Consumers And Brands: The Influence Of Perceived Corporate Social Responsibility On Brand Loyalty And TrustBy: Vesna Zabkar

Sabina Suler

Agenda

1. Purpose 1. Purpose

2. Approach2. Approach

3. Main Findings 3. Main Findings

4. Limitations and Future Research 4. Limitations and Future Research

5. Recommendations 5. Recommendations

Source: Willmott, 2003, pg.367

Citizenship and Loyalty Model

Qualitative Analysis: product recall consequences

Recalled over 21m toysStock has ↓ roughly 7%

Mattel’s executive VP has admitted that the company’s reputation

has been damaged

June 14th 2007, press release

about counterfeit toothpaste

incorrectly packaged

as “Colgate” has been foundOn press release date,

Colgate shares ↓ 0.9% to $66.85

Warning from the FDA

Sales ↓ 3% from a year earlierFaced approx. 486 lawsuits

Quantitative Analysis

H1: H2: H3: H4:

The more

positive a

person’s

perception of

CSR, the

higher is the

brand loyalty

Trust in a

company

will worsen

after a recall

People will

be less likely

to trust

brands that

have been

recalled

North

Americans

are differently

affected

by product

recalls than

Europeans

Research design

Figure 1: Fabricated Article

News & Features December 6, 2007, 2:46PM

Colgate toothpaste recalled

Antifreeze chemical found in tubes; no injuries reported

By David Riley

The Colgate-Palmolive Company said

Thursday that 5-ounce tubes of Colgate

toothpaste sold in discount stores are being

recalled because they may contain a

poisonous chemical.

A Food and Drug Administration official,

Doug Arbesfeld, said Wednesday that testing

had found the chemical in the Colgate

product.

MS USA Trading, Inc. of North Bergen, N.J .,

the importer involved in the initial recall

announcement, said the toothpaste may

contain diethylene glycol, a chemical found

in antifreeze.

The company said the toothpaste, imported

from China, was sold in discount stores in

New J ersey, New York, Toronto and Eastern

Europe.

“Made in China” is printed on the box and

includes Regular, Gel, Triple and Herbal

versions.

The trading company said the problem was

discovered in routine testing by the Food and

Drug Administration. It said no illnesses

have been reported to date.

Consumers who have purchased 5-ounce

toothpaste under the Colgate label can

return them to the place of purchase for a

refund, MS USA Trading said.

Riley is a senior correspondent in BusinessWeek's Detroit bureau.

3.39

3.54

4.29

0 1 2 3 4 5

How bothered are you by the reportedproduct recall?

To what extent are you concernedabout product recalls?

How important or unimportant is it toyou that firms such as Colgate avoid

product recalls.

Scale:n=5

Product recalls

Scale: 1= strongly dissagree, 5= strongly agree

H1: Perception of CSR Issues

0% 20% 40% 60% 80% 100%

SR behavior detracts from companies’ ability toprovide the best possible products.

SR behavior is a drain on a company’s resources.

SR behavior by firms is often a cover-up for inferiorproduct offerings.

SR firms produce worse products than do firms that donot worry about SR.

Firms that devote resources towards SR actions havefewer resources available for increasing employee

A company can be both SR and manufacture productsof high value.

Firms engage in SR behaviors tend to compensate forinferior product offerings.

Resources devoted to SR come at the expense ofimproved product offerings.

strongly disagree disagree indifferent agree strongly agree

H2: Trust in the Organization

Trust in Organization After the Recall

7

6

5

5

30

16

28

8

42

36

31

47

19

35

27

30

2

7

9

10

0% 20% 40% 60% 80% 100%

I believed the organization could not berelied upon to keep its promises.

I believed the organization was trustworthy.

I would find it necessary to be cautious indealing with this organization.

Overall, I believe this firm was honest.

strongly diagree disagree indifferent agree strongly agree

Trust in Organization Before the Recall

14

3

19

3

34

7

34

10

36

36

35

31

13

46

8

49

2

7

3

6

0% 20% 40% 60% 80% 100%

I believed the organization could not berelied upon to keep its promises.

I believed the organization was trustworthy.

I would find it necessary to be cautious indealing with this organization.

Overall, I believe this firm was honest.

strongly diagree disagree indifferent agree strongly agree

H2: Trust in the Organization

3.21

3.47

0 1 2 3 4 5

I believed theorganization w as

trustw orthy(after recall)

I believed theorganization w as

trustw orthy(before recall)

Mean

Scale: 1= strongly dissagree, 5= strongly agree

H3: Trust in BrandTrust in Brand Before Recall

4

9

3

1

9

19

13

13

27

40

38

23

42

21

42

51

18

11

4

12

0% 20% 40% 60% 80% 100%

I trust this brand.

I rely on this brand.

This is an honest brand.

This brand is safe.

strongly diagree disagree indifferent agree strongly agree

Trust in Brand After Recall

3

13

3

3

15

24

11

19

34

36

54

38

35

19

25

29

13

8

7

11

0% 20% 40% 60% 80% 100%

I trust this brand.

I rely on this brand.

This is an honest brand.

This brand is safe.

strongly diagree disagree indifferent agree strongly agree

H3: Trust in Brand

3.4

3.61

0 1 2 3 4 5

I trust this brand(after recall)

I trust this brand(before recall)

Mean

Scale: 1= strongly dissagree, 5= strongly agree

H4: Difference Between Groups

3.700

3.800

4.450

0 1 2 3 4 5

How bothered are you by thereported product recall?

To what extent are youconcerned about product

recalls?

How important or unimportantis it to you that firms such asColgate avoid product recalls.

Mean

3.183

3.367

4.183

0 1 2 3 4 5

How bothered are you by thereported product recall?

To what extent are youconcerned about product

recalls?

How important or unimportantis it to you that firms such asColgate avoid product recalls.

Mean

North Americans Europeans

Convenient, non-random sampleSample size

Multiple products on a larger, random sampleTwo-group pre-test post-test experimental designOther media

Limitations and Future Research

Recommendations

Foster CSR

Within its

Corporate

Culture

Public Trust

Ahead of Profit

Higher Rather

then Lower

Standards

Consistency of

Practices

Media &

Websites

Government

Consumers’

Sensitivity

To Damaging

CSR info