The foundation, on which the implications of
the paper “Effectiveness of corporate responses to brand crises: The role of
crisis type and response strategies” are built, is that brand crisis types
differ by brands benefits, which are functional and symbolic. Furthermore, it
is claimed that poor performance on functional attributes is more detrimental
to satisfaction (performance-based crises) than poor performance on symbolic
attributes (values-based crises), according to Mittal et al. I disagree with
this argument because the impact of the crisis is a function of the relevance
of the crisis to the brand’s equity key associations, as stated in the paper
“Brand crises: The roles of brand familiarity and crisis relevance in
determining the impact on brand evaluations”. So, if the key association with
the brand is a symbolic one, it is more important than the functional one and
determines the impact of the crisis. Here the example with Porsche can be
adduced as a proof, since it is associated with symbolic attributes and if
there is a huge relevance (mediation effect) of the crisis with them the
transgression on equity will be significant. Moreover, brand positioning on
lifestyle /symbolic attributes/ can prevent a brand from crisis and be safer
than functional positioning. And that is the example with beverage, which when
positioned on purity is at higher risk than on lifestyle. This reaffirms my statement
that symbolic benefits impacted by values-based crisis should not be
underestimated and are not less important than functional ones affected by
performance-based crises, therefore the response strategies to these kinds of
crises should be also be revised.
27.10.2012 г.
16.10.2012 г.
How investors perceive brand quality
One
of the main implications of the paper “The impact of brand quality in
shareholder wealth” is that investors view unanticipated increases in brand
quality less favorably if accompanied by decreases in current-period earnings
because it is a signal that a firm does not have the resources to maintain and
enhance its brand quality. This argument is questionable because most consumers
vary on the use of price and brand name when evaluating the various dimensions
of quality, as stated in the paper “Price and brand name as indicators of
quality dimensions for consumer durables”.
For instance, when assessing a product for which performance is an
important dimension to people the correlation between price and perceived
quality is not strong. So, consumers have high perceived brand quality but it
doesn’t pay off with the same extent in the price they are prone to pay. In
other words, people perceive high the quality of the product but the company
cannot exert high price of them. However, the firm maintains a high quality and
has the resources to maintain it which contradicts the point of view of
investors in this situation, who view it less favorably. This fact proves that
investors are wrong in this case, because they look at quality form an overall
standpoint and not considering the multi dimensions it has.
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