The impacts of product crisis on customer purchase patterns

The purpose of this research is to help better understand the impact of product crisis on customer purchase pattern. This research is based on panel data of milk powder sales during the Nestle product crisis in China. We present three stochastic models to estimate the impacts of product crisis on customer purchase frequency, monetary and recency. Our data show that product crisis has negative effect on customer purchase frequency. Some customers will cancel or postpone their purchase under the impacts of product crisis. However, for the customer whose demand for the products is rigid, the crisis has no significant effect on customer purchase monetary in a certain period; it just has negative effects on frequency and recency. Overall, our analysis shows that the stochastic models we present are valid tool to monitor or track the development of product crisis. The implications to product crisis management are discussed.