Brand equity and the exacerbating factors of product innovation failure evaluations: A communication effect perspective

When both high-equity and low-equity brands experience an innovation failure, does the high-equity brand fare better? This study investigates this question by exploring how consumers view and evaluate brands following an innovation failure. The researchers examine whether brand equity, preannouncement of the innovation, and word-of-mouth from an opinion leader exacerbate or alleviate the negative impact of the failure. Two experiments with a total of 816 subjects show that high-equity brands suffer less than low-equity brands from the adverse effects of innovation failures. However, innovation failures are more detrimental to high-equity brands that have preannounced the innovation and to low-equity brands that do not receive supportive word-of-mouth from an opinion leader after the failures occur.