The Cost of Selling Out: Demand Reactions to Authenticity Violations
Type
working paper
Date Issued
2025-03-20
Author(s)
Abstract
Many brands leverage authenticity to connect with consumers by embodying values that resonate with them, fostering a sense of shared purpose. Yet, despite its advantages, such a values-based positioning might entail substantial risks for demand. We argue that when consumer-brand relationships are premised on a brand's consistent commitment to its values, demand-side authenticity beliefs carry a binding liability. If a brand action disrupts these beliefs, it may cause non-compensatory consumer reactance. To document a possible impact of such an authenticity violation on consumer demand, we leverage a recent brand acquisition in a mainstream consumer goods category (spices). Using difference-indifference and synthetic control methods, we estimate that the acquisition-widely perceived as an authenticity violation-led to a 22.74% decline in brick-and-mortar sales and a 32.02% demand decline online. Content analysis of social media records confirms that this decline was indeed driven by a loss of consumers' beliefs in brand authenticity. We further suggest that the violation's impact was transmitted through the brand's reliance on influencers: many influencers publicly withdrew their support following the acquisition. Our findings demonstrate how authenticity, while a valuable marketing asset, can also expose brands to severe demand risks when violated.
Language
English (United States)
Keywords
demand reactions
brand authenticity
authenticity violations
brand acquisitions
social media
HSG Classification
contribution to scientific community
Publisher
Elsevier BV
Subject(s)
Division(s)