Marketing & Policy Studies-Faculty Candidate Seminar

Abstract

Halo refers to the phenomenon whereby positive affect for one brand increases positive affect for a rival. The authors define perverse halo as the phenomenon whereby negative content for one brand increases negative conversations for a rival. They define reverse halo as the phenomenon whereby negative content for one brand decreases negative conversations for a rival.

The authors test the existence of such halo effects in a unique context consisting of around 6000 online conversations of Japanese and American automobiles during a series of recalls between January 2009 and April 2010 such as the Toyota acceleration crisis. Online conversations are important because they are spontaneous, passionate, rich, and live. Thus, they can provide an early warning and diagnosis of potential problems. The authors analyze halo in online conversations using the Vector AutoRegressive (VAR) model, taking advantage of the natural experiment on automobile recalls.

The authors find strong perverse and reverse halo effects. Perverse halo occurs from both online conversations and media citations about a focal brand’s recall while reverse halo only occurs from online conversations and when affecting a rival from a different country. These halo effects have a short wear-in and they wear-out by the 8th day. Further, the authors find competitive effects of advertising whereby a firm’s advertising increases concerns for rivals. The authors discuss the implications of these findings.

KEYWORDS: Online Conversations; Product Recall; Halo; Perverse Halo; Reverse Halo; Advertising; Competitive effects; Vector Autoregressive Models; Text Mining; Dynamic Responses, Variance Decomposition

Monday, Sep. 24, 2012 from 9:15 a.m. to 10:45 a.m.
Peter B. Lewis Building 218
11119 Bellflower Road
Cleveland, OH 44106-7235
United States
Speaker(s): Abhishek Borah - Ph.D candidate, Marshall School of Business, University of Southern California

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