Journal of Business Ethics

, Volume 158, Issue 3, pp 743–761 | Cite as

Does Deceptive Marketing Pay? The Evolution of Consumer Sentiment Surrounding a Pseudo-Product-Harm Crisis

  • Reo SongEmail author
  • Ho Kim
  • Gene Moo Lee
  • Sungha Jang
Original Paper


The slandering of a firm’s products by competing firms poses significant threats to the victim firm, with the resulting damage often being as harmful as that from product-harm crises. In contrast to a true product-harm crisis, however, this disparagement is based on a false claim or fake news; thus, we call it a pseudo-product-harm crisis. Using a pseudo-product-harm crisis event that involved two competing firms, this research examines how consumer sentiments about the two firms evolved in response to the crisis. Our analyses show that while both firms suffered, the damage to the offending firm (which spread fake news to cause the crisis) was more detrimental, in terms of advertising effectiveness and negative news publicity, than that to the victim firm (which suffered from the false claim). Our study indicates that, even apart from ethical concerns, the false claim about the victim firm was not an effective business strategy to increase the offending firm’s performance.


Fake news Product-harm crisis Deceptive marketing Unethical business practice Slandering Advertising Word of mouth Social media Text mining 



We thank Tae Ho Song who provided a part of the data used in this research.


This study was not funded by any grant.

Compliance with Ethical Standards

Conflict of interest

The authors declare that they have no conflict of interest.

Ethical approval

This article does not contain any studies with human participants or animals performed by any of the authors.


  1. Ahluwalia, R. (2002). How prevalent is the negativity effect in consumer environments? Journal of Consumer Research, 29(2), 270–279.Google Scholar
  2. Ahluwalia, R., Burnkrant, R., & Unnava, R. (2000). Consumer response to negative publicity: The moderating role of commitment. Journal of Marketing Research, 38(May), 203–214.Google Scholar
  3. An, J., & Kim, H. (2015). Building a Korean sentiment lexicon using collective intelligence. Journal of Intelligence and Information Systems, 21(2), 49–67.Google Scholar
  4. Anderson, C. K., & Lawrence, B. (2014). The influence of online reputation and product heterogeneity on service firm financial performance. Service Science, 6(4), 217–228.Google Scholar
  5. Archak, N., Ghose, A., & Ipeirotis, P. (2011). Deriving the pricing power of product features by mining consumer reviews. Management Science, 57(8), 1485–1509.Google Scholar
  6. Berger, J., Sorensen, A., & Rasmussen, S. (2010). Positive effects of negative publicity: When negative reviews increase sales. Marketing Science, 29(5), 815–827.Google Scholar
  7. Borah, A., & Tellis, G. (2016). Halo (spillover) effects in social media: Do product recalls of one brand hurt or help rival brands? Journal of Marketing Research, 53(April), 143–160.Google Scholar
  8. Bruce, N. I., Foutz, N., & Kolsarici, C. (2012). Dynamic effectiveness of advertising and word-of-mouth in the sequential distribution of short life cycle products. Journal of Marketing Research, 49(August), 435–451.Google Scholar
  9. Burmester, B. A., Becker, J., van Heerde, H., & Clement, M. (2015). The impact of pre- and post-launch publicity and advertising on new product sales. International Journal of Research in Marketing, 32(4), 408–417.Google Scholar
  10. Business Insider. (2010). BP’s apologetic ad campaign is just one more dumb PR decision.
  11. Business Insider. (2016). Facebook is going to use Snopes and other fact checkers to combat and bury ‘fake news’.
  12. Chen, Y., Ganesan, S., & Liu, Y. (2009). Does a firm’s product-recall strategy affect its financial value? An examination of strategic alternatives during product-harm crises. Journal of Marketing, 73(November), 214–226.Google Scholar
  13. Chevalier, J. A., & Mayzlin, D. (2006). The effect of word of mouth on sales: Online book reviews. Journal of Marketing Research, 43(3), 345–354.Google Scholar
  14. Chosun Ilbo (2011). Blown-off Christmas sales of all bakeries due to the ‘rat bread’ crisis that intended to reduce competitors’ sales.
  15. Cleeren, K., van Heerde, H., & Dekimpe, M. (2013). Rising from the ashes: How brands and categories can overcome product-harm crises. Journal of Marketing, 77(March), 58–77.Google Scholar
  16. Clemons, E. K., Gao, G., & Hitt, L. (2006). When online reviews meet hyper differentiation: A study of the craft beer industry. Journal of Management Information Systems, 23(2), 149–171.Google Scholar
  17. Cowden, K., & Sellnow, T. (2002). Issues advertising as crisis communication: Northwest airlines’ use of image restoration strategies during the 1998 pilot’s strike. International Journal of Business Communication, 39(2), 193–219.Google Scholar
  18. Darke, R., & Ritchie, R. (2007). The defensive consumer: Advertising deception, defensive processing, and distrust. Journal of Marketing Research, 44(1), 114–127.Google Scholar
  19. Das, S. R., & Chen, M. Y. (2007). Yahoo! for Amazon: Sentiment extraction from small talk on the web. Management Science, 53(9), 1375–1388.Google Scholar
  20. Dawar, N., & Pillutla, M. (2000). Impact of product-harm crises on brand equity: The moderating role of consumer expectations. Journal of Marketing Research, 38(May), 215–226.Google Scholar
  21. Dellarocas, C., Zhang, X., & Awad, N. (2007). Exploring the value of online product reviews in forecasting sales: The case of motion pictures. Journal of Interactive Marketing, 21(4), 23–45.Google Scholar
  22. Divol, R., Edelman, D., & Sarrazin, H. (2012). Demystifying social media. McKinsey Quarterly (2012).
  23. Duan, W., Gu, B., & Whinston, A. (2008). The dynamics of online word-of-mouth and product sales: An empirical investigation of the movie industry. Journal of Retailing, 84(2), 233–242.Google Scholar
  24. Financial Times. (2005). Food chain ‘thrilled’ by arrest of woman who said she found a finger in her chili.
  25. Godes, D., & Mayzlin, D. (2004). Using online conversations to study word-of-mouth communication. Marketing Science, 23(4), 545–560.Google Scholar
  26. Goh, K., Heng, C., & Lin, Z. (2013). Social media brand community and consumer behavior: Quantifying the relative impact of user- and marketer-generated content. Information Systems Research, 24(1), 88–107.Google Scholar
  27. Google Official Blog. (2016). Labeling fact-check articles in google news.
  28. Hajli, N. (2016). Ethical environment in the online communities by information credibility: A social media perspective. Journal of Business Ethics, 2, 1–12.Google Scholar
  29. Herr, M. P., Kardes, F., & Kim, J. (1991). Effects of word-of-mouth and product-attribute information of persuasion: An accessibility-diagnosticity perspective. Journal of Consumer Research, 174, 454–462.Google Scholar
  30. Hu, M. & Liu, B. (2004). Mining and summarizing customer reviews. In Proceedings of 10th ACM SIGKDD international conference knowledge discovery and data mining (KDD-2004) (pp. 168–177). New York: Association for Computing Machinery.Google Scholar
  31. Kim, S., & Choi, S. (2014). Is corporate advertising effective in a crisis? The effects of crisis type and evaluative tone of news coverage. Journal of Promotion Management, 20(2), 97–114.Google Scholar
  32. Kim, H., & Hanssens, D. (2017). Advertising and word-of-mouth effects on pre-launch consumer interest and initial sales of experience products. Journal of Interactive Marketing, 37, 57–74.Google Scholar
  33. Kwark, Y., Lee, G. M., Pavlou, P. A., & Qiu, L. (2016). The spillover effects of user-generated online product reviews on purchases: Evidence from clickstream data. In Proceedings of 37th international conference on information systems, association of information systems. (pp. 1–24). Dublin, Ireland.Google Scholar
  34. Lu, X., Ba, S., Huang, L., & Feng, Y. (2013). Promotional marketing or word-of-mouth? Evidence from online restaurant reviews. Information Systems Research, 24(3), 596–612.Google Scholar
  35. Luca, M., (2011). Reviews, reputation, and revenue: The case of In Harvard business school working paper, September, No. 12-016.Google Scholar
  36. Luo, X., Zhang, J., & Duan, W. (2013). Social media and firm equity value. Information Systems Research, 24(1), 146–163.Google Scholar
  37. Maeil Business Newspaper. (2011). Why did 70 stores of CJ Tous les Jours go out of business?.
  38. Meyer, J., Song, R., & Ha, K. (2016). The effect of product placements on the evaluation of movies. European Journal of Marketing, 50(3), 530–549.Google Scholar
  39. Onishi, H., & Manchanda, P. (2012). Marketing activity, blogging and sales. International Journal of Research in Marketing, 29(3), 221–234.Google Scholar
  40. Rishika, R., Kumar, A., Janakiraman, R., & Bezawada, R. (2013). The effect of customers’ social media participation on customer visit frequency and profitability: An empirical investigation. Information Systems Research, 24(1), 108–127.Google Scholar
  41. Sentinel Projects. (2010). Turn a PR crisis into positive online buzz: Lessons from the Gap.
  42. Simonson, I. & Rosen, E. (2014). What marketers misunderstand about online reviews. In Harvard Business Review, January–February.Google Scholar
  43. Stephen, T. A., & Galak, J. (2012). The effects of traditional and social earned media on sales: A study of a microlending marketplace. Journal of Marketing Research, 49(5), 624–639.Google Scholar
  44. TechCrunch. (2016). Amazon sues more sellers for buying fake reviews.
  45. The Wall Street Journal. (2010). BP tripled its ad budget after oil spill.
  46. The Wall Street Journal. (2014). Companies turn to social-media coaches.
  47. The Wall Street Journal. (2015). KFC sues Chinese companies over alleged eight-legged chicken rumors.
  48. Tipton, M. M., Bharadwaj, S., & Robertson, D. (2009). Regulatory exposure of deceptive marketing and its impact on firm value. Journal of Marketing, 73(6), 227–243.Google Scholar
  49. Trusov, M., Bucklin, R., & Pauwels, K. (2009). Effects of word-of-mouth versus traditional marketing: Findings from an Internet social networking site. Journal of Marketing, 73(September), 90–102.Google Scholar
  50. Tybout, A. M., Calder, B., & Sternthal, B. (1981). Using information processing theory to design marketing strategies. Journal of Marketing Research, 18(1), 73–79.Google Scholar
  51. USA Today. (2015). Amazon cracks down on fake reviews.
  52. van Heerde, H. J., Gijsbrechts, E., & Pauwels, K. (2015). Fanning the flames? How media coverage of a price war affects retailers, consumers, and investors. Journal of Marketing Research, 52(5), 674–693.Google Scholar
  53. van Heerde, H. J., Helsen, K., & Dekimpe, M. (2007). The impact of a product-harm crisis on marketing effectiveness. Marketing Science, 26(2), 230–245.Google Scholar
  54. Villanueva, J., Yoo, S., & Hanssens, D. (2008). The impact of marketing-induced versus word-of- mouth customer acquisition on customer equity growth. Journal of Marketing Research, 45(February), 48–59.Google Scholar
  55. Zhao, Y., Zhao, Y., & Helsen, K. (2011). Consumer learning in a turbulent market environment: Modeling consumer choice dynamics after a product-harm crisis. Journal of Marketing Research, 48(April), 255–267.Google Scholar

Copyright information

© Springer Science+Business Media B.V. 2017

Authors and Affiliations

  1. 1.Department of MarketingCalifornia State UniversityLong BeachUSA
  2. 2.University of Missouri-St. LouisSt. LouisUSA
  3. 3.Sauder School of BusinessThe University of British ColumbiaVancouverCanada
  4. 4.Kansas State UniversityManhattanUSA

Personalised recommendations