An Examination of the Effect of Product Recall on Brand Reputation and its Financial Implications

Customer loyalty is a major strategic objective and focus in marketing. It has been suggested that brand reputation is a major driver of customer loyalty, and hence companies seek to increase the equity of their brands. Brand image is an asset of a company. Establishing and maintaining a good image in the consumer’s mind is one of the basic requirements to retain the customers and hence the market share. Product recall (or replacement) not only affects customer satisfaction, but also the reputation of the brand. Now, this “recall” term is not very new to India. A car recall in general layman’s language would mean – When a car is sold and if there is any company defect found, company has to issue a notice to all the car owners to bring back their cars to authorized company workshops. The cars then get full replacement for that faulty part completely free of charge. Product recall may sometimes adversely affect the purpose of huge expenditure made to establish the brand image. And hence the purpose of the research is to study the effect of these Recalls on the brand image of the product in consumer’s mind and then attempt to develop strategies to retain their image in the stage of recall