Introduction

There is an extensive research on different responses to repair customers’ trust in brands after a transgression. Denial (Siomkos and Kurzbard 1994; Dawar and Pillutla 2000; Laufer and Coombs 2006; Dutta and Pullig 2011); also addressed as stonewall (Kim et al. 2004); legally enforced recall by the government, (Siomkos and Kurzbard 1994; Dawar and Pillutla 2000; Laufer and Coombs 2006); an apology (Xie and Peng 2009; Mishra and Sharma 2018; Racine et al. 2018; Nazione and Perrault 2019); monetary compensation (Xie and Peng 2009; Veil et al. 2016); dissociation from the industry trade; thanking consumers’ trust and loyalty or showing rigorous test results (Veil et al. 2016) voluntary recall (Rehak 2002; Chen et al. 2009; Eaddy 2012; Zhao et al. 2013); and super effort (Siomkos and Kurzbard 1994; Dawar and Pillutla 2000; Laufer and Coombs 2006). There are also studies that assess if the efforts to recover trust pay off in terms of consumers’ trust as well as brand and corporation’s competence, integrity, and benevolence (Kim et al. 2004, 2009; Xie and Peng 2009) and the positive effect of legally enforced product recall on consumers’ trust in a high brand awareness product Mishra and Sharma (2018).

When there is a relationship with a brand, a transgression can generate feelings of betrayal and brand hate (Jain and Sharma 2019), vulnerability and a loss of trust and commitment to a brand (Ashley and Leonard 2009).

As far the authors are aware, there is a gap in the literature concerning scenarios that combine transgressions by high awareness brands, different levels of relationship (first-time vs. loyal customers) and situations of voluntary product recall and its opposite—passive product recall. The objective of this paper is to answer the following question: what is the impact of voluntary product recall (as opposed to passive recall) for loyal and first-time consumers’ trust on a high awareness brand after a functional transgression?

The current study evaluates the effects of relationship and voluntary recall following a high awareness brand performance transgression. We argue that after a transgression loyal consumers of a high awareness brand will have greater trust than first-time consumers. However, when adopting a voluntary recall, the difference between loyal and first-time will be reduced.

The following sections present a review of the literature on brand awareness, brand transgression, responses to brand transgression, first-time and loyal customers, brand trust and its components (competence, integrity, and benevolence), which will support the formulation of the hypotheses. Next, we present the method used in this study, discuss the implications of the findings in a managerial context, and propose recommendations for future research.

Brand Awareness

A brand is a valuable asset for organizations and a fundamental aspect of consumers’ choice of product. Aaker (1991) defines brand equity as a set of brand assets and liabilities that include brand awareness, brand recall, brand loyalty, perceived quality, and associations. The combination of these elements creates value for customers and companies. Brand awareness is a foundation for brand equity (Hoeffler and Keller 2003) and contributes to build brand identity and image (Ruão et al. 2016).

Brand awareness is the first step in the process of developing brand asset. It is a significant indicator of the extent to which the brand exists on consumers’ mental maps affecting their ability to identify a brand and associate it to a product category (Aaker 1991; Keller 1993).

Keller (2003) argues that brand awareness combines brand recognition and recall, and that consumers will consider buying high awareness brand over low awareness ones. Without brand awareness, consumers will hardly ever consider a brand as an option (Rossiter and Percy 1985; Aaker 1991). Macdonald and Sharp’s (2000) research on brand awareness and no-awareness situations over consumers’ behavior implied that the former simplifies the decision-making process, can generate repetition and is stronger than a lower price by a no-awareness product.

From a customer perspective, brand equity relates to the value consumers attach to a brand and only after creating value for customers companies will be able to reach financial value (Hakala et al. 2012). Due to its relationship with brand equity, managers use brand awareness as a common brand equity measure (Romaniuk et al. 2017). According to a Morgan Stanley Capital International (MSCI) study, through 1999–2019, the top world’s 40 strongest brands generated approximately the double of the total return to shareholders (TRS) than their competitors (Lehmann et al. 2020).

Because of the relevance of brand awareness, one of the most common metrics to measure brand awareness is top-of-mind awareness (TOMA) (Laurent et al. 1995; Romaniuk et al. 2017). When consumers are asked to name a brand in a product category, they will spontaneously mention the top brand. TOMA represents the highest level of brand awareness. To reach this level, the brand needs first to become recognized, then recalled and eventually reach TOMA. Nevertheless, for Hakala et al. (2012) a TOMA does not necessarily guarantee sales or loyalty.

For Aaker (1991), customer loyalty is the core among brand equity assets and liabilities. Although brand awareness is significant for promoting recognition and repetition, it does not guarantee brand loyalty. Loyalty results from a collection of circumstances experienced by consumers with a brand (Morgan and Hunt 1994). Long-term relationships between customers and organizations are based on trust (Molm et al. 2000) combined with recurring exchange (Starr-Glass 2011). Even companies that have high awareness brands must nurture customers’ trust and prevent its decline.

Brand Transgression

There are different definitions for transgression in the literature. They are unexpected events that can potentially threaten a brand reputation and its financial value because of the negative publicity (Benoit 1997; Hegner et al. 2014). For Dawar and Pillutla (2000) transgressions occur when a failure involves a well-publicized situation that affects a large group of customers.

Transgressions can concern functionality/performance (Raju and Rajagopal 2008; Dutta and Pullig 2011; Cleeren et al. 2017; Montgomery et al. 2017) or moral issues related to psychological, ethical or value aspects (Aaker et al. 2004; Raju and Rajagopal 2008; Montgomery et al. 2017; Kharouf and Lund 2018). Both performance and moral transgressions damage consumers’ perception of brands. However, there is no consensus over the type or extent of the harm that the two types of transgressions can cause. Some studies point that performance transgressions affect consumers’ perception more negatively than moral transgressions (Ahluwalia et al. 2000; Skowronski and Carlston 1989; Wojciszke et al. 1998; Montgomery et al. 2017). In a similar vein, studies on customers’ satisfaction suggest that product-related benefits are more critical to brand satisfaction than value-related benefits (Dutta and Pullig 2011; Kahn and Meyer 1991; Mittal et al. 1999; Swan and Combs 1976). The present study focuses on a high awareness brand performance transgression which compromises the brand’s capacity to fulfill in-contract obligations (Dutta and Pullig 2011; Montgomery et al. 2017).

Transgressions can bring several risks and drawbacks for a business. Frandsen and Johansen (2020) examined crisis management books published between 1986 and 2018 in the United States and the United Kingdom and identified that common risks presented by crises are: if not handled, the crisis can increase its intensity, the involvement of media and government scrutiny, the impacts to the business operation, to the image of the firm and its financial performance.

A brand that commits a transgression experiences a crisis that implies a reduction in consumers’ trust and compromises their relationship with the brand. In a globalized setting, social media magnifies the effects of transgressions, crises, and the reactions that follow them spread quickly putting a company reputation at risk. In a high-awareness brand failure context, it is crucial that organizations react before consumers manifest discontentment online. Otherwise, consumers and other stakeholders will perceive negatively the company, its products, and its brands. That’s why after a brand failure, organizations want to recover consumers’ trust (Cleeren et al. 2006).

A brand transgression also damages the brand reputation (Klein et al. 2004). According to Barnett et al. (2006, p 34) the corporate reputation corresponds to: “Observers’ collective judgments of a corporation based on assessments of the financial, social, and environmental impacts attributed to the corporation over time.” Reputation offers benefits like an increase in competitive advantage by signaling to stakeholders what a company’s products, work environment, and strategies are like compared to its competitors, which can leverage sales and attract good professionals and investors (Fombrun and Shanley 1990).

There is considerable research on the negative effects of brand transgression on sales and profitability performance and on consumers’ attitudes towards a brand (Van Heerde et al. 2007; Dutta and Pullig 2011; Haberstroh et al. 2015; Magnusson et al. 2014). Transgression can be considered a betrayal and causes retaliation against a firm through negative word-of-mouth, complaints to third parties, or a reduction in purchases (Grégoire and Fisher 2006). For Van Heerde et al. (2007), besides short-run sales and market-share decline, transgressions can bring a loss of effectiveness of marketing instruments since consumers’ trust might be breached, thus reducing the brand quality perception and advertisements results.

In a product-harm crisis affecting two brands in the same product category, consumers will be inclined to give a second chance for a stronger (high awareness) brand than for a weak one (Delgado-Ballester and Munuera-Alemán 2005). However, Grunwald and Hempelmann (2010) posit that companies with reputation for high quality products are more protected from blame accusations than less reputable ones.

Responses to Brand Transgression

Transgressions can also lead to opportunities to leverage a company’s image and can play an emblematic role in the relationship of brands with consumers (Aaker et al. 2004). Responding to a transgression can protect a brand’s trustworthiness (Hegner et al. 2014).

Dutta and Pullig (2011) identified three categories of responses to transgressions: denial, reduction-of-offensiveness, and corrective action response when a company accepts responsibility for the transgression and promises remedial action. Other scholars propose four tactics to handle transgressions: denial, a legally enforced recall, voluntary recall, and super effort (Siomkos and Kurzbard 1994; Dawar and Pillutla 2000; Laufer and Coombs 2006). Following a denial or stonewalling, in which a company repudiates responsibility through a statement (Kim et al. 2004), a product recall can occur because of legal mechanisms (Dawar and Pillutla 2000).

Chen et al. (2009) categorized product recall by responsiveness to the transgression. Some firms adopt a proactive/voluntary product recall when a problem is identified through internal inspections. In contrast, other companies choose a passive strategy, delaying the recall process.

In the case of a legally enforced product recall, communicating at the right time and speed are key factors for a successful recovery. A fast pace can be precipitous and incur excessive costs to the corporation, whereas a delay in starting a product recall may emphasize the effects of product failure and damage stakeholders’ perception of the brand and the company (Smith et al. 1996; Vassilikopoulou et al. 2009). Tardiness in implementing product recall and problems related to its execution can damage brand equity and lower market share (Korkofingas and Ang 2011).

Xie and Peng (2009) investigated three categories of trust repairing efforts. The first is corporate informational (e.g., disclosure). It is beneficial for a brand to disclose information about a transgression. Waiting for the press to reveal it will strengthen the harmful effects of the fault (Arpan and Roskos-Ewoldsen 2005; Poppo and Schepker 2010). If the brand informs stakeholders before the media, it minimizes the reputational damage (Fennis and Stroebe 2014). Furthermore, the self-disclosure of information by a brand that makes a transgression before a third party can prevent the negative effects of a crisis (Hegner et al. 2018).

The second trust repairing efforts category examined by Xie and Peng (2009) is affective (e.g., apology, remorse, and compassion). When a positive response, as an apology follows a transgression, consumers’ attitudes toward the brand can improve (Nazione and Perrault 2019). Racine et al. (2018) claim apologies support the restoration of consumers’ trust and the organization's reputation and that they mitigate unfavorable feelings towards the brand that commits a transgression.

The third trust repairing efforts group analyzed by Xie and Peng (2009) is functional (e.g., compensation and effort to avoid reappearance). Monetary compensation to remedy the damage the transgression might have caused can be a refund for a product recall, free product repair after product harm, coupons, or a discount (Xie and Peng 2009).

Examining the 2009 peanut butter spillover crisis in which all brands on the market were affected by one manufacturer’s product contaminated by salmonella, besides compensation and denial, Veil et al. (2016) identified three additional strategies to repair trust: organization’s dissociation from industry trade associations; ingratiation, e.g., thanking consumers’ trust and loyalty and, reminding stakeholders of the organization’s positive attributes as, for instance, being transparent by showing rigorous test results.

In a voluntary product recall, a firm’s spontaneous decision to carry out a recall can be an expensive strategy to regain trust. Tylenol’s 1982 voluntary recall was the first case in American history (Eaddy 2012) of adopting this strategy. The collection and destruction of over 30 million capsules and the launching of a new package were expensive, but shareholders recovered their losses in two months’ time (Rehak 2002).

Scholars have been researching the impact of a voluntary recall from investors and consumers’ perspectives. Chen et al. (2009) state that, regardless of a product nature or industry, a voluntary recall strategy has a greater negative effect on firms’ value than a passive one, as the market interprets that the potential effects of a crisis caused by the transgression are so intense that the company has no choice but to conduct the voluntary product recall. Contrary to that view, the findings of Zhao et al. (2013) on the outcomes of a voluntary product recall in the Chinese stock market indicate that a passive recall strategy is more harmful than a voluntary one. Research on the impact of voluntary recall on consumers’ perception indicates it is beneficial to consumers’ trust (Bortoli and Freundt 2017), as well as to the organization’s image, loyalty, and purchase intention (Souiden and Pons 2009).

The reasons for the selection of each strategy will vary according to the nature of the transgression, its potential impact on the company’s value, reputation, sales, and the purpose of the organization which is commonly that of recovering consumers’ trust (Cleeren et al. 2006) and prevent damages in financial results and corporate reputation (Xie and Peng 2009). Besides the strategies presented, some factors minimize the damages transgressions can cause. High awareness brands are better equipped to endure a product-harm crisis (Dawar and Pillutla 2000; Cleeren et al. 2006; Veil et al. 2016), as corporate reputation, brand familiarity and consumers’ loyalty might be of some help (Siomkos and Kurzbard 1994; Dawar and Pillutla 2000; Ahluwalia et al. 2001).

First-Time and Loyal Customers

Consumers’ attitudes toward products, brands and companies vary in accordance with awareness, experiences and information collected. There is vast research on the distinctions between transactional and relational purchase (Levine and White 1961; Anderson and Narus 1984; Berry et al. 1983; Dwyer et al. 1987; Baldinger and Rubinson 1996). The latter concerns repurchasing and developing and maintaining a long-term relationship with consumers (Morgan and Hunt 1994; Berry 1995; Grönroos 1991). Gummesson (2008) defined transactional purchase or pure transactional situation as one single acquisition. The price is key in the purchase process and brand recognition, preference, loyalty, or differentiation are not relevant (Webster 1992).

Morgan and Hunt (1994) brought attention to the role of trust in developing consumers’ relationships with brands. Trust grows because of an accumulation of situations that reinforce trustworthiness and leads to establishing relationships. Eventually, as consumers continue to purchase, they will experience brand loyalty (Ahluwalia et al. 2001; Raju et al. 2009; Jaiswal et al. 2018). Loyalty brings competitive advantages for firms (Sirdeshmukh et al. 2002; Reichheld and Schefter 2000) and is evaluated by repurchase rates (Aaker 1991). However, it brings more than sales, loyalty can provide additional revenue and higher profits (Reichheld and Sasser 1990; Gummesson 2002), it stimulates word-of-mouth and creates resistance to counter-persuasion (Dick and Basu 1994). Loyal customers can perform brand advocacy anchored in their endorsements. In case of a brand transgression, loyal customers’ brand advocacy can impact brand expectations (Keller and Fay 2012; Libai et al. 2013) and eventually, brand trust (Mishra and Sharma 2018).

Oliver (1999) developed a four-stage loyalty model related to consumers’ satisfaction improvement. The first stage concerns a cognitive situation when one brand attributes are preferable to the alternatives available, and there is a purchase routine, but without satisfaction processing. When satisfaction is processed cumulatively, consumers experience an affective loyalty for the brand, but are subject to eventual shifting to another brand. In the third stage, conative (behavioral intention), a brand has a positive impact on consumers, inspiring their commitment and it would take a lot of effort from a competitor to convince consumers to switch brands. In the fourth phase of Oliver’s loyalty model, consumers experience an attitude-based loyalty, in which their attachment to the brand corresponds to an inertial repurchasing behavior.

Baldinger and Rubinson (1996) assessed loyalty by integrating behavior with attitude. The behavior dimension pertains market share, penetration, and repetition, while the attitudinal dimension refers to awareness, advertising recall, and brand imagery. The researchers also classified loyal customers into three categories—high, moderate, and low loyalty. This study considers two scenarios. The first involves a first-time purchase of a high awareness brand and fits into the cognitive stage (Oliver 1999). The second scenario regards a situation of brand loyalty depicted by three consecutive purchases of the same brand. It suits a conative stage (Oliver 1999), which according to Baldinger and Rubinson (1996) characterizes high loyalty.

In a relationship situation, if a brand fails, consumers’ trust on it will rebuild loyalty intention (La and Choi 2012) and consumers will value more positive than negative information about a brand, whereas, in the absence of a relationship, consumers will give more importance to a negative information than positive information (Ahluwalia et al. 2000; Germann et al. 2013).

Mishra and Sharma (2018) evaluated loyal customers’ and other stakeholders’ reactions toward Maggi, a high awareness brand that faced a functionality transgression followed by a legally enforced recall. The findings indicate that due to Maggi’s high brand awareness, the negative impact of a health-related product-harm crisis was considerably mitigated by the relationship consumers had with the brand and the trust they had placed in it before the transgression. Another aspect Mishra and Sharma (2018) highlighted as key when handling the situation was Maggi’s ability to communicate during and after the crisis.

Brand Trust, Competence-Based, Integrity-Based and Benevolence-Based Trust

Trust results from the comparison of actual versus perceived intentions, motivations, and competencies. This evaluation will generate expectations (McEvily et al. 2003). Consumers’ trust in brands relies on the belief that promises related to physical attributes, functional and self-expressive benefits will be consistently delivered (Delgado-Ballester and Munuera-Alemán, 2005; Erdem and Swait 2004). According to Rajavi et al. (2019) trust affects various brand performance metrics and is a major managerial concern, as it influences purchase intention, loyalty, market share, and sensitivity to brand price.

Chaudhuri and Holbrook (2001) defined brand trust as the willingness of the average customer to rely on the brand’s ability to perform its function. Xie and Peng (2009, p 573) define “consumer trust as a concept comprising both consumers’ overall evaluation of corporate trustworthiness and their corresponding trust intent” while Mayer et al. (1995, p 71) offered a broader definition of trust as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor.” The authors developed a trust model based on three components: ability, integrity, and benevolence (Mayer et al. 1995). This model has been supporting various research (Ambrose and Johnson 1998; McKnight et al. 2002; Schlosser et al. 2006; Tomlinson and Mayer 2009; Xu et al. 2016) and is justified as consumers’ perception over competence integrity and benevolence are not always related (Xu et al. 2016) and they vary in different contexts.

Our research follows Kim et al. (2004), Xie and Peng’s (2009) and Xu et al. (2016) approach. Besides trust, it investigates trust separately into competence-based, integrity-based and benevolence-based trust.

Ability addresses a group of skills, competencies, and characteristics that make one influential in a domain of interest (Mayer et al. 1995). Sirdeshmukh et al. (2002) analyze trust under operational competency as the capability to perform as per customers’ expectations and having problem-solving capacity when complications occur. Competence is an element of trust based on judgment of ability (Xu et al. 2016). A brand's ability is what is ultimately delivered to consumers, and it predicts purchase intention (Schlosser et al. 2006) and brand loyalty (Kervyn et al. 2012).

Consumers perceive competence transgressions “as a symptom of greater organizational problems and dysfunction” (Poppo and Schepker 2010, p 131). In the literature on trust, scholars use competence and ability interchangeably. In this research, we adopted competence.

According to Raju and Rajagopal (2008), in cases of competence transgressions, a company that accepts accountability generates a more favorable attitude than the one that denies it. Kim et al. (2009) research in newly formed relationships indicates that in cases of competence or integrity-based transgressions, customers are more likely to forgive competence than integrity violations.

For this study, we propose that, under a third consecutive purchase, consumers have a collection of experiences with the brand that reinforce trust (Morgan and Hunt 1994) and indicate brand loyalty (Ahluwalia et al. 2001; Raju et al. 2009; Jaiswal et al. 2018). After a brand transgression, loyal consumers’ trust on the brand will renovate loyalty intention (La and Choi 2012) and loyal consumers will value positive rather than negative information about the brand (Ahluwalia et al. 2000; Germann et al. 2013). So, loyal consumers, will give more weight to positive information (voluntary product recall) than negative (passive strategy). Thus, first-time consumers have lower perception of competence than loyal consumers.

Hypothesis 1a

After a high awareness brand transgression, loyal consumers will perceive greater competence in the brand than first-time consumers.

In a high-awareness brand failure context, it is decisive that organizations react. By doing so, consumers and other stakeholders will perceive the company, its products, and its brands positively. That’s why after a brand failure, organizations want to recover consumers’ trust (Cleeren et al. 2006). After a brand transgression, in the absence of a relationship, consumers will value negative information about a brand more than positive (Ahluwalia et al. 2000; Germann et al. 2013). When a company admits its responsibility and announces a voluntary recall (favorable information), it will have a positive impact on loyal and first-time consumers’ brand perception. We propose that in a passive strategy, loyal consumers perceive greater competence than first-time consumers. The voluntary product recall strategy has a positive impact on loyal and first-time consumers. However, there is no difference among levels of competence perceived by them.

Hypothesis 2a

Response to a functional transgression (passive strategy vs. voluntary product recall)—moderates the relation between brand relationship (loyal vs. first-time consumers) and brand’s competence perception.

Integrity and benevolence are the moral components of trust and suggest whether the trustee has good intentions (Xu et al. 2016). Integrity represents someone’s set of principles, which is acceptable by another, such as keeping promises. Kim and Harmon (2014) define integrity-based trust as customers’ perception that the company sticks to the principles accepted by them. Morgan and Hunt (1994, p 23) state that trust exists “when one party has confidence in an exchange partner’s reliability and integrity.” Trustors will overcome transaction uncertainty by perceiving the trustee’s integrity which will lead them to act less opportunistically (Xu et al. 2016).

Products are subject to failures and consumers count on service guarantees and government intervention to protect them in product-harm crises. For Xie and Peng (2009) a functional remediation effort that involves communicating corporate acceptance of blame and admission of responsibility improves consumer perceptions of integrity. In relationship situations, using governmental intervention at the expense of a company's own decision can reduce and weaken trust (McEvily et al. 2003). Opting for a passive strategy instead of a voluntary product recall is a moral decision that affects consumers’ trustee perception (Ahluwalia et al. 2000; Skowronski and Carlston 1989; Wojciszke et al. 1998; Montgomery et al. 2017). The decision of implementing a voluntary product recall as soon as the company learns about the functional problem and before government intervention shows the intention of the brand to act ethically and less opportunistically (Kim and Harmon 2014; Xu et al. 2016). Therefore, to prove the brand’s integrity we delineated the following hypotheses.

Hypothesis 1b

After a high awareness brand transgression, loyal consumers will perceive greater integrity in the brand than first-time consumers.

Hypothesis 2b

Response to a functional transgression (passive strategy vs. voluntary product recall)—moderates the relation between brand relationship (loyal vs. first-time consumers) and brand’s integrity perception.

Benevolence means the extent to which one wants to do good to others, even though help is not required and there is no reward for it (Mayer et al. 1995). Sirdeshmukh et al. (2002), define benevolence as actions that prioritize customers over corporate interest, going beyond its promises. Consumer perceptions of product performance are higher when a company is driven by benevolence rather than self-interest behavior (Chernev and Blair 2015). For Schoorman et al. (2007), in a relationship situation, ability and integrity judgments develop faster than benevolence.

Benevolence regards exceeding expectations set by law or a formal contract. It is “synonymous with the willingness to take into consideration the partner’s interests in the decision-making process” (Nguyen 2010, p 347). Despite consumers' belief that an organization respects a professional code of conduct and follows principles and standards (integrity), there still might be doubts about its genuine concern for consumers' best interests (benevolence) (Xu et al. 2016).

A functional transgression should raise consumers' expectations of government intervention to protect them. When analyzing repairing efforts, Xie and Peng (2009) claim that the functional category (e.g., compensation at the expense of a company’s profit) is perceived as a strategy of greater benevolence than other reparation alternatives. The scenario of this study investigates a situation of sound malfunction, without risk to consumers’ health. Deciding to implement a voluntary product recall as soon as the media disclose a functional issue and before a legal intervention shows the brand’s intention to honor consumers’ trust and exceed their expectations at the expense of profits. Therefore, adopting a voluntary product recall to repair the transgression evokes brand benevolence. Based on the literature, we propose:

Hypothesis 1c

After a high awareness brand transgression, loyal consumers will perceive greater benevolence in the brand than first-time consumers.

Hypothesis 2c

Response to a functional transgression (passive strategy vs. voluntary product recall) moderates the relation between brand relationship (loyal vs. first-time consumers) and brand’s benevolence perception.

Method

Overview of the Study

The experiment had a 2 (company’s response: passive strategy; voluntary product recall) × 2 (relationship: loyal; first-time) between-subjects factorial design. We randomly assigned participants to one of the scenarios. They were exposed to a situation of buying a defective mobile phone.

Pre-test

For the current study, we are focusing on a high awareness brand, which makes it important for participants to have knowledge of the brand, thus increasing external validity of the experiment. Since 1990, Folha de São Paulo, a 100-year-old newspaper and number two in circulation among newspapers in Brazil (Navarro 2021) has been conducting Folha de São Paulo Top-of-Mind (Folha de S. Paulo 2021) annual research on TOMA brands in several product categories in the Brazilian market. This research considered a global mobile phone, which was TOMA in Brazil for the previous eight years in its category. That means it was a high awareness brand (Laurent et al. 1995; Dutta and Pullig 2011; Romaniuk et al. 2017).

We also ran a pre-test to verify how well-known the selected brand was. Based on a 7-point scale, we conducted descriptive analysis. Respondents (n = 77) indicated high awareness brand (M = 5.26, SD = 1.84).

Stimuli

The employment of recall is becoming more common across a diversity of segments—vehicles, health products, toys, food and beverages, and electronics. Mobile phones were one of the top categories that experienced product recall in Europe during 2016–2018 (European Commission 2019).

The proposed scenario considered a mobile with sound quality issues, a performance-related transgression representing no fulfilling in-contract obligations (Dutta and Pullig 2011; Montgomery et al. 2017).

In the passive strategy, the media discloses a functional flaw with the mobile phone but there is no sign of a legally enforced recall; the manufacturer opts for a passive strategy (Chen et al. 2009). The company ignores the issue and continues selling the product. The decision to ignore the problem is a strategy to save time and wait if serious consumer complaints to a federal agency might culminate in a legally enforced recall (Chen et al. 2009). In the voluntary product recall situation, as soon as the company learns about the functional problem, it spontaneously initiates the product recall. The respondents were asked to take the role of a buyer of the defective mobile phone.

Relationship was a manipulated variable. For the first-time consumers’ scenario, consumers had acquired the high brand awareness mobile (Gummesson 2002; Webster 1992), whereas loyal consumers had bought it for the third consecutive time, which characterizes a long-term relationship (Morgan and Hunt 1994; Berry 1995; Grönroos 1991) and high loyalty (Baldinger and Rubinson 1996). Manipulations were previously checked (Bortoli and Freundt 2017).

Procedure

One hundred and fifty undergraduate students participated in the study (105 males; Mage = 22.5, SD = 3.5) and were randomly assigned to one of the four conditions. Each scenario had between 35 and 40 subjects.

First, we presented the scenario with the defective mobile phone’s purchase. The manipulated variables were part of the scenario description. We asked participants to focus on the experience reported on the experiment. Next, the dependent variable measurements and demographic questions.

Measures

We measured participants’ perceptions of trust, competence, ability, and benevolence by 7-points scales adapted from Gefen (2002). Overall trust (α = 0.90) was measured by three items concerning the organization that manufactures the high awareness brand mobile phone: “I trust the company”; “I feel I trust the company”; “The company inspires me trust”, competence (α = 0.64) by two items: “The company understands the market they work in”; “The company knows how to provide excellent service”, integrity (α = 0.79) by three items: “I believe the information I receive from the company is always correct”; “I do not question the company’s honesty– reverse item”; “I’m confident the company behaves ethically”, and benevolence (α = 0.89) by five items: “The company has policies that puts my interest before their own”; “When the company makes important decisions, it takes into account customer’s well-being”; “The company acts as if the customer is always right”; “The company has good intentions towards me”; “The company puts customers’ interests before their own". The multi-item scales have acceptable reliability.

Results

Testing H1a, H1b and H1c

The first analysis aimed to verify the effect of relationship on competence, integrity, and benevolence. We categorized the relationship status as a dummy variable, and we performed an ANOVA for the test of each hypothesis. Loyal consumers generate higher competence level (M = 4.64) than first-time consumers (M = 4.05; F(1,146) = 7.439; p = 0.007). Loyal consumers also perceive higher integrity (M = 4.0) than first-time consumers (M = 3.35; F(1,148) = 10.123; p = 0.002). Customer with an established relationship with the company also perceive higher benevolence (M = 4.03) than first-time consumers [M = 3.41; F(1,144) = 7.537; p = 0.007]. Results confirm H1a, H1b and H1c.

Testing H2a, H2b and H2c

The moderation effects were tested with two-way ANOVAs. We first analyzed the effect of company’s response on the relation between relationship and brand’s competence perception. Company’s response does not have a main effect on competence [F(1,144) = 2.246; p = 0.136]. Relationship has a main effect on brand’s competence [F(1,144) = 7.097; p = 0.009]. Loyal (4.46) have higher competence perception than first-time consumers (M = 3.69). There is no significant interaction between company’s response and relationship regarding competence [F(1,144) = 0.137; p = 0.712]. Results show it is not possible to confirm that the levels of competence perceived by first-time and loyal consumers differ according to company's response (passive or voluntary recall). Therefore, we do not confirm H2a.

Company’s response [F(1,146) = 30.293; p < 0.001] and relationship [F(1,146) = 11.486; p < 0.001] have main effects on brand’s integrity perception. The interaction between company’s response and relationship is significant [F(1,146) = 5.313; p = 0.023]. In the passive strategy, integrity is higher for loyal than first-time consumers [3.70 vs. 2.65; F(1,73) = 15.693; p < 0.001]. When voluntary product recall takes place, there is an increase on integrity for loyal [3.7 vs. 4.3; F(1,70) = 4.273; p = 0.042] and first-time consumers [2.65 vs. 4.09; F(1, 76) = 36.904; p < 0.001], however there is no difference on the level of integrity perceived among loyal and first-time consumers [4.30 vs. 4.09; F(1,73) = 0.608; p = 0.438], (Fig. 1).

Fig. 1
figure 1

The interaction between relationship and company´s response on integrity

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Company’s response [F(1,142) = 75.037; p < 0.001] and relationship [F(1,142) = 10.452; p = 0.002] have main effects on brand’s benevolence perception. The interaction between company’s response and relationship has significant impact on benevolence [F(1,142) = 10.354; p = 0.002]. In the passive strategy, benevolence is higher for loyal than first-time consumers [3.53 vs. 2.38; F(1,71) = 19.158; p < 0.001]. When recall takes place, there is an increase on benevolence for loyal [3.53 vs. 4.5; F(1, 68) = 12.365; p = 0.001] and first-time consumers [2.38 vs. 4.5; F(1, 74) = 85.489; p < 0.001], however, the difference among them disappears and first-time consumers reach the same level of benevolence as loyal consumers [4.5 vs. 4.5; F(1,71) = 0.00; p = 0.991] (Fig. 2).

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The interaction between relationship and company´s response on benevolence

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We found that in the passive strategy, loyal consumers perceive higher integrity and benevolence than first-time consumers. We also found that consumers perceive higher integrity and benevolence when recall takes place as opposed to the passive strategy. However, when voluntary recall occurs, there are no differences between loyal and first-time consumers regarding the brand´s integrity and benevolence-based trust perceptions. Results confirm H2b and H2c.

Discussion

The study shows that, after a transgression, loyal consumers of a high awareness brand place greater competence, benevolence, and integrity in the brand than first-time consumers. The results strengthen the importance of developing a strong relationship with customers to shield established trust and the reputation of the brand in case of a transgression.

We found no interaction between response to a functional transgression and relationship on competence-based trust. It might indicate that consumers of a high awareness brand are not willing to forgive a functional failure and, therefore, even the realization of a voluntary recall will not have an impact on competence-based trust.

Concerning integrity-based trust, the results show that voluntary recall is positive for both categories of consumers, but it impacts more first-time consumers who reach the same level of integrity as loyal consumers.

When voluntary product recall takes place, both loyal and first-time consumers’ benevolence-based trust in the brand increase, with a more significant rise for first-time consumers, which results reach the same level of perception as loyal consumers. Benevolence-based trust comes from the belief that the trusted party is willing to do good to the customer. So, adopting a voluntary product recall before a government intervention leads to benevolence-based trust.

Loyalty results from a collection of circumstances experienced by consumers with a brand (Morgan and Hunt 1994). Even companies that have high awareness brands must sustain customers’ trust and avoid its decrease. In a passive strategy, being a high awareness brand is not enough to make first-time consumers achieve the same level of integrity and benevolence-based trust as relational consumers. However, when the company admits the problem and performs a spontaneous product recall, this will add to first-time consumers' experiences with the brand and should influence trust restoration.

Overall, the results are favorable for voluntary product recall as a strategy to regain trust. Particularly in situations which companies have many first-time consumers, e.g., after a new product release or an aggressive promotion campaign to attract new customers, adopting voluntary recall will impact in increasing trust in the brand after a transgression.

Managerial Implications

Developing high awareness brands and conquering loyal customers are fundamental business aims that require time and significant investments. When aware of a functional/performance transgression, companies can react spontaneously by communicating the issue or promoting a voluntary product recall. Alternatively, they can wait for an assessment of the consequences related to the problem to evaluate the risk of aggravating the situation and eventually respond to a legally enforced recall. This study indicates that when a high awareness brand performs a functional transgression, it can still preserve new and loyal consumers’ trust; however, not with the same intensity in the three components of trust. In a passive strategy, the high awareness brand will benefit from its strength and the relationship with loyal consumers, as their perception of the brand’s competence, integrity and benevolence will exceed first-time consumers. Loyal consumers will keep their loyalty intention (La and Choi 2012) and focus on the positive rather than negative aspects of a brand (Ahluwalia et al. 2000; Germann et al. 2013).

As pointed in previous studies, voluntary product recall falls into the category of positive responses after transgressions. As an apology can improve consumers’ attitudes towards a brand (Nazione and Perrault 2019) and have a positive impact on trust restoration and corporate reputation (Racine et al. 2018), so can a voluntary recall.

Even though conducting a voluntary recall is expensive, the results of this study indicate high awareness brands should consider embracing this strategy due to its potential positive impact on consumer’s perception of integrity and benevolence-based trust and ultimately on the brand and company’s reputation.

In line with the findings of Mishra and Sharma (2018) on the Maggi crisis, it is proper to imply that besides enhancing the relationship with the two categories of consumers addressed in this research, the voluntary product recall can also impact other stakeholders positively. Because reputation results from an accumulation of actions, a strategy that affects consumers’ trust and stakeholders favorably shall extend its results to the corporation’s reputation.

To minimize the relatively lower impact of the voluntary recall on consumers’ perception of the product’s competence, there should be efforts to change consumers’ views on the brand's functional features compromised by the product transgression through the adoption of, for instance, a bolstering strategy to remind brand advantages, good features, quality and performance of its products (Benoit 1997, Zhang and Lim 2020).

Limitations and Future Research

This study has some limitations worth noting. First, it focused on a high-involvement product category with no risk for consumers as is the case of food or kids’ toys. It is necessary to examine if its findings apply to other contexts. Other products could be used to test if the proposed relations stand across different categories.

Another limitation is the low-risk transgression of the product recall used herein; other hazardous scenarios should be explored. This study focuses on a performance transgression, which impacts more negatively on consumers’ perceptions than moral ones (Ahluwalia et al. 2000; Skowronski and Carlston 1989; Wojciszke et al. 1998; Montgomery et al. 2017) and might explain the results of the voluntary recall on both first-time and loyal consumers’ competence-based trust. It is worth investigating the results of voluntary recall effects on consumers’ trust in a high awareness brand in a moral or ethical transgression situation.

Consumers are more skeptical about multinational corporation brands, and even well-known brands can have low trust scores (Willmott 2003). This research considered a global high awareness brand with worldwide recognition in a developing country. It would be worth it to replicate the study in developed countries.

There was no test on the high awareness brand reputation or its products, which could explain the findings as companies with a reputation for high-quality products are more protected from blame accusations than less reputable ones (Grunwald and Hempelmann 2010). Besides, previous functional issues with the brand could justify consumers’ perception of the brand’s competence.

The study contemplated passive and voluntary recall. The study contemplated passive and voluntary recall. Other recovery strategies and their results for both low and high awareness brands, as well as loyal and first-time consumers, could be investigated.

Whereas this study considered relational and transactional purchases, future research should explore different levels of relationship between consumers and the brand, across a time horizon. We suggest that future research consider evaluating the effects of the voluntary recall on repurchase intention, word-of-mouth, and brand advocacy by loyal and first-time consumers.

Additional studies could collect data over a longer period, considering immediate and gradual effects on trust as a result of the publicity and social media word-of-mouth generated by a voluntary recall. While the effects on trust were favorable, they might be more pronounced over a longer time frame. In summary, this research should be extended with longitudinal designs to further identify the conditions in which voluntary recall can impact trust in an organization.