Understanding Product-Harm Crisis Management

Define a product-harm crisis

In the literature Crisis Management is broadly defined as an organization’s pre-established activities and guidelines for preparing and responding to significant catastrophic events or incidents (Lockwood, N 2005). It is clear that at some point in time most organizations or brands will encounter a crisis. This was postulated by Regester and Larkin (2005) who conceive that many crises are seen as smoldering phenomena directly associated with problems and risks, eventually bursting into critical incidents. Dawar and Pillutla (2000) in defining product harm crisis refers to incidents of negative publicity which are ubiquitous in the market place, ranging from lead paint-contained toys, to faulty tires, to tainted

Adding to the body of research, Siomkos and Kurzbard (1994) noted that Product-Harm crisis can be defined as well publicized events in which products are found to be defective or dangerous. There can be many outcomes that may result from Product-Harm crisis. For example there might be product recalls which may have a negative impact on the organization image, reputation, sales and bottom line. Whatever the outcome of the crisis there will be some impact to the organization so it is important to examine the factors that contribute to Product-Harm crisis.

Identify the factors that contribute to a product-harm crisis A review of the literature suggest that managers should be effectively prepared to deal with crises as they arise and even to the point where they develop a suitable communications strategy to deal with

Dawar and Pillutla (2000) also notes that product harm crises present more challenges in this age of mass media. Therefore companies should never underestimate the importance of properly handling product harm crises as it has been documented to have effects on their market share, stock prices, and sales of other company products (Pruitt and Peterson, 1986; Siomkos and Kurzbard, 1994). The fact that understanding that there may be some ambiguity around who the culpable party for a product harm crisis especially when it gets reported first in the media suggest that organizations should have a clear strategy around product harm crisis management. An example of this is the New York Times report (Peters, 2005) which suggested that Ford trucks with faulty cruise control switches, parked in garages were the cause of many house fires. However, Ford suggested that the fires could have started in areas other than the garage and denied any such claims of faulty switches. The implications of product harm crisis is far reaching and may go beyond the short-run on sales or market share loss for any number of reasons. Heerde et al (2007) in their research suggests that one implication for the organization is that their marketing mix effectiveness may be reduced because if the customers trust is breached advertising gets less “bang for the buck” than before the crisis. This may