Product-Harm Crises and the Signaling Ability of Brands

Brand equity is recognized as one of the most important assets firms own (Aaker, 1991; Keller, 1993). As one Coca-Cola executive put it, the company might survive the loss of its physical, production-related assets, but would find it considerably more difficult to recover from a collective loss of consumer memory of the Coca-Cola brand name and its associations. The intangible equity vested in the Coca-Cola brand name is an invaluable asset for the company. Research on brand equity is relatively recent and has tended to focus on defining and measuring the construct. Keller (1993), in discussing customer-based brand equity, stated that: "Perhaps a firm's most valuable asset for improving marketing productivity is the knowledge that has been created about the brand in consumers' minds from the firm's investment in previous marketing programs" (p. 2). Researchers have defined brand equity at various levels, ranging from stock-market valuation measures, through incremental cash flow due to the brand, to the awareness, credibility, and positive associations consumers attribute to the brand (Aaker, 1991; Kamakura and Russell, 1993; Keller, 1993; Shocker, Srivastava, and Reukert, 1994). This analysis is concerned with customer-based brand equity, which is defined in terms of (1) consumers' brand awareness, (2) cognitive associations, including perceptions of quality and brand attitudes, and (3) the brand's credibility (Aaker, 1991; Erdem and Swait, 1998; Keller, 1993). Increased recognition of the value of brand equity has led to a stream of research that examines how this asset can be leveraged through, for example, extension to new product categories (Aaker and Keller, 1990; Dawar, 1996; Dawar and Anderson, 1994; Keller and Aaker, 1992; Park, Milberg, and Lawson, 1992). However, little work to date has examined the impact of corporate

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