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The impact of value-related crises on price and product-performance elasticities

Author

Listed:
  • Raoul V. Kübler

    (Marketing Center Münster)

  • Michael Langmaack

    (Kühne Logistics University)

  • Sönke Albers

    (Kühne Logistics University)

  • Wayne D. Hoyer

    (The University of Texas at Austin)

Abstract

Previous research on the impact of corporate crises on customers’ elasticity has largely focused on performance-related crises (e.g., product recalls) and found an increasing price elasticity under these conditions. We investigate whether this result differs for value-related crises that are due to ethical violations, such as the use of child labor or environmental pollution. In line with moral foundation theory (MFT), we propose that value-related crises lead to stronger moral outrage and increased boycott intentions, thereby decreasing price and product-performance elasticities. We first analyze more than 360,000 Facebook user comments in relation to four value-related and four performance-related crises and show that the different outcomes for value- and performance-related crises can be explained according to MFT. Then, through discrete choice experiments, we demonstrate that, in contrast to performance-related crises, price elasticity decreases substantially for a value-related crisis that affects both violating and nonviolating companies. We also show for the first time the impact on product-performance elasticities with similar negative effects as for price. The results are stable even for different product categories, causes of ethical violations, and measurement conditions. As a result, it is more difficult for companies to recover from value- than performance-related crises.

Suggested Citation

  • Raoul V. Kübler & Michael Langmaack & Sönke Albers & Wayne D. Hoyer, 2020. "The impact of value-related crises on price and product-performance elasticities," Journal of the Academy of Marketing Science, Springer, vol. 48(4), pages 776-794, July.
    • Handle: RePEc:spr:joamsc:v:48:y:2020:i:4:d:10.1007_s11747-019-00702-5
    DOI: 10.1007/s11747-019-00702-5
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