Recalls hurt brands and rivals on social media - Futurity: Research News
Product recalls provoke a sharp increase in negative chatter on social media sites. This bad buzz can cause a drop in sales and the market cap—or total market value of unpurchased shares—of the recalling company. “Our study demonstrates that a recall event increases negative chatter that can have damaging effects on the sales and stock market performance of rivals. This, plus an abundance of auto-focused blogs and review sites, make cars the perfect context for studying the relationship between social media and recall events. Toyota, Honda, Nissan, and Chrysler For the study, Borah and study coauthor Gerard Tellis of the University of Southern California considered four automobile manufacturers: Japanese firms Toyota, Honda, and Nissan, and American firm Chrysler. Using sentiment analysis or opinion mining techniques—computer programs that evaluate public feelings about a product by reading social media—they found a sharp increase in negative chatter following a recall. As might be expected, the negative chatter extended to other models of the same car brand—that is, a Toyota Corolla recall incited worries about Tacoma, Prius, and RAV4, which are. Source: www.futurity.org
