Consumers’ Reactions to Brand Transgressions and Recovery Strategies: The Moderating Effect of Brand Image and the Mediating Role of Forgiveness

Objective Consumer-brand relationship is a well-documented phenomenon in marketing and consumer behavior. Relational marketing strategies focus on high customer retention rates, which depend on superior product or service delivery. Unfortunately, the unique nature of businesses makes it unrealistic to expect error-free services or products. Like individuals, even well-known and successful brands can make mistakes that damage their relationship with their consumers. This is an inevitable aspect of brand-consumer interactions. In recent decades, numerous brand transgressions have put major corporations to the test, including Samsung’s exploding Galaxy Note 7 batteries, Wells Fargo's creation of fake accounts, and Volkswagen's emissions cheating scandal. Brand transgressions not only result in customer dissatisfaction in the short term but negatively affect the relationship with customers in the long run. The pervasiveness of brand transgression highlights the drastic need for empirical research into how people perceive and respond to such events to implement a suitable response strategy after brand transgression. This article seeks to contribute to the branding literature by exploring the moderating role of brand image in influencing consumer responses and behaviors following a brand transgression, as well as the effectiveness of brand recovery strategies. In addition, this study seeks to examine how forgiveness mediates the interaction effect of apology appeal and brand image on consumers’ reactions. This study also investigates how the consistency between the type of apology appeal (emotional or informational) and the brand image (warmth versus competence) affects the effectiveness of the response strategy in the context of brand transgression. Additionally, it explores the impact on key consumer outcomes such as negative word-of-mouth, repurchase intention, and brand trust. The conceptual model proposed in this research is novel and has not been previously examined, either in Iran or globally. Methodology A 2x2 between-groups experimental design was employed, where the independent variables were brand image (warmth vs. competence) and apology appeal (emotional vs. informational). Before the main test, a pretest was conducted to check stimuli development and external validity. 146 students and graduates of Tehran universities were randomly assigned to conditions of the pretest and main test of this research. Data was gathered by distributing a questionnaire. Data analysis was performed with ANOVA and moderated mediation (PROCESS). Findings The results demonstrate that aligning the apology type with the brand image results in more favorable consumer responses following a brand transgression. Specifically, an emotional apology is more effective for warm brands, boosting repurchase intention, reducing negative word-of-mouth, and increasing brand trust. In contrast, an informational apology works better for competent brands, particularly in fostering brand trust. Additionally, forgiveness mediates the relationship between the type of apology and consumer response, with this mediation effect being moderated by the brand image type. Conclusion The findings of this study offer fresh insights into the dynamics of brand transgression, response strategies, and how consumers react. This study also provides practical guidance for managers on preserving a brand’s reputation following a transgression, helping to maintain positive customer behaviors. Additionally, it offers valuable recommendations for crafting effective response strategies that foster customer trust and brand loyalty.