Peugeot and the problem of product recalls.
Case Study: Question 2.8.4 Peugeot
A) Explain why product recalls can be damaging to a firm’s reputation.
Products recalls usually have a negative connotation associated with it and would usually cause a certain degree of damage to a firm’s reputation like Peugeot. First of all, the major recalling of the Peugeot 307 shows that Peugeot didn’t spend enough time and during the R&D phase of the vehicle to make sure that there wouldn’t be any major problem on this vehicle. The customer’s perception of the company’s car and the company as a whole would decline and become negative as a result of this. At the same time, recalling a vehicle already means that the vehicle could cause harm to the customers if it is not fixed. This means that customer would again have a negative view of the company simply because the product endangers their life. Thirdly, a product recall of a massive scale usually involves the press or media and the media is well known for making situations out of proportions which again would damage the firm’s reputation. Lastly, a product recall makes it easier for competitors to convince consumers to buy their products instead. This would hurt the reputation of the company and also the profit that the company makes.