A Note on Modeling Consumer Reactions to a Crisis: The Case of the Mad Cow Disease

What drives the behavior of consumers when faced with a product-related crisis, such as that involving food contamination or life-threatening design flaws? For both consumers and companies, these crises have become of increasing importance because of the globalization of markets and an increased coverage by the media. Marketers need to understand why and how consumers react to a crisis. We show that by decoupling risk response behavior of consumers into the separate components of risk perception and risk attitude, a more robust conceptualization and prediction of consumers’ reactions is possible. Such a framework helps provide answers on how marketers can deal with such types of crises. The merits of this conceptualization are illustrated in two field studies that examine the reactions of German, Dutch, and American consumers to the BSE (mad cow disease) crisis. D 2002 Elsevier Science B.V. All rights reserved.

[1]  A. Smidts.  The relationship between risk attitude and strength of preference: a test of intrinsic risk attitude , 1997 .

[2]  M. Bazerman.  Judgment in Managerial Decision Making , 1990 .

[3]  D. E. Bell,et al.  Decision making: Descriptive, normative, and prescriptive interactions. , 1990 .

[4]  John R. Hauser,et al.  Assessment of Attribute Importances and Consumer Utility Functions: von Neumann-Morgenstern Theory Applied to Consumer Behavior , 1979 .

[5]  J. Pratt.  RISK AVERSION IN THE SMALL AND IN THE LARGE11This research was supported by the National Science Foundation (grant NSF-G24035). Reproduction in whole or in part is permitted for any purpose of the United States Government. , 1964 .

[6]  Gerald Zaltman,et al.  Consumer behavior : basic findings and management implications , 1979 .

[7]  P. Fishburn.  Transitive measurable utility , 1983 .

[8]  P. Farquhar.  State of the Art—Utility Assessment Methods , 1984 .

[9]  P. Schoemaker,et al.  Probability Versus Certainty Equivalence Methods in Utility Measurement: Are they Equivalent? , 1985 .

[10]  J. March,et al.  Managerial perspectives on risk and risk taking , 1987 .

[11]  L. Robin Keller,et al.  An empirical investigation of relative risk aversion , 1985, IEEE Transactions on Systems, Man, and Cybernetics.

[12]  Kenneth R. MacCrimmon,et al.  Characteristics of risk taking executives , 1990 .

[13]  Ralph L. Keeney,et al.  Decisions with multiple objectives: preferences and value tradeoffs , 1976 .

[14]  Rakesh K. Sarin,et al.  Modeling Ambiguity in Decisions Under Uncertainty , 1988 .

[15]  P. Schoemaker.  The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations , 1982 .

[16]  J. Jacoby,et al.  Consumer Behavior , 2009 .

[17]  P. Slovic.  Perception of risk. , 1987, Science.

[18]  G. Hofstede.  The Cultural Relativity of Organizational Practices and Theories , 1983 .

[19]  Z. Shapira.  Risk Taking: A Managerial Perspective , 1995 .

[20]  J. Bettman.  Perceived Risk and Its Components: A Model and Empirical Test , 1973 .

[21]  Terry L. Childers.  Assessment of the Psychometric Properties of an Opinion Leadership Scale , 1986 .

[22]  J. March,et al.  Variable risk preferences and the focus of attention , 1992 .

[23]  R. Staelin,et al.  A Model of Perceived Risk and Intended Risk-handling Activity , 1994 .

[24]  G. Hofstede,et al.  Culture′s Consequences: International Differences in Work-Related Values , 1980 .

[25]  D. F. Blankertz,et al.  Risk taking and information handling in consumer behavior , 1969 .

[26]  Kenneth R. MacCrimmon,et al.  Taking Risks, the Management of Uncertainty , 1987 .

[27]  A. Tversky,et al.  The framing of decisions and the psychology of choice. , 1981, Science.

[28]  F. Knight.  The economic nature of the firm: From Risk, Uncertainty, and Profit , 2009 .

[29]  John O. Summers,et al.  Perceived Risk and Composition Models for Multiattribute Decisions , 1978 .

[30]  A. Abbott.  BSE fallout sends shock waves through Germany , 2001, Nature.

[31]  Ale Smidts,et al.  Assessing the Construct Validity of Risk Attitude , 2000 .

[32]  B. Wansink,et al.  The Battle Over Genetically Modified Foods: False Assumptions About Consumer Behavior , 2001 .

[33]  R. L. Keeney,et al.  Decisions with Multiple Objectives: Preferences and Value Trade-Offs , 1977, IEEE Transactions on Systems, Man, and Cybernetics.

[34]  J. Riley,et al.  The analytics of uncertainty and information: Long-run relationships and the credibility of threats and promises , 1992 .

[35]  G. Laurent,et al.  Measuring Consumer Involvement Profiles , 1985 .

[36]  K. Arrow.  Essays in the theory of risk-bearing , 1958 .

[37]  J. Pennings,et al.  Measuring Producers' Risk Preferences: A Global Risk‐Attitude Construct , 2001 .

[38]  G. Laurent,et al.  Further evidence on the consumer involvement profile: Five antecedents of involvement , 1993 .

[39]  R. Brockhaus.  Risk Taking Propensity of Entrepreneurs. , 1976 .

[40]  P. Aldhous.  Inquiry blames missed warnings for scale of Britain's BSE crisis , 2000, Nature.

[41]  Daniel Kahneman,et al.  The Framing of Decisions and the Rationality of Choice. , 1980 .

[42]  B. Ratchford,et al.  An Empirical Test of a Model of External Search for Automobiles , 1991 .

[43]  Colin F. Camerer,et al.  Taking Risks: The Management of Uncertainty , 1988 .

[44]  Gilbert A. Churchill.  A Paradigm for Developing Better Measures of Marketing Constructs , 1979 .