Product recall with symmetric uncertainty and multiunit purchases

Maggi was the most popular instant noodles brand in India, which children in particular loved to snack on. The brand had a dominant position until suddenly in mid-2015 it got engulfed in controversy. Several state food regulators found that Maggi contained monosodium glutamate as well as lead well above the prescribed limits. Both these substances were harmful especially for children. When Nestlé India was confronted with lab test results it stuck to its position that they had a world class quality control process in place and that their products were safe for consumption. Finally, the national food regulator FSSAI, ordered a ban on the sale of Maggi including product recall. Consequently, several state governments imposed temporary ban on the sale of Maggi noodles in their respective states. The future of the company suddenly looked very bleak. Nestlé India was slow to respond to this fast unfolding crisis. Further, their responses were very brief and not adequately culture-sensitive. This led to the feeling in several quarters that the company was probably guilty of wrongdoing. To set right things Nestlé's worldwide CEO flew into India to douse the flames of the controversy and draw up an appropriate strategy to bail out the brand. He address the media, put in place a new CEO for Nestlé India and set brand Maggi on the path of recovery. However, Nestlé India was still facing a number of critical issues. What should be done to win over the trust of its customers? How should it recover market share lost to competitors both old rivals and new entrants? What strategy should it develop to succeed with the new products, especially hot heads, launched along with the comeback strategy? Should it change its approach to dealing with government health officials to prevent confrontations in future? How should it shorten the response time and make it effective in the face of a media backed public outcry in future?

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Global harmonization of food safety regulation from the perspective of Korea and a novel fast automatic product recall system

Journal of the Science of Food and Agriculture ◽

10.1002/jsfa.6278 ◽

2013 ◽

Vol 94 (10) ◽

pp. 1932-1937 ◽

Cited By ~ 4

Author(s):

Mun-Gi Sohn ◽

Sangsuk Oh

Keyword(s):

Food Safety ◽

Safety Regulation ◽

Product Recall ◽

Global Harmonization ◽

Recall System ◽

Automatic Product ◽

Food Safety Regulation

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Incorporating regulatory focus theory in product recall communications to increase compliance with a product recall

Public Relations Review ◽

10.1016/j.pubrev.2010.03.004 ◽

2010 ◽

Vol 36 (2) ◽

pp. 147-151 ◽

Cited By ~ 26

Author(s):

Daniel Laufer ◽

Jae Min Jung

Keyword(s):

Regulatory Focus ◽

Regulatory Focus Theory ◽

Product Recall ◽

Focus Theory

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“De terughaalactie geld alleen voor de hierboven afgebelede pizza’s geldig.”

Tijdschrift voor Communicatiewetenschappen ◽

10.5117/2015.043.003.292 ◽

2015 ◽

Vol 43 (3) ◽

Author(s):

Mariet Raedts ◽

Irene Roozen

Keyword(s):

Negative Impact ◽

Purchase Intentions ◽

The Other ◽

Product Recalls ◽

Negative Consequences ◽

Product Recall ◽

Brand Evaluations ◽

Different Types

Consumers’ responses to product recalls with language errors Consumers’ responses to product recalls with language errors Product recall notices not only warn consumers for faulty products, they also limit the damage which may be caused to the company. But what happens when the product recall notice itself contains errors? This study investigated the effects of three different types of language errors: typographical errors, verb errors and sentence errors. Four versions of a product recall were created. The control condition contained no errors. The other three versions contained either five typos, five grammatical conjugation errors or five poorly formed sentences. Participants (N = 710) were randomly assigned to one of the four conditions. Results indicate that participants who detected the errors, had lower attitudes towards the advertisement and the company than participants in the control condition and participants who failed to detect the errors. Poorly formed sentences also had a negative impact on consumers’ brand evaluations and their future product purchase intentions. Hence, language errors in product recall notices can have negative consequences for companies.

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The effects of brand equity and failure severity on remedy choice after a product recall

Journal of Product & Brand Management ◽

10.1108/jpbm-02-2020-2741 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Sascha Raithel ◽

Alexander Mafael ◽

Stefan J. Hock

Keyword(s):

Decision Making ◽

Brand Equity ◽

Probit Model ◽

Future Research ◽

Product Recalls ◽

Product Recall ◽

Managerial Decision ◽

Managerial Decision Making ◽

Content Type ◽

Failure Severity

Purpose There is limited insight concerning a firm’s remedy choice after a product recall. This study aims to propose that failure severity and brand equity are key antecedents of remedy choice and provides empirical evidence for a non-linear relationship between pre-recall brand equity and the firm’s remedy offer that is moderated by severity. Design/methodology/approach This study uses field data for 159 product recalls from 60 brands between January 2008 to February 2020 to estimate a probit model of the effects of failure severity, pre-recall brand equity and remedy choice. Findings Firms with higher and lower pre-recall brand equity are less likely to offer full (vs partial) remedy compared to medium level pre-recall brand equity firms. Failure severity moderates this relationship positively, i.e. firms with low and high brand equity are more sensitive to failure severity and then select full instead of partial remedy. Research limitations/implications This research reconciles contradictory arguments and research results about failure severity as an antecedent of remedy choice by introducing brand equity as another key variable. Future research could examine the psychological process of managerial decision-making through experiments. Practical implications This study increases the awareness of the importance of remedy choice during product-harm crises and can help firms and regulators to better understand managerial decision-making mechanisms (and fallacies) during a product-harm crisis. Originality/value This study theoretically and empirically advances the limited literature on managerial decision-making in response to product recalls.

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Labor Unions and Product Quality Failures

Management Science ◽

10.1287/mnsc.2021.4082 ◽

2021 ◽

Author(s):

Omesh Kini ◽

Mo Shen ◽

Jaideep Shenoy ◽

Venkat Subramaniam

Keyword(s):

Product Quality ◽

Labor Unions ◽

Product Recalls ◽

Employee Morale ◽

Product Recall ◽

Quality Outcomes ◽

Panel Regressions ◽

Broad Cross Section ◽

Operating Leverage ◽

The Impact

In this paper, we study the impact of labor unions on product quality failures. We use a product recall as our measure of quality failure because it is an objective metric that is applicable to a broad cross-section of industries. Our analysis employs a union panel setting and close union elections in a regression discontinuity design framework to overcome identification issues. In the panel regressions, we find that firms that are unionized and those that have higher unionization rates experience a greater frequency of quality failures. The results obtain even at a more granular establishment level in a subsample in which we can identify the manufacturing establishment associated with the recalled product. When comparing firms in close elections, we find that firms with close union wins are followed by significantly worse product quality outcomes than those with close union losses. These results are amplified in non–right-to-work states, where unions have a relatively greater influence on the workforce. We find that unionization increases firms’ costs and operating leverage and, consequently, crowds out investments that potentially impact quality. We also find some suggestive evidence that unions may compromise quality by hurting employee morale and by resisting technological upgrades in the firm. Overall, our results suggest that unions have an adverse impact on product recalls, and thus, product quality is an important dimension along which unions impact businesses. This paper was accepted by Gustavo Manso, finance.

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