Acr 2010 Poster Session Submission: The Effect of Systems of Thought on Brand Scandal Spillover: Holistic versus Analytic Cognition Moderating Scandal Spillover and Denial Effects Yun Lee* a marketing PhD



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ACR 2010 Poster Session Submission:

The Effect of Systems of Thought on Brand Scandal Spillover:

Holistic versus Analytic Cognition

Moderating Scandal Spillover and Denial Effects


Yun Lee*

A Marketing PhD. Candidate,

Henry B. Tippie College of Business,

University of Iowa
Nara Youn*

Associate Professor of Marketing,

College of Business Administration,

Hongik University



*Correspondence concerning this article should be addressed to either Yun Lee, PhD. Candidate (yun-lee@uiowa.edu) or Nara Youn, Assistant Professor (nara-youn@uiowa.edu), Department of Marketing, Henry B. Tippie College of Business, The University of Iowa, Iowa City, IA 52242-1000; phone: 319-512-1472.



The Effect of Systems of Thought on Brand Scandal Spillover:

Holistic versus Analytic Cognition

Moderating Scandal Spillover and Denial Effects
ABSTRACT  
We propose that different systems of thought influence the likelihood of brand scandal spillover, depending on the degree to which the contents of brand scandals are processed as context-based or focal object-based information. We demonstrate that holistic thinkers are more susceptible to brand scandal spillover than analytic thinkers are when a brand scandal is not directly associated with the product itself. Therefore, scandal spillover correction occurs to holistic thinkers when brand scandal denials are issued, but the denials boomerang to analytic thinkers. In contrast, analytic thinkers make more biased judgments than holistic thinkers do when a brand scandal is directly associated with the product itself. Analytic thinkers correct for scandal spillover when brand scandal denials are presented, but denials or no denials are equally effective to holistic thinkers in this case.


Keywords: Brand scandal spillover; Scandal denial; Systems of thought; Cognitive style; Analytic; Holistic; Negative brand publicity; Product-harm crises.



The Effect of Systems of Thought on Brand Scandal Spillover:

Holistic versus Analytic Cognition

Moderating Scandal Spillover and Denial Effects

EXTENDED ABSTRACT
Recent high-profile product recalls (Tang 2008) and more stringent product-safety legislation (Birch 1994; Patterson 1993) have led to increased consumers’ exposure to negative brand publicity. Product-harm crises or brand scandals lead to significantly decreased preferences and purchases for the scandalized brands and their family (Sullivan 1990) as well as their competing brands (Roehm and Tybout 2006). Recent research has demonstrated that consumers engaged in different systems of thought are more or less susceptible to negative brand publicity (Monga and John 2008).

Extending prior work, our research examines how different contents of negative publicity and systems of thought jointly affect consumer reactions to brand scandals and the spillover correction effects of denials. We argue that whether the contents of negative brand publicity are intrinsic or extrinsic to the product itself determines the degree to which individuals process the negative information as a focal point versus a context and that this relative difference subsequently affects the type of judgment bias they make. Holistic thinkers tend to focus more on relationships among objects and events and analytic thinkers tend to focus more on a discrete focal point from its context (Nisbett et al. 2001).

These distinct differences between holistic versus analytic cognitive styles lead us to predict that when negative publicity is directly associated with issues intrinsic to the product itself, for example, poor product quality or risks of injury threatening consumer safety, the focal components of negative publicity become more salient, and thus analytic thinkers might make more biased judgments for the scandalized brand than holistic thinkers might. Monga and John (2008) depicted this case and showed that when participants were presented with negative publicity about a new car with manufacturing problems, analytic thinkers were prone to more biases than holistic thinkers. We argue that the converse should show the opposite results. When negative publicity is not directly associated with the product itself, but related with issues extrinsic to the product, for example, manufacturing process causing a water pollution or recent Tiger Woods’ multiple mistress scandal linked with brands using him in their ads (e.g., Nike or Gatorade), consumers would attend more to the contexts of the brand scandals than the focal points of the scandalized brand itself, thus it leads to more biased judgments of holistic thinkers.

Furthermore, we argue that the effects of brand scandal denials will also depend on which cognitive thinking mode is active. Since scandal denials are perceived to be informative, when consumers consider the brand scandal as diagnostic, but to be redundant when they do not we argue that when the contents of the negative brand publicity are intrinsic to the product itself (Roehm and Tybout 2006), denials will attenuate the harmful effects of the brand scandal for analytic thinkers, but not for holistic thinkers. In contrast, when negative brand publicity information is extrinsic to the product itself, scandal denials will be more effective for holistic thinkers than for analytic thinkers.

We begin our hypothesis testing by demonstrating the effects of holistic versus analytic cognitive styles on brand scandal spillover in a fictitious situation where a brand scandal is extrinsic to the brand itself (Experiment 1). Next, we investigate the moderating role of thinking modes on the effects of scandal denials involved with the negative publicity extrinsic (Experiment 2), and intrinsic (Experiment 3) to the brand.

In Experiment 1, participants were asked to read a fictitiously created water pollution scandal regarding Nike athletic shoe factories and then indicate brand attitudes for Nike in general and the likelihood of its competing brand, Reebok, polluting nearby waters. Then they responded to ten items on a holistic scale (Choi et al. 2003). Regressing thinking styles (holistic versus analytic) on brand scandal spillover supported our prediction. In the context of negative publicity involved in the issues extrinsic to the product itself, holistic thinkers evaluated its parent brand more negatively and indicated the higher likelihood of Reebok’s water pollution than analytic thinkers did (βNike= -.490, t= -2.694, p=.013; βReebok= .51, t= -2.65, p=.015).

To investigate the role of cognitive modes moderating the effects of brand scandal denials, in Experiment 2, participants were primed with holistic versus analytic thinking styles by completing sentences in a short story about a trip to a city by filling in proper pronouns (i.e., I, my, me, mine versus we, our, us, ours; Kühnen et al. 2001). Then they were presented with a brand scandal about Nike’s water pollution and then an article introducing its competing brands, Adidas or Converse’s launching new athletic shoes with or without the denial of water pollution. Participants indicated the likelihood of Adidas or Converse’ polluting nearby waters. A 2(thinking styles: holistic versus analytic) × 2 (brand similarity: high, Adidas versus low, Converse) × 2(denial: yes versus no) between-subjects ANOVA revealed a significant three-way interaction (F(1,103)=9.277, p = .003). Subsequent analyses showed that there was a two-way significant interaction between thinking styles and denial in the high brand similarity condition (Fadidas(1,53)=9.245, p = .004). We also found a marginally significant main effect for thinking style, indicating that holistic thinkers are more susceptible to the brand scandal spillover (F(1,53)=3.258, p = .077) than analytic thinkers are. Contrasts revealed a marginally significant brand scandal spillover correction effect of a denial for holistic thinkers, but its boomerang effects for analytic thinkers. When denial was provided in the article, holistic thinkers indicated decreased likelihood of Adidas’ water pollution compared to when denial was not included in the article (Mno= 4.69, Myes=4.408; F(1,25)=3.021, p = .09). In contrast, analytic thinkers indicated significantly increased likelihood of Adidas’ water pollution when denial was included in the article (Mno= 3.292, Myes=4.405; F(1,28)=6.547, p = .016).

In Experiment 3, we tested our prediction in the context of negative publicity intrinsic to the product itself. Thinking style manipulation was the same as used in Experiment 2. Participants were presented with a fictitiously created McDonald’s food hygiene law violation scandal about using expired hamburger meat and breads. After reading the scandal story, they indicated the likelihood of Burger King and Outback’s food hygiene law violations and also of other filler brands. They then read an article introducing KFC or Outback’s new programs employing organic produce from environmentally friendly farming methods. The new program article was also varied with or without denial of food hygiene law violation. Participants then indicated the likelihood of KFC or Outback’s food hygiene law violation. A 2(thinking styles: holistic versus analytic) × 2 (brand similarity: high, Burger King versus low, Outback) repeated-measures ANOVA with thinking styles as a between-subjects factor and brand similarity as a within-subjects factor revealed a marginally significant main effect for thinking styles (F(1,220)=3.048, p = .08) and a significant main effect for brand similarity (F(1,220)=73.33, p < .001).

Replicating the results of Monga and John (2008), the data showed that holistic thinkers were less susceptible to the negative brand publicity than analytic thinkers were (Mholistic= 5.095, Myes=5.603). This effect was greater for the participants in the conditions of Burger King than Outback (Mbuerger king= 5.919, Moutback=4.779). As expected, a 2(thinking styles: holistic versus analytic) × 2 (brand similarity: high, KFC versus low, Outback) × 2(denial: yes versus no) between-subjects ANOVA revealed a significant three-way interaction (F(1,211)=8.207, p = .005). This interaction effect qualified the main effects for thinking styles (F(1,220)=4.459, p = .036), indicating that the brand scandal spillover effects occurred to analytic thinkers than holistic thinkers (Mholistic= 5.104, Manalytic=5.760). Subsequent analyses revealed a marginally significant two-way interaction between thinking styles and denial in the condition of KFC (F(1,138)=3.119, p = .08). As expected, contrasts indicated that the brand scandal spillover correction effects occurred to analytic thinkers, when the article was with the brand scandal denial compared to when it was not (Mno= 6.72, Myes=5.5; F(1,69)=6.752, p = .01), whereas denial or no denial was equally effective to holistic thinkers.
By employing a 2(thinking styles: holistic versus analytic) × 2 (brand similarity: high versus low) × 2(denial: yes versus no) × 2(scandal content: intrinsic versus extrinsic) between-subjects design in Experiment 4, we intend to increase the robustness of previous results and directly test the effect of the scandal content. The results of Experiment 4 will be presented at ACR 2010 with a complete working paper.

REFERENCES
Birch, John (1994), "New Factors in Crisis Planning and Response," Public Relations Quarterly, 39 (Spring), 31-4.

Choi, Incheol, Reeshad Dalal, Chu Kim-Prieto, and Hyekyung Park (2003), “Culture and Judgment of Causal Relevance,” Journal of Personality and Social Psychology, 84 (January), 46–59.

Klein, Jill and Niraj Dawar (2004), “Corporate social responsibility and consumer's attributions and brand evaluations in a product harm crisis,” International Journal of Research in Marketing, 21, 203-17.

Kühnen, Ulrich, Bettina Hannover, and Benjamin Schubert (2001), “The Semantic-Procedural Interface Model of the Self: The Role of Self-Knowledge for Context-Dependent versus Context- Independent Modes of Thinking,” Journal of Personality and Social Psychology, 80 (March), 397–409.

Monga, Alokparna Basu and Deborah Roedder John (2008), “When Does Negative Brand Publicity Hurt? The Moderating Influence of Analytic versus Holistic Thinking,” Journal of Consumer Psychology, 18, 320-32.

Nisbett, Richard E., Kaiping Peng, Incheol Choi, and Ara Norenzayan (2001), “Culture and Systems of Thought: Holistic versus Analytic Cognition,” Psychological Review, 108 (April), 291-310.

Patterson, Bill (1993), "Crises Impact on Reputation Management," Public Relations Journal, 49 (November), 47-8.

Roehm, Michelle, L. and Alice M. Tybout (2006), “When Will a Brand Scandal Spill Over, and How Should Competitors Respond?,” Journal of Marketing Research, 43 (August), 366- 73.

Sullivan, M. (1990), “Measuring image spillovers in umbrella-branded products,” The Journal of Business, 63, 309-21.

Tang, Christoper S. (2008), “Making Products Safe: Process and Challenges,” International Consumer Review, 8 (Autumn), 48-55.



Tybout, Alice M., Bobby J. Calder and Brian Sternthal (1981), “Using Information Processing Theory to Design Marketing Strategies,” Journal of Marketing Research, 18 (February), 73-9.


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