Immunizing consumers against bad news can protect brands, says study

Abercrombie & Fitch. Balenciaga. Starbucks. In recent years, these brands and many others have faced extreme public backlash due to insensitive comments from executives, changes to loyalty programs, controversial advertising decisions, and more.

In today's hyperconnected world, negative information about brands can quickly snowball online, resulting in widespread calls for boycotts and lost sales. In the most extreme cases, companies may lose hundreds of millions of dollars.

The customers most upset by bad news are often a brand's most loyal, says Wayne Hoyer, marketing professor and James L. Bayless/William S. Farrish Fund Chair for Free Enterprise at Texas McCombs. In a new paper, he tests a novel but simple strategy to help brands retain their most valuable devotees in the wake of moderate controversies.

"Everything in marketing is about promoting the brand, creating positive attitudes," he says. "But now, another whole area is brand defense. How do we protect ourselves against the obvious attacks that we might get?"

Hoyer's research, with co-authors Omar Merlo and Andreas Eisingerich of Imperial College London, builds on prior studies whose findings might seem paradoxical at first blush. By intentionally exposing customers to weakly negative news, a brand makes them less likely to abandon it in the future, even when worse news emerges.

In initial conversations with marketers, the researchers found them resistant to trying the strategy. One CEO described it as "terrifying" and even "grotesque."

But what would happen, the researchers wondered, if they tweaked the concept? Expose customers to the general idea of bad news rather than anything specific. Would it have a similar effect, strengthening their brand loyalty while also being more palatable to businesses?

To test this hypothesis, they surveyed more than 1,100 postgraduate students and online volunteers about three of the biggest brands—Amazon, Facebook, and Nike—with separate studies for each.

In each study, respondents were asked about their future intent to purchase or use the brand, generally on a scale from 1 to 7. From there, however, they split into three groups:

• A "bad news" group was asked to rank agreement with statements such as "My relationship with Amazon is not affected by negative information about it."
• Members of a second group ranked their overall attitudes toward the brand, from dislikable to likable.
• A third, which served as a control group, was asked no additional questions.

All three groups started with similar levels of purchase intention. A week or two later, they were given specific items of moderately negative news. The news was fictional for Amazon and Nike and real in the case of Facebook: an attack by Apple on its user privacy practices.

Respondents were then asked again about their purchase and usage intentions. The results were consistent across the three studies. Those in the bad news groups, who had been asked about resistance to negative news, were far more likely to keep patronizing the brands than members of the other two groups.

In the Amazon study, for example, purchase intentions dropped an average of only 0.15 points in the bad newsgroup, compared with 1.2 points in each of the other two.

But why? Hoyer points to a well-established concept called the measurement effect, in which measuring people's intentions can affect their subsequent behavior.

Asking customers how they would respond to hypothetical negative information creates cognitive dissonance, he explains. They may resolve it by thinking of all the things they like about the brand. That process reinforces those positive beliefs and makes them more readily accessible in the future.

He likens the process to a vaccination. A flu shot, he says, doesn't contain a full-blown dose of the virus. Rather, it gives your body a small amount in hopes it will be able to ward off the real thing.

The immunizing effect works only with customers who already have some level of affinity for a brand, he adds. "It's just reinforcing existing attitudes and could even make them stronger. This won't work on people who have no positive feelings."

But the most loyal customers are precisely the ones whom brands should obsess about retaining, Hoyer says. Many marketers already survey customers, such as loyalty program members. It would be relatively simple to add a few questions about their resilience to negative information.

The beauty of such questions, he says, is that they can measure customers' immunity "without exposing them to any actual negative information about the brand, something managers are highly reluctant to do."

The researchers are now working with several large consumer goods companies to test the method with real consumers, with plans for a second paper. But Hoyer says it might also apply to a wide range of companies with strong customer bases, from grocery stores to banks.

"The psychology of loyalty is the same no matter what product or service you're talking about," he says.

He also thinks it might work with consumers of all ages, races, and genders. "There are studies where they find that 7-year-olds have brand loyalty toward certain brands," he says. "It is very basic psychology."

The study is published in the Journal of the Academy of Marketing Science.