CONSUMERS’ REACTIONS TO NEGATIVE INFORMATION ON PRODUCT QUALITY: EVIDENCE FROM SCANNER DATA

Maria De Paola () and Vincenzo Scoppa ()

No 201012, Working Papers from Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF

Abstract: We analyze consumers’ reactions to negative information on product quality using daily scanner data at item level from a well-known supermarket chain. We focus on a fraud that in 2008 has involved a number of Italian leading firms in the cheese sector. Exploiting the fact that only some brands were mentioned by the media as being involved in the fraud, we adopt a difference-in-differences estimation strategy and evaluate the effects of the negative media coverage comparing changes in sales for involved and for not involved brands. It emerges that the negative news on product quality have induced consumers to shift their demand from involved to not involved brands. These effects persist overtime, also once the media was no more giving attention to the issue. Retailers have suffered part of the costs deriving from the diffusion of bad news on product quality: the margin gained on brands directly mentioned by media has decreased after the negative publicity.

Keywords: Consumer Behavior; Product Quality; Firm Reputation; Scanner Data (search for similar items in EconPapers)
JEL-codes: L14 L15 L66 Q11 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2010-05
New Economics Papers: this item is included in nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.ecostat.unical.it/RePEc/WorkingPapers/WP12_2010.pdf First version, 2010-05 (application/pdf)

Related works:
Journal Article: Consumers’ Reactions to Negative Information on Product Quality: Evidence from Scanner Data (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:clb:wpaper:201012

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