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The Effect of Corporate Scandals on Customer Loyalty- A Case Study on Primark

Molitor, Marie (2019) The Effect of Corporate Scandals on Customer Loyalty- A Case Study on Primark.

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Abstract:This paper investigates the effect of corporate scandals on affective customer loyalty. A review of current literature showed, that there is limited research on the affective antecedent of customer loyalty and hardly any research on the effect that corporate scandals have on affective loyalty. In order to fill the gap in the current literature for this subject of growing interest, this paper made use of the Primark scandals in order to conduct a Vignette study. The study assessed customer ratings regarding statements about Primark, relating to parts of affective loyalty; customer identification, satisfaction and trust, before and after the introduction of the corporate scandals. The study was executed with a random sample of 42 men and women in Germany. The findings were analysed using a factor analysis and the paired sample t-test in order to test for a significant different outcome after the scandals were introduced. It was found, that corporate scandals affect affective customer loyalty significantly. The different parts of the affective loyalty construct declined significantly after the corporate scandals were introduced and therefore confirmed the hypotheses of this paper. The most significant decline was found for customer trust. The main implication for firms is to pay attention to the fact that affective customer loyalty is strongly affected by corporate scandals and since it is difficult to rebuild, firms should seek to prevent themselves from negative publicity. They might consider a risk prevention committee or further develop their customer loyalty programs by using insights from this study in order to defend themselves from a loss of customers and therefore significant losses in the market.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:70 social sciences in general, 85 business administration, organizational science
Programme:International Business Administration BSc (50952)
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