Introduction
In the agile environment that characterizes the prevailing markets, the survival of companies depends on publicity and advertising (Marder and Lindvall, 2014). The two elements are particularly significant in the building of strong company brands worldwide. Publicity is described as a “non-personal communication” that employs modes such as tapes, films, photographs, newsletters, feature articles, press conferences, media interviews, and press releases (Marder and Lindvall, 2014, p. 1). Although publicity can have positive impacts on a business and strengthen brand equity, negative publicity may have adverse consequences for the company. Typically, negative publicity refers to damaging information that tends to degrade the business units, services, or products of a company. Such destructive information can spread through word-of-mouth, media, or print, and cause stronger effects on company image than positive publicity (Marder and Lindvall, 2014). Studies have demonstrated that negative publicity might cause substantial losses in market and revenue share. Therefore, companies should respond appropriately to any event that holds the potential to hurt the image of their businesses (Monga and John, 2008). Nevertheless, current research shows that bad publicity may also bring benefits to a company and increase the sales volume (Osak, 2012). As such, the present investigation offers a critical review of the literature concerning the positive effects of negative publicity.
Literature Review
Although popular opinion indicates that any form of publicity is beneficial, past studies have stressed the drawbacks associated with negative press. For instance, negative reviews seem to affect product sales and evaluation adversely. Berger, Sorensen, and Rasmussen (2010) combined experimental methods and econometric analysis to unify different perspectives and delineate the contexts that allow negative publicity to cause negative or positive effects. In particular, the authors argued that adverse publicity has the potential to promote sales through product awareness. As a result, negative publicity may cause differential impacts on the well-known versus the unknown products. For instance, “a negative review in the New York Times” decreased the sale of books written by established authors, but promoted the “sales of books that had lower prior awareness” (Berger et al., 2010, p. 815). Thus, although individuals and firms often attempt to restrain negative publicity, Berger et al. (2010) found that such adverse publicity could have benefits in certain cases. Publishers of well-known books or producers of established motion pictures may want to eliminate negative press, but less-known book publishers or less-illustrious film producers may wish to promote negative publicity in order to benefit from the resulting public awareness. Nonetheless, negative information may not always produce positive effects. Hence, there is a need to understand and acknowledge consumer sentiments. Usually, consumers tend “to discount direct advertising, but because negative publicity does not seem like a direct product appeal, it may slip in under the radar” (Berger et al., 2010, p. 826). Consequently, such undetected adverse publicity may have relatively more pronounced effects. As such, Berger et al. (2010) concluded that negative publicity could have positive impacts on business.
Zhu and Chang (2013) employed evidence collected from China to study the effects of bad publicity, which are associated with the unethical conduct of business founders, on company image. Since the development of digital media, unethical behavior in business founders has continued to soar in China. Zhu and Chang (2013) employed the balance and stimulus-response hypotheses to develop a theoretical framework aimed at examining the effects of negative publicity, which are linked to unethical conduct, on corporate perception. The researchers tested the model using “the partial least squares technique” and found that recovery performance and publicity intensity, as well as perceived severity, could predict the corporate image (Zhu and Chang, 2013, p. 111). Generally, perceived severity hurts the corporate image whereas recovery performance and publicity intensity improve the public perceptions. Moreover, the image of the business founder mediates the link between the corporate image and the predictors. Zhu and Chang (2013) also noted that the “initial consumer impression of business founders has a positive impact on positive corporate image” (p. 111). Cases involving unethical behaviors in business founders in China include “the stock price manipulation case of Huang Guangyu and the ‘contribution door’ event of Wang Shi” (Zhu and Chang, 2013, p. 111). Since business founders continue to be tied to their companies, consumers often view them passively or actively as company endorsers.
Deshpande and Hitchon (2002) conducted a study to test “Cause-Related Marketing (CRM) ads in the context of Benoit’s Image Restoration Theory” (p. 905). The researchers compared the impacts of three ads on brand image, as well as a nonprofit group. CRM is described as the formulation and implementation of marketing activities that involve company offers aimed at backing a particular cause when consumers make purchases. According to Deshpande and Hitchon (2002), researchers have concentrated more on the CRM’s effect on brands than its moral and ethical consequences. CRM appears to promote responsible marketplace activities. Thus, customers consider it as an appealing method for supporting social causes. Various surveys suggest that consumers tend to buy brands that exhibit social responsibility. As a result, CRM campaigns increase consumer involvement and interest in ads, heighten ideas concerning brand superiority, and improve brand perceptions (Deshpande and Hitchon, 2002). Hence, CRM activities improve a brand’s social responsibility and ad credibility, although the CRM’s involvement following negative publicity raises questions regarding corporate intentions. Deshpande and Hitchon (2002) noted that CRM activities promoted the highlighting of a brand’s social responsibility, but negative publicity had the effect of rendering such activities unethical.
Discussion
Since negative reviews may increase the awareness of less-known products, adverse word-of-mouth could have same l impacts. However, Berger et al. (2010) noted the need for future research to investigate additional aspects that might determine the influence of product reviews and publicity on consumer choice. Such factors might include the review’s extremity and relevance to consumers. The findings made by Berger et al. (2010) were not conclusive but suggested the need for further research on “direct negative publicity,” such as product reviews, as well as indirect negative publicity (p. 826).
Although the study conducted by Zhu and Chang (2013) provided meaningful implications, the authors identified various limitations that future research could address. The researchers’ investigation aimed at examining the effect of business founders’ inappropriate behavior on corporate image. Hence, Zhu and Chang (2013) failed to test the links between recovery performance, public intensity, and perceived severity, in addition to moderating and mediating factors. Future studies may explore such independent variables and investigate moderating variables like inappropriate behaviors, consumer commitment, and the consumers’ initial perceptions about a company. Mediating factors that may be considered in future investigations include consumer trust and emotion (Zhu and Chang, 2013). Researchers may also carry out a comparison of the impacts of unethical behavior’s adverse publicity on the corporate image of different endorsers. Such endorsers may include typical celebrities and professional managers. Additionally, researchers might consider a further investigation of the impacts of negative publicity on the purchasing behavior of consumers (Zhu and Chang, 2013).
The study conducted by Deshpande and Hitchon (2002) supported previous findings, which indicated that the ads produced by CRM generated more credibility perceptions than the use of brand ads prior to the brand’s negative publicity. Negative news, however, had unfavorable influences on consumer responses to CRM ads. The findings have several implications for non-commercial and commercial organizations’ advertisers. For example, commercial marketers may consider initiating consumer-centered CRM campaigns to promote brand and ad perceptions (Deshpande and Hitchon, 2002). Image restoration strategies identified in the study found that bolstering was the worst repair policy following an incidence of negative news coverage. Although the image repair strategies were examined in different interpersonal contexts, Deshpande and Hitchon (2002) suggested that future researchers should extend such comparisons to situations that involve corporate crises. Furthermore, future investigations may consider exploring other restoration strategies, apart from bolstering. The research conducted by Deshpande and Hitchon (2002) “was restricted to comparisons among types of ads before and after a scandal” (p. 918). Therefore, the investigators failed to draw conclusions regarding the publicity’s effectiveness in comparison to advertising. Such a comparison should be incorporated in future research.
Conclusion
Although publicity can have a positive influence on a business and strengthen brand equity, negative publicity has the potential to cause damaging effects on a company. In some cases, nevertheless, bad publicity can increase the sales volume and, hence, prove beneficial to a firm. For example, Berger et al. (2010) argued that adverse publicity could promote sales through product awareness. In another study, Zhu and Chang (2013) found that perceived severity, publicity intensity, and recovery performance play a critical role in predicting the corporate image. Hence, the proper handling of negative publicity can improve a company’s image significantly. Although CRM activities promoted the highlighting of a brand’s social responsibility, Deshpande and Hitchon (2002) reported that negative publicity could make such activities appear unethical. Therefore, there is a need for companies to develop and implement effective recovery strategies after negative publicity crises.
Bibliography
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Deshpande, S. and Hitchon, J. C., 2002. Cause-related marketing ads in the light of negative news. Journalism and Mass Communication Quarterly, 79(4), 905-926.
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Zhu, D. –H. and Chang, Y. –P., 2013. Negative publicity effect of the business founder’s unethical behavior on corporate image: evidence from China. Journal of Business Ethics, 117, 111–121.
