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Multi-Brand Crisis Impact on Dairy Industry Trust

Author ZhangShuPing
Tutor LuJuan
School China Agricultural University
Course Agricultural Economics and Management
Keywords multi-brands industry-level trust trustee trustor trust repair tactics
CLC
Type PhD thesis
Year 2014
Downloads 23
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In recent years, a great number of product related crises have occurred. The crisis first appears in certain clusters and usually involves several brands. This causes the widespread concern of the affected parties. But for the moment studies of such crisis situations have focused on a single brand and the related damage to the firms after the crisis. But the research on the multi-brands crisis is insufficient, which has proven to have a profound negative effect on the whole industry and leads to a lack of confidence form the consumers and decreased willingness to buy the affected industry products. Moreover it will harm the whole industry value chain and can turn into a vicious cycle. The resulting damages to all parties in the value chain can then turn the crisis into a full-fledged industry crisis. Therefore, the comprehensive and scientific research of the faith in an industry after a multi-brands crisis is of important theoretical and practical significance.From the industry risk point of view, this paper focuses on the dairy industry and takes a closer look at the2008melamine scandal in China. Using the survey data in2012, first we analyze the multi-brand crisis phenomenon, and then give a descriptive analysis of the trust status of the multi-brands crisis and put forward some suggestions on how to repair industry trust by analyzing both the trustee and trustee’s actions. The specific research content includes:(1) analyzing the multi-brands crisis phenomenon and trust status, revealing the traits of it and the most critical influences of industry trust.(2) studying the action of the truster (company) and trustor(consumer) and discussing the impact of interaction on industry trust.(3) researching the trust repair tactics of the industry from two aspects, firms and government based on the consumer’s trust estimate.The main conclusion of this research are as follows:(1) the paper find that the main cause of the multi-brands crisis is there exists unfair allocation mechanism in the industrial chain. both the consumer’ trust and the consumers’ intention to purchase decline after the multi-brands crisis,the speed of the consumer trust recovery is also slow.(2) the consumer’s behavior changes, He perceives the industry risk too be much higher than before, As a consequence the consumer begins to collect the information on his own, he becomes more prudent and also more rational in terms of purchase.(3) the company’s actions revolve around restoring and promoting trust, which we define in3categories: competent trust, goodwill trust and integrity trust. Among them,the competent trust is chief.For the firms who were directly involved the crisis with their products, their main agenda is to reform in order to regain the consumer trust. For the firms in the same industry but not directly involved, the crisis is an opportunity to enhance trust.(4) the government after the crisis focuses on enhancing the competent trust to raise goodwill trust and openness/transparency trust. The government then promotes the trust in the institutions and regulations. Point of emphasis are the concern for the wellbeing if the industry and consumer, upgrading supervision measures and improving information mechanisms.(5) after the crisis the firms typically display, listed in order of importance restrain tactics, recall tactics as well as communication tactics. On the other hand the government effective measures are to enhance regulations followed by improving the legislature and strengthening control mechanisms.The novelty in the research of this paper lies in (1) In this paper, based on the interaction between company and consumer, the relevant actions are discussed. Additionally the effective measures to repair trust form the company and government side are discussed. This is the novelty in the research of industry trust. Taking the2008melamine scandal as a case study for the research, the conclusions of this paper are more convincing and credible.(2) Previous studies have focused on the strategies to repair the trust after crises. Few studies have focused on the trust repair tactics of the whole industry. This paper break not only researches the crisis of the single brand, but puts the emphasis on multi brand and industry crisis and the process of regaining trust。

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