research began by examining factors that moderate pardoning a scandalized brand when the scandal at issue involves corporate misbehavior. We propose a retrieval process whereby strong brands (but not weak ones) are pardoned through the activation of positive brand associations that offset the impact of negative scandal information. This process is expected to be moderated by whether consumers are in a reflective or an interactive mindset due to the media source that reports the story. The retrieval process is likely to occur when the story is stated to appear in a print newspaper and, thus, when a reflective mindset is activated, but not when the story is stated to appear in at an online news site, and a more interactive mindset is activated.

However, caution is in order. When the scandal pertains to an issue that is engaging to consumers, and especially if it involves ways in which a product could harm users, the greater elaboration on the story that occurs when it is attributed to a print newspaper is likely to focus on the negative implications of the scandal behavior rather than on the retrieval of positive associations to the brand. As a result, the damage to brand attitudes may be greater when the story appears in print rather than online. These hypotheses were tested in a series of experiments.

An initial experiment explored the effect of a fictional but realistic corporate-misbehavior scandal involving water pollution stemming from a manufacturing facility with a faulty filtration system that was not properly monitored. The scandal was attributed either to Nike, a familiar, well-regarded brand for which consumers have many positive associations, or Asics, a less familiar, less favorably viewed brand. The scandal article was stated to have appeared in either the print edition or the online edition of The New York Times. Research participants’ attitudes were measured both before and after they read the scandal story. In addition, participants listed their thoughts in response to the story. When the scandal was about Nike, consumers’ post-scandal attitudes toward the company were more negative than their pre-scandal attitudes, but only when the scandal was described as appearing in the online edition of The New York Times.

When the story was stated to have appeared in the print edition of the paper, pre- and post-scandal attitudes were virtually the same; the scandal didn’t have a negative impact on attitudes toward Nike, suggesting the firm was pardoned. By contrast, when the scandal was about Asics, consumers’ post-scandal attitudes were more negative than their pre-scandal attitudes irrespective of whether the scandal was attributed to a print or an online source. Analysis of the thoughts that research participants listed after reading about the scandal revealed that when the story was attributed to an online source, most thoughts were interactive, reflecting participants’ consideration of how and with whom to share the story. By contrast, when the story was attributed to the print version of the newspaper, participants’ thoughts focused on the content of the story (the scandal and the brand) and, in the case of Nike (but not Asics), included a number of positive thoughts about the brand.

Three follow-on studies provided further evidence that being told a story appeared online promoted thinking about sharing the story, whereas being told that a story appeared in print promoted elaboration on the content of the story and established that the same effects occurred regardless of whether the story actually appeared online versus in a print newspaper or participants were merely told where it appeared.

A final experiment explored the generality of the effects on a second well-regarded brand, Coca-Cola. Specifically, participants read about one of three fictionalized scandals: the water-pollution scandal used in the initial experiment, a scandal involving guilt by association with another tainted brand, or a product-harm scandal. Each type of scandal was stated to involve either Nike or Coca-Cola. As in the initial experiment, the scandal story was attributed to either an online or print-media source.

For the water-pollution scandal, the effects were similar to those in earlier experiments irrespective of whether the scandal was about Nike or Coca-Cola. Attitudes toward the scandalized firm were largely unaffected if the scandal story was stated to have appeared in print. However, attitudes toward the scandalized firm became more negative when the scandal story was stated to have appeared online.

By contrast, for scandals that were more engaging or personally relevant, the reflection that occurred when the scandal was attributed to a print source resulted in more negative attitudes. Specifically, when either Nike or Coca-Cola was connected to the FIFA bribery scandal through continued sponsorship of FIFA events, the thinking that occurred when the scandal story was attributed to a print rather than an online source resulted in a less rather than a more favorable view of the company. This negative impact of elaboration in response to the story was even greater when the scandal involved potential harm to consumers (i.e., injury from a defective chin strap on a football helmet for Nike and injury from chlorine in beverages due to contamination during a maintenance procedure for Coca Cola).

These findings led to three conclusions:

  1. Whether consumers receive their news online versus in a print newspaper can have a significant impact on how they react to that news. The online medium appears to promote a more interactive response focused on reacting to the news or sharing it whereas the print medium appears to encourage more reflection on the substance of the story.
  2. Strong brands about which consumers have well-developed and positive attitudes are more likely to be pardoned for corporate social-responsibility scandals if the medium (print) encourages reflection that leads consumers to retrieve more favorable brand associations than if the medium (online) focuses attention on interactivity.
  3. The reflection on the story that is encouraged when a scandal is attributed to a print newspaper can cut two ways. If the scandal is removed from consumers’ brand experience (e.g., CSR scandals), a strong brand may be pardoned. However, if the scandal involves ways in which the consumer engages with the brand (event sponsorship or product harm scandals), greater elaboration may increase the negative impact of the scandal on brand attitudes.

Read More For more from Tybout, see her additional thoughts about the factors determining the reaction to a brand scandal.

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