The Impact of a Product-Harm Crisis on Marketing Effectiveness
Marketing Science
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Although prior literature has examined reactions to drastic negative news, we examine the situation in which decision makers receive contradictory information about products and they have to decide whether to persist with or abandon product usage. We investigate physician reactions to conflicting information concerning the cardiovascular risk of Avandia, a diabetes drug. We examine how beliefs about both drug effectiveness and drug safety are updated and speculate that experience, expertise, and self-efficacy impact how such information is integrated with current quality beliefs. Unlike previous Bayesian learning models, we consider that some signals, such as positive and negative news releases and the firm's marketing effort, may be biased in that they provide an opinionated point of view. The results show interesting differences in how physician types (specialists, hospital-based primary care physicians, heavy and light prescribers) update their beliefs and the information sources they use to do so. We find evidence that safety issues about Avandia resulted in spillover concern to close competitor Actos. The results have implication for determining who should be targeted and what vehicles should be used if a firm is faced with a situation where consumers are in a quandary because of receiving conflicting messages.