Sometimes firms face recalling their products due to manufacturing failure. A recall is defined as “an action taken by a manufacturer, or the government, to protect the public from products (such as medications, food, vehicles, child safety seats, cosmetics, and more) that may cause health or safety problems” (usa.gov. 2016). Recall process starts when an Investigation Report of the U.S. Consumer Product Safety Commission (CPSC) finds a fault or a potential for danger in a certain product. They have the legal right to request a product recall. A product recall can return a batch of or an entire of production (Investopedia, 2016).
Sometimes, a firm or company may voluntarily initiate a recall. This means the firm without a mandate from the CPSC recalls products. Most of the announced recalls are voluntary in business. Companies recall their product voluntarily as safeguards against potential lawsuits or rigid legal situations (Kurt & Itkin, 2015). Some of the companies that recalled their products voluntarily in 2015 are Toyota Avalon and Lexus ES Vehicles, Takata Airbags, Maytag, Dairy Farms- Cheese, Blue Bell Ice Cream, Sabra Hummus and Kraft Mac & Cheese (FDA.gov. 2016).
Recall product is rather costly for firms; both loss of money and reputation. For example, Nestle, Maggi noodles (Figure 1) were taken off shelves in May 2015. Maggi had to destroy 400 million packets of the product, and it cost to firm $67 million. In October, new tests mandated by an Indian court found that Maggi noodles were at a safe level. It was claimed that social media especially in Twitter recall protested with this “The Maggi quality check story is a clear indicator of the power of social media” (FDA.gov. 2016) had sported Nestle.
Recalling failure products, of course, is a critical function of ensuring consumer health, and safety. Companies have a social responsibility, must consider public health and security first. On the other hand, this should be asked that does recalling products have a negative effect on companies’ image. Does recalling a brand influence consumer perception or does it change consumer decision-making? Shakespeare and Morris (2013) investigated Toyota consumer perception about the recall of cars. By the Brand Index statistics, the general impression of brand fell (almost 20 units; from +29 to +15). 56% of consumers’ perception change negative but nearly 40% of them expressed that their perception did not change. On the other hand, 92% of consumers who are already Toyota owners’ perception has stayed positive. This case showed that Toyota’s recalling has not a significant impact on Toyota owners. However, whether consumers always have a positive perception about recalled products is highly debatable and risky. Lei, Dawar, and Canli (2012) investigated consumers’ perception changes on condition that product-harm crises. Researchers sought whether prior beliefs influence recall product evaluation. As stated in the findings; if participants have positive experiences with the brand, they blame the company less; contrary they rate the brand trustworthiness high. They added that base-rate information is a basic source of information that influences consumers’ inference judgments. Base-rate or consensus information refers how common the focal behavior or event is among the population of interest. Authors also noticed that in the next recall could have resulted in different consequences because the same base-rate information may have a different effect on the attribution. Consumers who discount the first crisis also tend to discount the second crisis for the same brand whereas consumers who subtype the first crisis are unlikely to subtype again.
Then it can be said that consumers who; “forget companies’ failure and keep going positive attitude towards the firm is a strong possibility if the brand has a good reputation. However, companies continue of recalling the products, because consumer perceptions may change over time. |