Earning and maintaining a good reputation is challenging for new and established businesses. When bad publicity emerges, businesses could be portrayed as irresponsible, dishonest or appear to be only looking out for their own best interests. Although it is possible to make a good name for your business on a local or national scale, doing so can be an uphill battle, especially in the face of bad publicity.

Loss of Trust

Bad publicity can come in the wake of an exposed lie or inaccuracy. Sometimes advertising is used to pump up businesses' capabilities and consumers' expectations. Expectations can be carelessly overblown, revealed as false in the form of bad publicity and lead to disappointment and a loss of trust.

When an organization fails to follow through with promises, customers, employees and partners are more likely to question the truthfulness of all the organization's current and future messages. Regaining trust can be difficult and time-consuming. Mistrust expressed by word of mouth and through social media can take years to repair and often can only be remedied by the number of vocal supporters eventually outnumbering the critics.

Effects on Sales

In general, bad publicity negatively affects sales. Companies that are virtually unknown can at times experience a boom in business after bad publicity, but they are the exception. In general, bad publicity damages the long-term success of larger established businesses. Product accessibility can also decrease with bad publicity, and potential consumers might have fewer opportunities to purchase products. When buyers and store owners have negative opinions, their choices ultimately affect their customers' options.

Damaged Brand Equity

Brand equity can suffer long-term damage as a result of bad publicity. This is especially evident for companies that must recall their products because of safety or health hazards. In such cases, even if only a portion of a product's supply is recalled, buyers are likely to avoid the brand altogether for a period. Rumors, even those with no merit, can affect sales just as strongly.

There is some hope. A study conducted at the Wharton Marketing Department at University of Pennsylvania showed that audiences experience something called the "sleeper effect" when recalling details about a company, message or brand. The sleeper effect refers to a person's tendency to retain an awareness of a product or company without necessarily retaining negative memories or attitudes once associated with it. For this reason, bad publicity can sometimes be healed simply with time.

Damaged Brand Association

Brand association refers to the deep-seeded attitudes and feelings a customer has toward a product or company. When brand association is negative, negative attitudes are more likely to come into a consumer's mind before positive ones. Bad publicity can contribute to negative brand association, which can in turn reduce sales over time.

Changing attitudes and brand associations can take a great deal of time and can also be costly, as a company might be forced to invest in additional advertising and campaigns to correct negative attitudes. Damaged brand association also leaves room for competition to move in on a customer base, which can also reduce sales.