DOCSLIB.ORG

Corporate Social Responsibility and the Effect of Product Recalls on Brand Loyalty

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Corporate Social Responsibility and the Effect of Product Recalls on Brand Loyalty UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS MASTER THESIS CORPORATE SOCIAL RESPONSIBILITY AND THE EFFECT OF PRODUCT RECALLS ON BRAND LOYALTY (DRUŽBENA ODGOVORNOST PODJETIJ IN VPLIV ODPOKLICEV IZDELKOV S TRGA NA ZVESTOBO BLAGOVNI ZNAMKI) Ljubljana, February 2008 SABINA SULER IZJAVA Študentka Sabina Suler izjavljam, da sem avtorica tega magistrskega dela, ki sem ga napisala pod mentorstvom prof. dr. Žabkar in somentorstvom dr. Pahor in skladno s 1. odstavkom 21. člena Zakona o avtorskih in sorodnih pravicah dovolim objavo magistrskega dela na fakultetnih spletnih straneh. V Ljubljani, dne___________________ Podpis:_______________________ Table of Contents 1. Introduction.............................................................................................................................................................. 1 1.1 Problem Description ........................................................................................................................................... 1 1.2 Purpose and Hypothesis of the Master Thesis..................................................................................................... 2 1.3 Methods of Analytical Approach......................................................................................................................... 3 1.4 Master Thesis Structure....................................................................................................................................... 4 2. Conceptual Review on Corporate Social Responsibility....................................................................................... 4 2.1 Definition of CSR ................................................................................................................................................ 4 2.2 Components of CSR............................................................................................................................................. 6 2.3 Drivers of CSR .................................................................................................................................................... 8 2.4 Social Performance and Effect on Financial Performance................................................................................. 9 2.5 Theoretical Models of CSR................................................................................................................................10 2.6 Developing a CSR Strategy ............................................................................................................................... 12 2.7 Arguments for and Against CSR........................................................................................................................ 14 2.8 Future of CSR.................................................................................................................................................... 17 2.9 Examples of CSR and Marketing Strategy ........................................................................................................ 18 3. CSR and Brand Loyalty ........................................................................................................................................ 19 3.1 Definition of Brand Loyalty............................................................................................................................... 20 3.2 Components of Brand Loyalty........................................................................................................................... 20 3.3 Advantages and Disadvantages of Brand Loyalty............................................................................................. 21 3.4 CSR and its Effects on Brand Loyalty ............................................................................................................... 22 4. Analysis of Effects of Product Recalls on Brand Loyalty................................................................................... 23 4.1 Research Purpose and Objectives..................................................................................................................... 23 4.2 Qualitative Analysis: Case Studies.................................................................................................................... 23 4.3 Quantitative Analysis and Methodology............................................................................................................ 28 4.4 Research Hypotheses......................................................................................................................................... 29 4.5 Main Findings ................................................................................................................................................... 31 4.6 Research Limitations and Future Research Direction ...................................................................................... 46 4.7 Recommendations.............................................................................................................................................. 46 5. Conclusion .............................................................................................................................................................. 48 6. Literature and Sources .......................................................................................................................................... 51 Appendices List of Figures: Figure 1: The Three-Domain Model of CSR .................................................................................11 Figure 2: Citizenship and Loyalty Model ......................................................................................22 Figure 3: Mattel's Total Recall of Chinese Made Toys..................................................................26 Figure 4: Gender.............................................................................................................................31 Figure 5: Country of Residence .....................................................................................................32 Figure 6: Brand Position in Slovenia .............................................................................................32 Figure 7: Pyramid of Toothpaste Brands in Slovenia ....................................................................33 Figure 8: Area of Residence...........................................................................................................33 Figure 9: Age of Respondents........................................................................................................34 Figure 10: Highest Level of Education ..........................................................................................35 Figure 11: Corporate Social Responsibility and Company Ability................................................36 Figure 12: Opinions on CSR Dimensions Regarding Colgate.......................................................37 Figure 13: Brand Loyalty ...............................................................................................................38 Figure 14: Fabricated Article .........................................................................................................39 Figure 15: Product Recalls .............................................................................................................40 Figure 16: Trust in Organization Pre-Recall..................................................................................41 Figure 17: Trust in Organization Post-Recall ................................................................................42 Figure 18: Trust in the Organization..............................................................................................42 Figure 19: Trust in Brand Pre-Recall .............................................................................................43 Figure 20: Trust in Brand Post-Recall............................................................................................44 Figure 21: Trust in Brand...............................................................................................................44 Figure 22: Group #1 North Americans ..........................................................................................45 Figure 23: Group #2 Europeans .....................................................................................................45 List of Tables: Table 1: Regression-CSR Issues and Brand Loyalty .....................................................................37 Table 2: Demographics ................................................................................................................ VII Table 3: One-Sample Statistics –Testing Ambivalences for Brand Loyalty ............................... VII Table 4: One-Sample Test...........................................................................................................VIII Table 5: One-Sample Statistics-Testing Ambivalences for Product Recalls ..............................VIII Table 6: One-Sample Test...........................................................................................................VIII Table 7: Model Summary.............................................................................................................. IX Table 8: Anovab............................................................................................................................. IX Table 9: Coefficientsa ...................................................................................................................
Load more

Recommended publications
  • State Attorneys General and the Response to the 2007 Recalls of Children’S Toys
    STATE ATTORNEYS GENERAL AND THE RESPONSE TO THE 2007 RECALLS OF CHILDREN’S TOYS David Tutor February 5, 2009 INTRODUCTION In 2007, millions of toys were recalled because they contained small but powerful magnets that could perforate a child’s intestines when swallowed, as well as a dangerous amount of lead paint on exterior surfaces. These recalls of children’s products were both preceded and succeeded by additional recalls of everything from toy charms to pet food to car tires. The majority of these products were designed in the United States, manufactured overseas, and returned to the domestic market where they appeared largely untested on shelves in major retail outlets. In many cases, it took reports of deaths or serious injuries to spur major recalls. The Consumer Product Safety Commission (CPSC), the agency charged with protecting the American public from the risks of dangerous products, appeared to be abdicating its responsibility. Years of slashed funding and deregulatory ideology had rendered the agency essentially reactive-- its primary function shifted to monitoring for signs of injury or death that might prompt a recall and assisting companies publicize their press releases once a recall had been initiated. In the absence of strong federal regulation, state Attorneys General began to fill in the voids of the current system and were able to achieve some major successes in the consumer products realm. However, prior to the Consumer Product Safety Improvement Act of 2008 (CPSA), state Attorneys General were often limited to confronting dangerous products to the extent that they were present in their state, despite their presence on shelves across the country.
    [Show full text]
  • Mattel: Overcoming Marketing and CASE Manufacturing Challenges 7
    Mattel: Overcoming Marketing and CASE Manufacturing Challenges 7 Synopsis: As a global leader in toy manufacturing and marketing, Mattel faces a number of potential threats to its ongoing operations. Like most firms that market products for children, Mattel is ever mindful of its social and ethical obligations and the target on its corporate back. This case summarizes many of the challenges that Mattel has faced over the past decade, including tough competition, changing consumer preferences and lifestyles, lawsuits, product liability issues, global sourcing, and declining sales. Mattel’s social responsi- bility imperative is discussed along with the company’s reactions to its challenges and its prospects for the future. Themes: Environmental threats, competition, social responsibility, marketing ethics, product/branding strategy, intellectual property, global marketing, product liability, global manufacturing/sourcing, marketing control t all started in a California garage workshop when Ruth and Elliot Handler and Matt Matson founded Mattel in 1945. The company started out making picture frames, Ibut the founders soon recognized the profitability of the toy industry and switched their emphasis. Mattel became a publicly owned company in 1960, with sales exceeding $100 million by 1965. Over the next 40 years, Mattel went on to become the world’s largest toy company in terms of revenue. Today, Mattel, Inc. is a world leader in the design, manufacture, and marketing of family products. Well-known for toy brands such as Barbie, Fisher-Price, Disney, Hot Wheels, Matchbox, Tyco, Cabbage Patch Kids, and board games such as Scrabble, the company boasts nearly $6 billion in annual revenue. Headquartered in El Segundo, California, with offices in 36 countries, Mattel markets its products in more than 150 nations.
    [Show full text]
  • Logistics and Supply Chain Management : Creating Value-Adding Networks / Martin Christopher
    LOGISTICS & SUPPLY CHAIN MANAGEMENT LOGISTICS & SUPPLY Martin Christopher is Emeritus Professor This updated fourth edition Effective design and management of supply chain networks can cut costs MARTIN CHRISTOPHER of Marketing and Logistics at Cranfi eld School of the bestselling Logistics & of Mangement, a leading UK business school. and enhance customer value. The supply chain can be a sustainable source He has written numerous books and articles of advantage in today’s turbulent global marketplace, where demand is Supply Chain Management is and is on the editorial advisory board of several diffi cult to predict and supply chains need to be more fl exible as a result. professional journals. Until recently he was co- the practical guide to all the key editor of The International Journal of Logistics In fact, the real competition today is not between companies, but between topics in an integrated approach Management and his latest books have focused supply chains. The winning approach to supply chains is an integrated upon relationship marketing, logistics and supply perspective that takes account of networks of relationships, sustainability LOGISTICS & to supply chains, including: chain management. and product design, as well as the logistics of procurement, distribution, and fulfi lment. Logistics & Supply Chain Management examines the tools, He has held appointments as Visiting Professor core processes and initiatives that ensure businesses can gain and maintain • The link between logistics and at universities around the world. Professor competitive advantage. customer value Christopher is a Fellow of The Chartered Institute of Marketing, The Chartered Institute The fourth edition has been updated and now contains four new chapters covering: SUPPLY CHAIN • Logistics and the bottom line – of Logistics and Transport and The Chartered Institute of Purchasing & Supply.
    [Show full text]
  • Mattel Responds to Ethical Challenges
    Daniels Fund Ethics Initiative University of New Mexico http://danielsethics.mgt.unm.edu Mattel Responds to Ethical Challenges INTRODUCTION Mattel, Inc. is a global leader in designing and manufacturing toys and family products. Well-known for brands such as Barbie, Fisher-Price, Disney, Hot Wheels, Matchbox, Tyco, Cabbage Patch Kids, and board games, the company boasts nearly $5.9 billion in annual revenue. Headquartered in El Segundo, California, with offices across the world, Mattel markets its products in over 150 nations. It all started in a California garage workshop when Ruth and Elliot Handler and Matt Matson founded Mattel in 1945. The company started out making picture frames, but the founders soon recognized the profitability of the toy industry and switched their emphasis to toys. Mattel became a publicly owned company in 1960, with sales exceeding $100 million by 1965. Over the next forty years, Mattel went on to become the world’s largest toy company in terms of revenue. In spite of its overall success, Mattel has had its share of losses over its history. During the mid to late 1990s, Mattel lost millions to declining sales and bad business acquisitions. In January 1997, Jill Barad took over as Mattel’s CEO. Barad’s management-style was characterized as strict and her tenure at the helm proved challenging for many employees. While Barad had been successful in building the Barbie brand to $2 billion by the end of the 20th century, growth slowed in the early 21st. Declining sales at outlets such as Toys ‘R’ Us marked the start of some difficulties for the retailer, responsibilities for which Barad accepted and resigned in 2000.
    [Show full text]
  • Gates , Deandra 1 1 2 3 Ts
    G A T E S , D E A N D R A 1 1 2 3 T S Marketing in Today’s CHAPTER Economy 1 G A INTRODUCTION T As noted in the opening Beyond the Pages 1.1 story, competing in today’s economy means finding ways to break out of commodity statusE to meet customers’ needs bet- ter than competing firms. All organizations—both for-profitS and nonprofit—require effective planning and a sound marketing strategy to, do this effectively. Without these efforts, organizations would not be able to satisfy customers or meet the needs of other stakeholders. For example, having an effective marketing strategy allows Apple to develop popular products, such as theD iPhone, iPad, iWatch, and its MacBook line of computers. Further, effective planning and strategy allows Cola- Cola to continue its leadership in soft drinks, make keyE acquisitions, and continue its expansion into the lucrative Chinese market. TheseA and other organizations use sound marketing strategy to leverage their strengths and capitalize on opportunities that exist in the market. Every organization—from yourN favorite local restaurant to giant multinational corporations; from city, state, andD federal governments, to chari- ties such as Habitat for Humanity and the American Red Cross—develops and imple- ments marketing strategies. R How organizations plan, develop, and implementA marketing strategies is the focus of this book. To achieve this focus, we provide a systematic process for devel- oping customer-oriented marketing strategies and marketing plans that match an organization to its internal and external environments.1 Our approach focuses on real-world applications and practical methods of marketing planning, including the process of developing a marketing plan.
    [Show full text]
  • The Mattel Affairs: Dealing in the Complexity of Extended Networks
    The Mattel Affairs: Dealing in the Complexity of Extended Networks Sergio Biggemann Senior Lecturer Marketing Department – School of Business University of Otago Ph: 64 3 479 8467 Fax: 64 3 479 8172 [email protected] Dunedin – New Zealand 1 The Mattel Affairs: Dealing in the Complexity of Extended Networks (Competitive paper) Abstract Outsourcing and/or offshoring is an increasingly common practice in industry. This practice, fuelled by the need of continuous cost reduction, produced large concentration of supply capacity in Asian countries, mainly China. Particularly important is the case of the toy industry that sources more than two thirds of their products from China. Although cost-effective, outsourcing and/or offshoring increases the complexity of the network in which companies interact and therefore increases cost of coordination between parties. Thus, it challenges the effectiveness of existing business processes. I studied the problems of product quality and safety that Mattel faced previously to Christmas 2007; the most important selling season for the toy industry. Lead painted toys and loosely fixed magnets –to mention two examples– caused massive recalls triggering a crisis that jeopardised Mattel’s position in the market having severely damaged the firm’s bottom line, the value of its stock, and potentially its brand reputation. I analysed publicly available information such as official company communiqués and media reports, to investigate the reasons why a company like Mattel could end in such a difficult situation. I found that while division of labour reduces manufacturing costs it increases complexity and makes coordination more difficult and more expensive, potentially overshadowing savings of outsourcing and/or offshoring.
    [Show full text]