Product harm crisis refers to an embarrassing public event emanating from a product’s inefficiency. The product in question may have caused a public uproar because it is either harmful or completely defective. Such an instance may impact negatively on all the brands by the same producer. Similarly, consumers may express concerns over consumption of close alternatives. It is unfortunate that product harm crisis in the modern era goes viral due to the emergence of social media sites such as twitter and face book among others. Therefore, users can spread the message at the touch of a button.
Product harm crisis affects the company directly. One of the most notable negative effects of product harm crisis includes a drastic fall of the sales volume. Additionally, the negative image may render the product useless as the consumers may be unwilling to purchase it. Therefore, the manufacturer may have to close the production plant indefinitely. Such a company finds it difficult to win if customers if it remains in business. Product harm crisis may affect other brands. There are some cases where product crisis may cause problems. In such a case, the firm may suffer a chain of lawsuits from the affected users.
The way a firm handles such an event determines its survival in the market. However, cases of product crises are quite rare. Economists suggest that a company employs hazard mitigation strategies to manage an unfortunate occurrence of a product harm crisis. It is important for managers to remain on high alert to address a product harm crisis (Vassilikopoulou, Lepetsos, Siomkos and Chatzipanagiotou, 2009, p. 67). Some of the causes of product –harm crisis may be negligence. Notably, it has serious effects to the company. The company can reverse such a crisis through product recalls although it does not guarantee consumer confidence.
Factors that Contribute to a Product Harm Crisis
A firm’s reputation
The corporate reputation of a company determines the effect of product harm crisis to the public. The occurrence may drain away its positive image among the public. It may worsen an already existing negative perception. On the other hand, the effect may not be badly off if the company had a strong positive reputation among the public. Therefore, the firm may not suffer much after a crisis. It may only act as an unexpected liability because the public had an inbuilt trust towards the brand.
The firm’s response
The way a firm responds to a crisis determines its probability to remain in the market. Proper response involves reliable hazard mitigation strategies to reduce the severity of the damage. More often than not, a firm with good hazard mitigation strategies is likely to reduce damage. Therefore, consumers could be sure that the company can contain the damage. A timely approach to a crisis can go to great depths in containing the damage caused by the crisis. On the other hand, failure to respond to a crisis in time and in an appropriate manner results to severe losses to the company. Similarly, the firm’s reputation suffers significantly. Such a firm stands at a risk of collapsing due consumers’ reluctance to use the product.
The way the government responds to a product harm crisis determines the viability of the product in the consumer market. An intervention by the government goes to great depths to win the customers’ trust to use the product. Government intervention acts as a form of relief to the company. If the government responds negatively to a product harm crisis, chances are that the company will alter its activities indefinitely. Similarly, the risks of a lawsuit are proportionately high.
The impact of the press
The media has a pronounced role in the community. It notifies people of the activities going on around their environment. A product’s harm crisis may either become serious or less depending on the attention it gets from the media. The press may make things better for a company if it uses the right approach. It may get a reprieve from the media if it can prove that the harm occurred due to unavoidable circumstances and not negligence. A tainted image on the press is likely to paint the same picture to the public and vice versa. It is critical for a company to maintain a positive reputation in all its endeavors to ensure that it remains at par with the social expectations. When such an occurrence catches the media attention, it becomes quite difficult to withdraw the perception.
Various scholars strive to explain the impact of product harm crisis. Some believe that it emanates from a company’s carelessness. For instance, a firm may fail to examine the raw materials’ safety before using them to produce. Product harm crisis is quite popular in areas that attract many people such as a market (Cleeren, Dekimpe and Helsen, 2008, p. 39). Most scholars agree that a product harm crisis has serious negative effects to the company’s reputation. Additionally, it may lead to serious impacts such as injuries, sickness and death in severe cases.
They believe that proper management is the precursor to saving the brand name from negative publicity among the customers. Essentially, appropriate address to the affected population may help reverse the product’s negativity. Many researchers suggest that firms carry out an in-depth examination of the output before distributing it to the public. A relationship exists between the consumer attitudes and a crisis (Samarawera, Li, and Qing, 2014, p. 2647). However, a crisis comes as an emergency because most companies do not expect it. Many of them do not have hazard mitigation strategies. Therefore, an unfortunate event of a crisis leads to serious losses. Research indicates that product harm crisis stresses the management. Additionally, it is a dreaded experience that managers try to keep at bay.
Economists believe that a company that has been affected by product harm crisis may regain its initial position through appropriate action to address the gap. It may engage in extensive commercials and advertisements to correct the tainted image. Moreover, it may engage the public to sample out their opinion to improve product and service delivery.
The way a company handles a product harm crisis determines its chances of success in restoring the lost glory. More often than not, a proper approach is likely to restructure the company’s tainted image. It is important for the firm find out the cause of the crisis. When the management is sure about the cause, it can address the issue with due confidence. Sometimes, the cause of the failure may be an accident or a natural disaster, which the firm cannot control.
When responding to a crisis, it is critical for a company to observe the laws of the land. It ought to conform to the rules and regulations when making public addresses. A company’s conformity to the law avoids further confrontation from the authorities and negative image to the public. The company ought to limit its response to the social boundaries of the immediate environment (Siomkos and Malliaris, 1992, p. 62). If the media and government agencies react positively to the product harm crisis and defend the company, chances are that the public will exhibit more favorable attitudes to the product.
The company ought to scrutinize the entire production process to ensure that the output is safe for use. It may do this through conducting checks and submitting the output to a standards bureau to check the product’s safety. Such an initiative will go to great depths to deter the occurrence of product harm crisis. It is important to note that an unfortunate event of a crisis may lead to losses and a probable downfall of the company. Consumers may be unwilling to support the company after such an event. Therefore, the company ought to maintain the safety of the product to ensure that consumers are comfortable and contented with the product to protect the company’s future business interests.
The company may express concerns to those affected through helping them regain their lifestyles. It may demonstrate responsibility through provision of compensation and incentives to those affected and apologizing to the public for the error. The company may put in place some crisis management strategies to help respond to an unfortunate case of a product harm crisis in future. The company may come up with an error correction model to restore the product’s image among the public in the long run.
Cleeren, K, Dekimpe, G. M and Helsen, K. (2008). Weathering Product-harm Crisis. Journal of Academic Mark Science, 36, 36-262.
Samarawera, C. G, Li, C and Qing, P. (2014). Mitigating Product Harm Crisis and Making Markets Sustainable: How does National Culture Matter? Journal of Sustainability, 6, 2642-2657.
Siomkos, J. G, and Malliaris, G. P. (1992). Consumer Response to Company Communications during a Product Harm Crisis. Journal of Applied Business Research. 8(4). 59-65.
Vassilikopoulou, A, Lepetsos, A, Siomkos, G and Chatzipanagiotou, K. (2009). The Importance of Factors Influencing Product-Harm Crisis Management across Crisis Extent Levels: A Conjoint Analysis. Journal of Targeting, Management and Analysis for Marketing, 17, 65-74.