Bauer Business Focus

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Partha Krishnamurthy | March 4, 2011

Published on March 2, 2011

Associate Professor Partha Krishnamurthy spoke to Bauer Business Focus host Andrew Schneider about the impact of the Toyota recall on consumer confidence.

On Bauer Business Focus- A conversation on the impact of the Toyota recall for the brand and consumers with Andrew Schneider, business reporter for KUHF 88.7 FM.

Although safety inspectors have officially cleared Toyota, concluding that there is no evidence that malfunctions in electronics caused sudden acceleration accidents in their vehicles, the company still faces an uphill battle in repairing their brand in the mind of consumers.

Partha Krishnamurthy, an associate professor of marketing at the University of Houston C. T. Bauer College of Business, stopped by Bauer Business Focus to talk about the challenges of restoring consumer confidence after a very public recall.

“Consumer reaction has been dramatic and swift,” Krishnamurthy said. “Toyota’s brand image was doing fine, fine, fine, and then it went down like a rock. You’ve seen it come back a bit (since the recall in 2009), but it may never reach what it was before.”

How quickly and strongly a company responds to a recall or question regarding the quality of its products plays a big part in how consumers evaluate a brand, he added.

“Toyota’s response has been a bit tepid,” Krishnamurthy said, noting that when the issue first made headlines, the company denied any fault. “Their response should have been to embody wholeheartedly the message, ‘safety is our priority, and we’re going to do everything we can to make our cars safer.’”

“Once it becomes a news story, you treat it with sensitivity because of the impact on brand value,” he added, citing Tylenol’s response to reports of potential toxicity in their product by immediately pulling every product from every shelf everywhere as a way a brand has shown consumers it takes safety seriously.

Although Toyota seems to be trying to improve their image as best and quickly as they can, they still have a lot of ground to cover, Krishnamurthy said. And, although the company has taken a hit from the media attention on the recall, consumers may see the most impact, he added.

“When there is a false scare, you’re taking out one major force in the market for the wrong reasons. Everybody gets better because this big player is out of the market. My concern is someone buying a car now may not consider Toyota as much as before for the wrong reasons,” Krishnamurthy said.

Click here to hear the full interview.