The issue of product recalls by companies affects the companies and consumers in many ways. It is likely that the perception of consumers about a company that has recalled its products from the market will change (De Matos, 2007). It is the social responsibility of a company to recall products that are not fit for consumption from the market to restore its image but the medium through which the information is passed to consumers should be trustworthy so that things are put in the right perspective. Many companies in the United States have been forced to recall their products from the market because modern products are very complex and are bound to have defects here and there. Product recalls have been on the increase in the last ten years because there has been reluctance by the government in enforcing safety standards for products (De Matos, 2007). Companies have continued to lose millions of dollars because of product recalls while the consumers’ health remains at stake due to consumption of substandard products. This paper will discuss the effects of recalls on consumers and the food industry.
Products recall has been proved to have some effect on the market share but little research has been done in relation to the exact impact that product recalls can have on share prices. When a company recalls its products from the market, information about the company associated with the recall is normally passed to the consumers. It is important to know how consumers react to various types of company information about a product recall (De Matos, 2007). The familiarity of the company plays a very important role in determining how consumers react to the defect in the company’s products.
The Consumer Product Safety Commission is a body that gives directives to companies to recall substandard food products from the market and its influence affects the reaction of consumers to a product recall (De Matos, 2007). It is a common consumer perception that a company that is well-known is less responsible for a particular defect in a product. In a case where similar companies have had recalls, the recall will not affect the reaction of the consumer the same way it would have affected them if competitors had not experienced the same problem. Companies that are not well known tend to receive negative reactions from consumers as they are perceived to be more responsible for the defect or defects in the recalled products. The favorability of a company entirely depends on how the consumers perceive their responsibility for a particular product defect (De Matos, 2007). The magnitude of the injuries caused by the defective product is another factor that affects consumer reaction.
Consumers will only be motivated to buy a replacement product if the resulting injury or damage from the product is minimal. The time a company takes to recall a defective product from the market is very crucial in determining how consumers will react to the recall. A company that is keen to maintain its reputation should recall a product that is defective as soon as possible before a lot of damage is done (De Matos, 2007). A company stands to lose both present and future sales if it does not take quick corrective measures in case a defective product has been distributed to the market. The quicker the recall the more the consumers will be encouraged to buy a replacement product.
Defective products especially food can have adverse effects on the health of consumers and can even result in death. Many Americans have been made sick or even ended up with bad food (Marler, 2011). Many consumers die as a result of food poisoning according to information from the Center for Disease Control and Prevention. Almost 3,000 people die annually from food poisoning and this makes it necessary for all stakeholders to get concerned about the issue. Food safety is no longer emphasized and this has left consumers with permanent injuries (Marler, 2011). The Jack in the Box fast-food chain is an example of fast-food outlets whose products have adversely affected consumers through food poisoning. E-coli poisoning is common in the US and this has left medical practitioners and food safety agencies worried because of the increased number of deaths being caused by this type of food poisoning.
Listeriotic is a food-borne disease caused by bacteria known as Listeria (Marler, 2011). Public health is threatened by this disease because of the severe effects it can have on a patient. The Listeria bacteria are found in contaminated food and the fact that the disease caused by this bacterium can cause a pregnant woman to have a miscarriage shows how deadly the disease is. Food safety interventions are necessary in order to save the population from listeriosis (Marler, 2011). It is advisable that patients suffering from this type of food-borne disease be treated with antibiotics. The elderly and people with weak immune systems are at great risk of being infected by listeriosis. Consumers are supposed to eat well cleaned and cooked fast foods, especially the perishable ones (Marler, 2011).
After looking at the two examples of food-borne diseases, it is clear that defective products can cause severe infections and even lead to the consumer’s death. The food supply chain has adversely been affected by the ever-increasing cases of food poisoning and the two cases of E-coli poisoning and listeriosis represent the many infections and complications brought about by food poisoning. The companies that supply defective products also risk being sued by consumers who are negatively affected by consuming the company’s products. Another way of decreasing product recalls is by negotiating a good supply contract with the suppliers which ensures that all the supplies meet all the legal standards. Contracts that ensure that suppliers have product liability play a major role in ensuring that quality supplies are received from suppliers. This type of contract reduces the possibility of a product recall due to substandard materials.
Quality assurance departments should be on high alert to ensure that only quality products are supplied to the market (Taylor, 2007). It is the responsibility of the quality assurance department in production companies to inspect all products to ensure that they meet all the safety standards. Pro-active measures should be taken right away from the time raw materials arrive at the plant until the time the final product is produced. As it has been observed, many recalls are caused by small mistakes that occur due to negligence (Taylor, 2007). In general, it is the responsibility of all companies to produce quality and safe products in order to save themselves from the negative effects of recalls.
The corporate image of a company can be damaged a great deal by a product recall just like any other type of negative information that might be passed to consumers. Consumers tend to put much emphasis on negative information about the company compared to positive information. Consumers view a product recall as negative information and this can have a negative effect on the company’s image and future sales (Taylor, 2007). If consumers receive unfavorable information about a company, it is likely that their attitude towards the company’s products will change. The situation is made even worse if consumers come to learn that the defect in the product was a result of the company’s fault.
Companies that are keen on protecting their corporate image should try their level best and prevent any kind of negative information that might reach the consumer as a result of a product recall. The company should come out to set the record straight by explaining their reason for recalling the product and justifying their social responsibility. Consumers tend to like companies that are more socially responsible compared to the ones that are not (Taylor, 2007). The reaction of consumers to a product recall is influenced by how socially responsible the company in question is. The objectivity and trustworthiness of the government also determine how consumers react to a product recall. The media has a great influence on consumer reaction to a product recall. The media can help protect the image of a company or pass negative information that can dent the corporate image of the company.
There are various ways through which companies can decrease product recalls both in the present and in the future. The food industry in the US has continued to suffer a lot of losses due to recalls and it is time that preventive measures are put in place to save the industry from complete collapse (Taylor, 2007). It is often very expensive and time consuming to reclaim products that are already in circulation because of the complex logistics involved. Product recalls not only affect the company but the suppliers’ reputation is also put at stake and consequently, the sales are bound to drop (Taylor, 2007). Food manufacturers should ensure that all their products are produced according to the laid down standards. The safety of products should be guaranteed to consumers through strict adherence to safety standards by manufacturing companies. It is interesting to note that most of the recalls are preventable and therefore companies should ensure small mistakes such as labeling errors are avoided. The most unfortunate thing is that even the smallest of mistakes can cause a product to be recalled from the market. Almost 51 percent of recalls were as a result of mislabeling and this calls for more accuracy and consistency in packaging and labeling of products. Integrated packaging management is one of the recommended methods of dealing with labeling errors (Taylor, 2007). Centralized packaging is the new approach being used by food and beverage companies to reduce product recalls. All packaging and labeling information should be centralized to make packaging easy and accurate.
Companies should be more careful with the ingredients used to produce food products to prevent contamination (Taylor, 2007). The US government has allocated extra funds to FDA to ensure that the regulation agency intensifies its operations to ensure consumers are well protected from substandard goods. All companies are supposed to comply with the FDA regulations and failure to do so leads to heavy fines. Stringent regulations by FDA will ensure that companies comply with all the safety and production standards and in the end reducing the number of recalls (Taylor, 2007).
De Matos, C. (2007). Consumer reaction to product recalls: Factors influencing product judgment and behavioral intentions. International Journal of Consumer, 31, (1), 109-116.
Marler, B. (2011). Food poisoning outbreak and litigation: Surveillance and analysis. Food Poison Journal, 1, 1-5.
Taylor, M. (2007). Taxonomy of mediated crisis responses. Public Relations Review, 33, (2), 140-145.