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Brand Relationship: A New Perspective on Brand Crisis Management

OUYANG Hong-xing Management School, Jinan University, P.R.China, 510632

Abstract: Based on the nature of brand relationship,

it’s a new perspective on brand crisis management to explore what kind of impacts the interactive relationship between consumers and brands would have on brand crisis. From the perspective of brand relationship, this paper defines brand as a state of the severe distortion and even temporary or permanent dissolution of brand relationship caused by widely spread negative incidents and puts forward an idea that brand crisis is a dynamic and evolutionary process which may be divided into three circulating phases: latency, outbreak and recovery. Brand relationship quality (BRQ) may be evaluated to judge which phase brand crisis is in, thus helping corporations accurately identify brand crisis, scientifically prevent and cope with crisis, better learn about crisis, and reduce the losses to the lowest.

Keywords: Brand crisis; Brand relationship; Brand relationship quality; New perspective on brand crisis management; 1. Introduction

China currently is in a transition period of market

economy with escalating market reform, and corporations are facing huge uncertainties with its survival and development. A large number of famous brands from such ones in early periods as Three, Giant and Qin Pool to the recent ones like Sanlu, Toyota, Carrefour, etc were deeply hit and even died out after a series of brand crisis. Facing the challenges of crisis, how to appropriately cope with crisis and transfer them into opportunities has become the first priority for corporations carrying out brand crisis management.

Specialized researches on brand crisis are rare in the field of academy, although brand crisis becomes much more frequent and corporations are paying more and more attention to the prevention and management of brand crisis. Currently, scholars both at home and abroad focus on the impact of the crisis triggered by product defects or harm on corporations from the perspective of product harm, but not all the crises are caused by product defects or harm, such as Huang Guanyu incident in Gome, the Donation incident in Wanke, etc. Meanwhile, based on the realistic problems encountered by

corporations in China, a part of domestic scholars have directly conducted research from the perspective of brand crisis, but most of them focus on the corporations’ prevention and response to crises (Li Wei, 2000; Zhu Lei, 2004; Chao Gangling, Wang Zhiliang, 2006; Liu Chunzhang, Yu Mingyang & Hou Aoshuang, 2008), and effects of the building of corporate managerial system and mechanism on crisis prevention and response. All the researches mentioned above have greatly promoted the development of study on brand crisis, however, what’s the connotation and nature of brand crisis? How brand crisis would evolve? How to clearly define which phase brand crisis is in through quantitative evaluation? These problems like a “black box” afflicting the effective management and further study of brand crisis. Brand relationship provides us a new perspective on brand crisis management and theoretical support on deep understanding of the nature of brand crisis, and it may help corporations better learn about brand crisis, scientifically manage crisis, and reduce the losses to the lowest.

2. Research on brand relationship

2.1 Nature of brand relationship

Brand relationship appears under the background of prevalence of relationship marketing where brand is seen as a bridge connecting corporation and consumers. Based on the theory of relationship marketing and interpersonal relationship theory in social psychology, Blackston (1992) put forward the concept of brand relationship, believing that brand relationship is a interaction between the attitudes of consumers towards brands and that of brands towards consumers, i.e. it’s a result of the interaction between the objective aspect(mainly refers to brand image which may be good or bad) and subjective aspect (mainly refers to brand attitude which may be positive or negative)of a brand. The interaction is reflected in the following two aspects: on the one hand, a brand forms its personality shown in front of consumers through positioning strategy, and it’s a objective brand at this time; on the other hand, consumers would have their own attitudes towards brand personality, which is called subjective brand. According to the connotation of brand

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relationship, it is recognized that corporations have to reach a unity between subjective brand and objective brand to establish an ideal brand relationship.

The theoretical foundation of brand relationship decides the anthropomorphic relationship between consumers and brands. This kind of relationship is not bound by law or formal agreement, but built upon the mutual trust and promise between consumers and brands, which is a contractual relationship in essence. However, this contractual relationship is different from the contract in black and white, which is an interactive relationship built upon mutual promises and common beliefs. Corporations promise to provide consumers products and service with quality assurance and carry out related social obligation; while consumers also have to accordingly spend time and money on those products and service provided by corporations. Two basic prerequisites are required to establish and maintain this brand relationship: brand identity and mutual benefit. Brand identity is not equal to knowledge about products and trademarks, not totally equal to brand image or brand position either, but reflecting consumers’ brand attitude, i.e. how consumers look upon brand image and brand position. Apparently, the more identity consumers hold to a brand, the more likely they keep good relationship with this brand. In addition, the maintenance of brand relationship has to build upon mutual benefit. The essence of mutual benefit is to keep the balance between brand benefit and consumer benefit, only this, can the mutual benefit be guaranteed, and once this balance is broken, the contractual relationship would break off.

2.2 Evolution phases of brand relationship

Brand relationship is a dynamic and evolutionary process, and like development of interpersonal relationship, it will experience a process from strangeness to familiarity, from usual intimacy to loyalty. However, brand relationship is a kind of fragile brand equity, mainly lying that it’s built upon the knowledge and belief of consumers towards brands which would change accordingly with the changing external information. Thus, brand relationship would end for brand mistakes or negative information exposure, but may recover through corporation’s positive rescue.

Based on different angles, current researches divide the evolution phases of brand relationship differently. From the perspective of development trend, phases of brand relationship may be divided into three categories: raising, ending and circulating.

Raising brand relationship argues that brand relationship is a deepening process from low level to high level. Typical theories are as follows: MBI pyramid model and the five phases of brand relationship based on brand touch-point. Resolving product’s satisfying consumer demands from function to emotion, MBI pyramid model points out the dynamic development of consumer-brand relationship owns a layer characteristic like pyramid, including five levels: existence, relevance, function, merit and connecting. Based on the perspective

of brand touch-point, Cross and Smith (1995) thought that there were five phases in the formation process of brand relationships, which were cognition, agreement, connection, community and support. Nevertheless, there is a common limitation for the two division methods that neither of them involved the deterioration and dissolution process of brand relationship, and it doesn’t correspond with the real development of brand relationship.

Ending brand relationship holds the point that relationship between consumers and brands would break up in the end. Typical theories mainly include the five stages of interpersonal relationship and the five-phase model of buyer-seller relationship. Representative of the former is Levinger (1980) who saw brand relationships as interpersonal relationship having five stages which includes attraction, building, continuation, deterioration, and ending. Varied with the five stages of interpersonal relationship, Dwyer, Schurr & Oh (1987), the main representatives of the latter believed that buyer-seller relationships evolve through five general phases identified as awareness, exploration, expansion, commitment and dissolution. Compared with raising brand relationship, the foregoing two theories thought brand relationship would finally come to ending or dissolution, which has been proved by a sea of brand marketing practices, but there are still a lot of century-old brands existed in real life.

Circulating brand relationship is the six phases of brand relationship put forward by Fournier (2001) who believed that brand relationship is a dynamic process which includes getting notice, getting acquainted, growing together, staying together, dissolution and getting back together. The six phases of brand relationship holds a circulating view, which not only involve the building, maintenance and dissolution of relationship, but also the recovery after breaking up of brand relationship, thus it’s much more close to real situation and provides theoretical basis for tackling brand crisis and re-building brand image.

Dissolution of brand relationship takes place frequently as result of complex market environment. As for corporations, besides well-prepared relationship maintenance in early stage, they will also confront getting back those consumers whose relationship with brands has been broken, thus it becomes critical to conduct effective recovery of brand relationship. Therefore, the six phases of brand relationship raised by Fournier is comparatively more objective and comprehensive, because it points out that relationship would dissolute for various reasons and resurrect through positive rescue. Based on the three categories of evolution phases of brand relationship mentioned above, this paper divides the whole circulating process of brand relationship into three phases: formation of brand relationship, dissolution of brand relationship and recovery of brand relationship.

2.3 Evaluation of brand relationship

Brand relationship quality (BRQ) is a core concept of

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measuring and evaluating strength of brand relationship, which is first raised by Fournier who defined it as “people’s subjective view upon the interaction between consumers and brands” by borrowing the concept of relationship quality in service marketing. BRQ reflects the intensity of long-term connection and development capacity between consumers and brands, and may be used to measure the stability and sustainability of brand relationship. Until now, scholars’ studies on measurement constructs of BRQ are shown in Tab.1.

Tab.1 Studies on constructs of brand relationship quality

Name Main constructs Scholars or Institutes

Time

The Two Factor theory

Trust and satisfaction

Blackston 1992

The Three Indicator theory

Awareness, trust and loyalty

Markinor Market Research Co. in South Africa

From 1992

The Six Element theory

Love and passion, self-connection, interdependence, commitment, intimacy and brand partner quality

Fournier, Aaker and Brasel

19982001

The Eight Indicator theory

Awareness, credibility, consistency, contact, responses, passion, affinity and fancy.

Duncan and Moriarty

1999

The Two Dimension theory

Intensity and activity

Keller 2001

Brand Relationship Index Model

Commitment/connection, attachment/attention, familiarity/awareness, trust/respect, association/recognition

Zhou Zhimin

2006

Chinese Brand Relationship Quality (CBRQ)

Social value expression, trust, interdependence, real and assumed emotions, commitment and self-concept connection

He Jiaxun 2006

Blackston (1992) thought that customer’s trust and

satisfaction with a brand are two elements of brand relationship, among which the former is affected by risk, credibility and intimacy, while the latter is a function of

activity and support. Markinor Market Research Co. in South Africa has developed the brand relationship score (BRS) to launch “Markinor Top Brands Survey” from 1992, which is summarized by three indicators, namely, awareness, trust and loyalty. Research conducted by Fournier (1998) is a landmark achievement in construct of BRQ. She extracted six constructs of brand relationship quality from a large number of brand stories through in-depth interview, which is Love and passion, self-connection, interdependence, commitment, intimacy and brand partner quality.

Following the brand relationship quality raised by Fournier, from perspective of the practical operation of corporation, Duncan and Moriarty (1999) put forward eight indicators to evaluate brand relationship, including Awareness, credibility, consistency, contact, responses, passion, affinity and fancy. Hess and Story (2005) saw brand relationship as commitment, arguing that commitment is comprised of personal connection and functional connection. Personal connection is determined by trust while functional connection is determined by satisfaction, and satisfaction has impact on trust. Gurviez and Korchia (2002) saw trust as a core variable of BRQ, which is comprised of credibility, sincerity and goodness.

Domestic scholars also conduct deep research on brand relationship quality, for instance, Zhou Zhimin (2005) creatively put forward a brand relationship matrix, and five constructs of brand relationship quality were got through empirical study, which includes commitment /connection, attachment/attention, familiarity/awareness, trust/respect, association/recognition. Note-worthily, rooted in Chinese culture, on the basis of the six elements of BRQ raised by Fournier, He Jiaxun (2006) put forward a Chinese brand relationship quality (CBRQ) model through factor analysis, which is social value expression, trust, interdependence, real and assumed emotions, commitment and self-concept connection. Differences existed between BRQ and CBRQ in two constructs: social value expression and real and assumed emotion, which shows that brand relationship quality may affected by local social and cultural environment, varying from region to region.

3. Brand crisis management research from the perspective of brand relationship

3.1 Connotation of brand crisis from the perspective of brand relationship

The interactive relationship between consumers and brands is a contracting relationship in essence. Contract means the common agreement achieved between both parties to fulfill certain benefit goal. On the one hand, corporations provide consumers with products and service and satisfy them both in material and spirit; on the other hand, consumers will gradually trust, be loyal to and depend on corporations and their brands after using and experiencing products and service. Only when

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the benefits in both parties reach a balance, can the contracting relationship maintain good and healthy development.

However, fierce competition and globalization make none of brands may keep stable in a changing market environment and the contracting relationship between consumers and brands is no exception. Change in corporate internal and external environment and that in consumers’ demands and cognition result in dynamic uncertainties in consumer-brand relationship. When some true or false negative brand information is exposed, consumers’ trust and loyalty to this brand would plummet immediately, the contracting relationship between consumers and brand would be distorted or broken, brand crisis would take place for the negative effect. Thus, from the perspective of brand relationship, brand crisis refers to a state that is the severe distortion and even temporary or permanent dissolution of brand relationship caused by widely spread negative incidents. During brand crisis, as consumers feel that they are betrayed by corporations, they have a strong sense of mistrust and suspicion, and will choose to abandon the brand or associate with other consumers to resist buying any products and service provided by the brand, thus getting brand relationship further deteriorated even ended.

3.2 Evolution of brand crisis from the perspective of brand relationship

Brand crisis is the distortion and dissolution of brand relationship which is caused by the breach of contract between consumers and brands. However, from the perspective of circulating brand relationship, it is known that brand relationship is a dynamic circulation process which not only involves the building and dissolution of brand relationship, but also the recovery of brand relationship after dissolution. Both dissolution and recovery of brand relationship are objective reality, and the well-done recovery job may guarantee a relatively stable brand relationship to a large degree and may also rejuvenate the broken consumer-brand relationship. Similarly, if corporations are able to take appropriate measures to “cool” the crisis incidents in the media center, prevent crisis from expanding, and diminish the effects of crisis, brand crisis may recover too. Based on the three phases of brand relationship defined in this paper, taking crisis breaking as frontier, the evolution of brand crisis may be divided into three dynamic and circulating phases: latency, outbreak and recovery.

Latency of brand crisis is a phase where brand relationship is slightly distorted, brand incidents are known to a small range of consumers, most of consumers don’t have strong feeling about the explosion of brand crisis, and consumers’ purchase attitudes won’t change apparently. For instance, Toyota “recall” incident in 2010 didn’t take place overnight, as a matter of fact, the danger of sudden speed-up for Toyota had hidden for six years, since as early as 2004, some consumers in the USA complained to NHTSA of CAMRY and ES

speeding up without touching accelerator. At that moment, quality problems of Toyota had been known among a small range of consumers (at least these who complained), safety of Toyota was questioned among these consumers, brand relationship was slightly distorted, and BRQ began to decline.

Once brand incidents can’t get properly solved, brand relationship will sharply deteriorate and even thoroughly dissolute, at this moment, brand crisis arrives at outbreak. Outbreak is the most critical phases of evolution of brand crisis as well as a phase the most easily identified. A wide range of consumers know about the brand incidents at this time, and fundamental change in consumers’ buying behavior and buying attitude takes place with a sharp decrease in brand relationship quality. The brand incidents of Toyota accelerated in 2010 with a sharp decrease in sales volume in China and America after entering outbreak. Figures showed that sales volume of Toyota in America in January 2010 reduced by 15.8% compared with previous month, whose position in the American auto sales rank drop down at the same time; In China, according to the data published by China Auto Association, Toyota was out of sales top 10 for the first time. Consumers’ trust towards Toyota declined obviously, and the sales reduction showed that consumers’ buying attitude and behavior had changed. Debate on Toyota online reached the peak of intensity too, and most of consumers held negative attitude towards such quality crisis of Toyota as pedal defects, seat pads and brake incidents, etc. The following media coverage and successive exposed negative message badly damage the brand image of Toyota.

After the outbreak of brand crisis, corporations face with two approaches. Firstly, not able to or don’t respond to crisis, despite the spread of crisis, corporations would finally come to the end; secondly, take positive and appropriate measures to prevent the spread of crisis, then it comes to the recovery. Brand recovery is a phase where deterioration of brand relationship relieves gradually. Entering recovery, brand relationship becomes better and consumers’ buying attitude and behavior return to the state in pre-crisis. Despite the losses brought by Toyota “recall” incident is huge, negative effects of the incident apparently diminished and large number of coverage in various media vanished since March 2010. Toyota grasped the recovery opportunity and adopted active remedial measures. It was shown that Toyota gained a surprising financial data in the first quarter, fulfilling operation profit 95.3 billion yen (1 billion US dollars), and it was the third quarter to be profitable successively, while in the same quarter of previous year, Toyota got a loss of 682.5 billion yen. The achievements can’t separate from the active promotion in the USA as well as positive recall of question products after crisis. The recent survey conducted by TNS auto study shown that the impact of recall on Toyota owners is not so severe—among the 500 subjects, approximately 1/4 of the owners of similar brands thought the recall would severely affect their recognition (27%) and trust (25%)

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towards Toyota brand, while only 15% of owners of Toyota held the same opinion.

3.3 Measurement of brand crisis from the perspective of brand relationship

Studies on the evolution of brand crisis are plentiful, but most of them just conduct qualitative research on the division of crisis phases from the perspective of brand crisis management. Without quantitative research, characteristics in various phases of brand crisis are not clear, corporations can’t respond appropriately to brand crisis in accordance with characteristics of the phases they are in, thus losing the prime time for brand crisis management. From the perspective of brand relationship, studying the evolution of brand crisis according to changes of brand relationship quality in various phases may accurately define characteristics of various phases of crisis and precisely defeat brand crisis, reducing the losses for corporations to the lowest. Therefore, quantitative researches on the changes of BRQ in various phases of brand crisis are helpful in solving the “black box” problem in the evolution of brand crisis, and have significant implications for both theory and practice.

As a paramount indictor of evaluating the strength of brand relationship, BRQ changes with the development trend of brand crisis in the whole dynamic evolution process. It is concluded from the Toyota “recall” incident that severity of brand crisis and exposure of negative brand information increase from latency to outbreak and then decrease in the phase of recovery. Previous research shows that severity of brand crisis and negative brand information are negatively correlated with brand relationship quality. Hence, in the evolution of brand crisis, brand relationship quality is shown as a U curve.

4 Conclusion

Brand crisis is rampant nowadays. Brand relationship

provides us a new perspective on recognizing and studying brand crisis management which has significant theoretical and practical implications. Firstly, based on the nature of brand relationship, it is found that the relationship between consumers and brands is a kind of contractual relationship, while brand crisis is the severe distortion or dissolution of contracting relationship, which provides theoretical foundations for further understanding the nature of brand crisis. Secondly, according to the circulating brand relationship, brand crisis is a dynamic evolutionary process and note-worthily may be resurrected. Compared with previous studies on brand crisis management highlighting response and prevention, recovery of brand crisis provides new idea for brand crisis management. Furthermore, evaluation and measurement of brand relationship quality guarantee the precise judging which phase brand crisis is in, and the evolution of brand crisis is not “black box” anymore, which has significant implications for promoting scientific crisis management and enhancing the capability and efficiency of coping

with crisis. On the whole, previous studies on brand crisis mainly

focus on crisis prevention and response from the perspective of management by conducting qualitative research. Recovery of brand crisis and quantitative research on the dynamic and evolutionary process of brand crisis from the perspective of brand relationship quality would be future directions for study on brand crisis management.

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