[PREPRINT] Does Deceptive Marketing Pay? The Evolution of Consumer Sentiment Surrounding a Pseudo-Product-Harm Crisis

Authors

Reo Song, California State University, Long Beach
Ho Kim, University of Missouri-St. LouisFollow
Gene Moo Lee, University of British Columbia
Sungha JangFollow

Document Type

Article

Abstract

Slandering of a firm’s products by competing firms poses significant threats to the victim firm. The resulting damage can be as large as the one from a product-harm crisis. Unlike a true product-harm crisis, the disparagement is based on a false claim, thus we call it a pseudo-product-harm crisis. Using a pseudo-product-harm crisis event that involves two competing firms, this research examines how consumer sentiments evolve surrounding the crisis. Our analyses show that while both firms suffer, the damage is severer to the offending firm (which causes the crisis) than to the victim firm (which suffers from the false claim) in terms of advertising effectiveness and negative news publicity. Our study indicates that apart from the ethical concern, false claims about competing firms are not an effective business strategy to increase firm performance.

Publication Date

9-1-2016

Publication Title

Journal of Business Ethics, Forthcoming

DOI

10.2139/SSRN.2835819

Recommended Citation

Song, Reo; Kim, Ho; Moo Lee, Gene; and Jang, Sungha, "[PREPRINT] Does Deceptive Marketing Pay? The Evolution of Consumer Sentiment Surrounding a Pseudo-Product-Harm Crisis" (2016). College of Business Administration Faculty Works. 11.
DOI: https://doi.org/10.2139/SSRN.2835819
Available at: https://irl.umsl.edu/business-faculty/11