Essays on marketing's role during firm crises

• Main Author: Germann, Frank Axel
• Format: Dissertation
• Language: English
• Published: ProQuest Dissertations & Theses 01-01-2012
• Subjects: Brand equity; Business to business commerce; Credit ratings; Management of crises; Marketing; Medical device industry; Medical equipment; Product recalls; Studies
• ISBN: 9781267823885; 1267823887

This research examines marketing’s role during two types of firm-crises. Essay 1 investigates brand equity’s role when product recalls occur, and essay 2 examines the role of marketing’s influence within the firm when the firm faces the junk-crisis, i.e., when the firm’s credit is downgraded to the lowest investment-grade level. Both essays contribute to the firm-crisis and the marketing-finance interface literatures and suggest that marketing has significant and, for the most part, positive performance implications for firms that face product recalls and/or the junk-crisis. Building on an assimilation-contrast framework in essay 1, I hypothesize and find that high levels of brand equity attenuate negative consumer responses in low severity recalls but augment them in high severity recalls. Thus, while brand equity seems to provide a reservoir of goodwill in the former case, it acts as a liability in the latter case. Process tests indicate that consistency and discrepancy thoughts account for the observed attenuating and augmenting effects in a manner consistent with the underlying assimilation-contrast framework. Further, building on the firm-crisis and marketing’s influence within the firm literatures, essay 2 shows that marketing’s influence within the firm provides significant benefits during the junk-crisis. Specifically, the empirical results suggest that marketing’s influence within the firm reduces the likelihood of business-to-consumer (B2C) firms cutting their advertising spending during the junk-crisis, which has a positive impact on the firms’ future credit rating trajectory. In contrast, marketing’s influence does not moderate the likelihood of business-to-business (B2B) firms cutting their advertising, which does not seem to negatively affect their future credit ratings. Moreover, the empirical results show that both, B2B and B2C firms in which marketing’s influence is high are significantly less likely to get downgraded to speculative grade (i.e., junk) when faced with the junk-crisis than the firms in which marketing’s influence is low.