2.

LITERATURE REVIEW

2.1 Introduction

2.2 Brand crises

Due to the rapid development and adoption of social media platforms, information on the
Internet and these platforms could reach the public widely and rapidly. However, it also poses
a great threat of misinformation likely to happen. Misinformation refers to inaccurate
information that is spread to deceive people for illegal and unethical purposes. As Internet
and social media platforms allow free speech and anonymity which enables people to publish
unverified information on these platforms easily and conveniently. Along with that, the
keyword-searching algorithm allows users to reach information rapidly. According to, people
tend to be attracted by bad-seeming information rather than good-seeming information, and
this phenomenon is known as negativity bias. Negativity bias is defined as the form of
cognitive bias in which the human brain focuses more on negative news or events, and it
makes people think seriously rather than it’s actually happening. As people are more attracted
to negative information, many people take advantage from that to create negative news, thus
fake news is on the rise, and it has a strong influence on parties involved in the news.
Simultaneously, there has been a rise of mandatory responsibility of firms in social and
environmental aspects, thus any business’s decision-making has a strong impact on the
reputation of the firms. According to Futurecast’s Getting to Know Gen Z: How The Pivotal
Generation is Different from Millennials research report, a full 60% of Generation Z expect
the brands they support to take a stand on the social issues they believe in. Brands and
businesses no longer have the luxury of avoiding political, economic, and social
controversies. There is no longer a separation of brand and state. A brand’s value and values
are now inextricably intertwined. Choosing not to take a side on polarising issues is now just
as damaging to a brand as choosing the wrong side to support. Last year, in the wake of
Trump’s anti-muslim travel ban, Uber’s smaller rival, Lift donated a million dollars to the
anti-travel-ban lobby. Uber stayed out of the fray. Within the space of a weekend, 200,000
Uber customers had deleted their Uber apps and switched to Lyft. As could be seen that
customers in the modern day also demand firms more on their environmental and social
responsibility, as well as they are significantly sensitive to publicly negative information.
Therefore, any misinformation or negative information about firms could evoke customers
‘emotions and result negatively on brand reputation.
Within the current era, a brand crisis is likely to happen, and it could damage severely brand
equity and brand reputation. A brand crisis is defined as a sequence of negative events and
news that threaten the brand’s reputation, customers’ trust, and loyalty toward the brand.
Firms with poor brand crisis management may be a failure to recover from the situation and it
would damage severely the financial activity of firms in the long-time. Brand crisis happens
in all sectors, and all market segments, thus firms need to have solid brand management
strategy to avoid crisis, and combat a crisis when it arises. Primary causes of the brand crisis
are the spreading out of negative information about the brand, and the brand crisis could even
happen when this information does not reflect the appropriate and actual context of the brand
which it is merely the unverified information that is published deliberately to damage the
brand’s reputation.
Within the business environment, crises are the nightmare of all brands, and this has been
more and more increasingly prevalent in the global marketplace. Brand crises have devasting
effects as described above, and thus topic relates to brand crisis management becomes more
and more attractive to marketing researchers. In this chapter, the literature review of brand
crises and brand crisis management will be provided in detail.
The term ‘brand crises’ appears popularly in social media, and when mentioning brand crises,
it directs people to the thought that the brand has been doing something bad and being
criticized by the public. Within the empirical research, Dawar and Lei (2009) first mentioned
this term. Dutta and Pullig (2011) formally conceptualized brand crisis as the unexpected
event that damages to brand’s perceived ability. Van Heerde et al (2007) also discussed the
consequences of brand crises that reduce the brand’s volume of sales, the effectiveness of
marketing and advertising activities, and customers’ trust. Humphreys and Thompson (2014)
also said that brand crises could even cause the butterfly effect for the entire industry which
damages customers’ trust in the entire industry. For example, Primark’s brand crises of
unethical business conduct relate to the Rana Plaza factory’s collapse, has made customers
lose trust on all fast fashion brands.
There are various root causes attributed to brand crises, and example of these causes have
been given above. Under the theoretical lens, brand crises have been conceptualized into two
types - 1) attribution theory perspective; 2) brand equity theory perspective. Based on the
attribution theory perspective developed by Weiner (1985), Coombs (2007) suggested the
Situational Crisis Communication Theory (SCCT) which divides crises into three types –
victim crisis (the brand is considered as a victim of the event and their attribution of crisis
responsibility is weak), accidental crisis (the event happened unintentionally and
uncontrollably, and the brand has very weak attribution of crisis responsibility), and
intentional crisis (the event happened intentionally, and the brand has strong attribution of
crisis responsibility). In terms of brand equity developed by Keller (1993), it states that there
are two types of benefits that customers could derive from the brand that are functional
benefits and symbolic benefits, and based on this theory, Dutta and Pullig (2011)
conceptualized brand crises into two types - performance-related crises and values-related
crises. Performance-related crises are defined as product-harm crises that arise due to
defective or dangerous products and thus damages to the brand’s ability to generate
functional benefits. For example, Value-related crises are defined as crises that arise due to
social or ethical issues surrounding the brand. For example,
Some notable examples include Volkswagen’s emissions scandal, McDonald’s and KFC’s
food scandal, labour violations of Apple’s suppliers in developing countries. Such brand
crises can be extremely devastating for the involved brands. For example, after American
Environmental Protection Agency ordered Volkswagen to recall about half a million vehicles,
the company’s stock price fell nearly 20 percent and may well be slapped with $18 billion in
fines, according to Reuters. Except for the tremendous immediate loss from sales and costly
compensation, brand crises can also have some far-reaching detriments on the involved
brands in the long run such as consumer trust and brand equity (Van Heerde et al., 2007; Xu,
2015). Considering the tremendous negative impact of brand crises, it is imperative to
understand what a brand crisis is and how to manage it in order to save the valuable yet
fragile asset

2.2 Brand crisis management

Within the era where crisis is likely to happen, corporates need solid brand crisis
management that is always ready to combat the negative situation. An effective brand crisis
management plan does not only focus on a recovery strategy but also includes a preventive
strategy. In terms of the recovery strategy during the brand crisis period, defined it as the
process of designing a plan and coordinating resources to fix the issues related to the brand
crisis, as well as accommodating affected parties’ needs. Also mentioned is that brand crisis
management is the process that companies train and develop skills for employees to face
unforeseen situations and circumstances. Having effective brand crisis management helps
brands to rapidly respond to the situation, minimize the crises’ impacts, and recover
customers’ trust, etc. Many researchers mentioned that the firm’s response to the event
determines the brand equity’s recovery level. However, there is no research or theories about
standardized brand recovery strategies after the crisis as the effectiveness of strategies
depends on the characteristics of the crises. McLaughlin et al. (1983) conceptualized the
strategies into different types, including silence, concession, excuse, justification and refusal.
In addition, in terms of the brand’s image recovery strategy, Benoit (1997) also mentioned
the five categories of strategies, including denial, evasion of responsibility, reducing
offensiveness of event, corrective action, and mortification. From these findings, it could be
seen that all researchers have different perspectives and approaches to conceptualising brand
crisis management strategies. However, these approaches of brand crisis management
strategies from these researchers could be put into the deny-apology continuum which
determines whether and the extent level of brands’ responsibility toward the event. Dawar
and Pillutla (2000) conceptualized brand crisis management strategy as a continuum from
apparent support to responsibility denial. Brands adopting an apparent support strategy would
accept their responsibility toward the event and offer remedies to affected parties. On the
other hand, brands that adopt responsibility denial would not have any remedial measures and
refuse all responsibility for the event. Additionally, Ahluwalia et al (2000) developed broader
concepts toward deny strategies and they suggested that there are two types of deny
strategies, including counter argumentation and diagnosticity. In terms of counter
argumentation, brands would publish counterarguments that are against the information of the
crises in a rational and logical way. In terms of diagnosticity, this strategy focuses on
reducing the strength value of the negative information. With regard to apologetic response
strategies, Xie and Peng (2009) conceptualize three types of responses, including affective
repair, functional repair, and information repair. In terms of affective repair, this strategy
focuses on expressing the brands’ apology, regret and compassion to the public and effective
parties. In terms of functional repair, this strategy focuses on providing financial
compensation to affected parties along with other actions, including appropriate
communication expressing the brands’ apology, and making a commitment to how the brands
would solve the crises. In terms of information repair, this strategy focuses on updating
information about how the brand handles the crises with facts.
2.3 Brand forgiveness

2.4 Influential factors on effectiveness of brand forgiveness

2.4.1 Brand relationship

2.4.2 Self-brand congruity

2.4.3 Brand engagement

2.4.4 Brand involvement

2.4.5 Brand attachment

2.5 Effects of brand forgiveness on the brand

2.5.1 Effects of brand forgiveness on word-of-mouth
2.5.2 Effects of brand forgiveness on future purchase intention
2.5.3 Effects of brand forgiveness on brand defense

2.6 Conceptual framework

2.7 Chapter summary

Ahluwalia, R., Burnkrant, R. E., & Unnava, H. R. (2000). Consumer response to negative
publicity: The moderating role of commitment. Journal of Marketing Research, 37(2),
203–214. [Link]

Benoit, W. L. (1997). Image repair discourse and crisis communication. Public Relations
Review, 23(2), 177–186. [Link]
Coombs, W. T. (2007). Protecting organization reputations during a crisis: The development
and application of Situational Crisis Communication theory. Corporate Reputation
Review, 10(3), 163–176. [Link]

Dawar, N., & Lei, J. (2009). Brand crises: The roles of Brand Familiarity and crisis relevance
in determining the impact on Brand Evaluations. Journal of Business Research, 62(4),
509–516. [Link]

Dawar, N., & Pillutla, M. M. (2000). Impact of product-harm crises on brand equity: The
moderating role of consumer expectations. Journal of Marketing Research, 37(2), 215–
226. [Link]

Dutta, S., & Pullig, C. (2011). Effectiveness of corporate responses to brand crises: The role
of crisis type and response strategies. Journal of Business Research, 64(12), 1281–
1287. [Link]

Humphreys, A., & Thompson, C. J. (2014). Branding disaster: Reestablishing trust through
the ideological containment of systemic risk anxieties. Journal of Consumer
Research, 41(4), 877–910. [Link]

Keller, K. L. (1993). Conceptualizing, measuring, and managing customer-based Brand

Equity. Journal of Marketing, 57(1), 1. [Link]

McLaughlin, B., Rossman, T., & McLeod, B. (1983). Second language learning: An
information-processing perspective. Language Learning, 33(2), 135–158.
[Link]

Van Heerde, H., Helsen, K., & Dekimpe, M. G. (2007). The impact of a product-harm crisis
on marketing effectiveness. Marketing Science, 26(2), 230–245.
[Link]

Weiner, B. (1985). An attributional theory of achievement motivation and

emotion. Psychological Review, 92(4), 548–573. [Link]
295x.92.4.548

Xie, Y., & Peng, S. (2009). How to repair customer trust after negative publicity: The roles of
competence, integrity, benevolence, and forgiveness. Psychology and Marketing, 26(7),
572–589. [Link]