We focus on collective layoffs, defined as the simultaneous termination of the labor contracts of a large group of workers. Once consumers are aware of collective layoff announcements, they may (1) find the brand less likable and trustworthy, and (2) become more uncertain about the brand.

1. Landsman and Stremersch (2020)
How Do Company Layoffs Affect
Marketing Performance?
Such layoffs have become quite common in many Western counties

2. • Collective layoffs are the simultaneous termination of
the labor contracts of a large group of workers
• How do consumers react to collective layoffs?
• Consumers may consider collective layoffs unfair to workers,
-> making the brand less likable and trustworthy
• Consumers may become uncertain about the brand
-> making them doubt the continuance and the quality of the
relationship with the firm
Customer response to layoffs
2
Landsman and Stremersch (2020)

3. From:
Study
• 205 collective layoff events in the
automotive industry
• Affecting more than 300,000 employees
• 9 countries, 15 years, 20 brands
Key Results
• Collective layoffs have negative
consequences on the company’s marketing
performance
• Lower company sales
• Weaker advertising effectiveness
• Higher price sensitivity
• These effects have the potential to further
exacerbate a manufacturer’s woes and lead
to even more layoffs in the future
• Implications: Managers should anticipate
such consequences, and include marketing
managers in the restructuring task force
Landsman and Stremersch (2020)

4. Firms’ advertising response to layoffs
4
0%
20%
40%
60%
80%
100%
120%
Advertising
Predicted advertising*
Actual advertising
-16%
For 84% of the layoff
announcements, actual advertising
for the brand is lower than that
predicted absent the
announcement
* The predicted level, based on the model parameters, had the announcement not occur
Landsman and Stremersch (2020)