Imagination: You are responsible for the marketing of a major car manufacturer, and your biggest competitors have just recovered thousands of cars. Customers are now worried about the safety of cars like you. Have you seized this moment and exacerbated advertisements to steal market share? Or will you withdraw advertisements, worrying that customers will associate your brand with bad media?
This dilemma has been popping up with a marketing professor like me, and this dilemma has been popping up. Whether it is product recall, customer data leakage or scandal, the bad news of a brand can shake the customer's confidence in the entire product category.
A big problem: Raders should respond by increasing or reducing advertising? Will these adjustments help or damage to sales?
At first glance, the answer seems obvious. More advertising expenditures should mean greater market share, right? But reality is more complicated. In a recent study, my colleagues and I found on average that when the competitors' brands recall, my colleagues average, its competitors have reduced the advertising expenditure by half. In other words, most brands treat the crisis of competitors as threats rather than opportunities.
When we look at the content of the advertisement, we see something more interesting. When a brand of competitors accidentally discovered, we found that alternatives increased the average price -centered advertisement by 25 %, which may be to attract people seeking transactions. At the same time, they will reduce quality -centric advertisements by 71 %, which may be to avoid unnecessary comparison.
This is kick: This strategy is effective.
We have discovered that the recall of competitors has increased the monthly sales of alternatives by 35.3 %, and the more brands withdraw the advertising expenditure, the greater the effect. Therefore, when the competitors have faltering, the best response does not have to shout loudly. Instead, the data shows a smarter game: strategically spending, focusing on price information transmission, and avoid paying attention to quality comparison.
How do we complete work
In order to understand the brand's response when the competitors are facing crisis, we focus on a case in the real world: Volkswagen recalls nearly 5 million cars under the Sagita model under the Sagita model in October 2014. This provides a perfect opportunity advertising strategy for how competitors' brands have adjusted their way.
We have determined the alternative model of Sagitar-the other 62 cars in Class A category, sold by more than 30 manufacturers-and collected sales and advertising expenditures about the 308 media markets within a few months before and after recalling data. We then conducted statistical analysis to control several other variables that may affect AD expenditure.
Why is it important
Previous research provides a hybrid guidance for how to adjust its advertising expenditure after the marketing crisis of the alternative brand. Anecdotes in the automobile and consumer goods industry are also mixed. For example, after Samsung recalled its Galaxy Note 7 due to battery failure in 2016, the competitive pronuncist actively exacerbated the advertisement to increase its market share.
Similarly, in 2010, after the Toyota recall, General Motors provided incentive measures to inspire Toyota owners to use GM. GM's chief marketing officer positioned these incentive measures as a way for GM buyers to desire peace of mind. The report shows that after Toyota's recall, the sales of car manufacturers of GM and other competitors have increased.
But my team's research shows that this strategy may not be the best strategy. Sometimes, less saying is actually more.
Research introduction is a brief view of interesting academic work.