A company disaster is not just about plummeting share prices and a product recall. For marketing, this is also about Brand Equity.
In Samsung’s case, the big problem for marketing experts is their Reputation and brand equity. This equity is the company’s most valuable asset, and restoring a damaged corporate reputation can be a long, painful and expensive process. Why? Well, once you have lost the trust of your valued clients it may be difficult to bounce back.
If you want an example of this, just research Volkswagen, they are still trying to restore its good name following last year’s emissions scandal, when they reportedly used software to lower pollution in its diesel engines. Let’s take a look at products. Whirlpool has to modify five million faulty tumble dryers that are at risk of catching fire.
If a company does need to repair a damaged reputation, what is the best way for it to go about it? Tim Ward, chief executive of the Quoted Companies Alliance has an answer for this: ‘Do the right thing’ He says: “It’s about being out there, being on the front foot, and having a clear plan about what the eventualities might be. It’s all about communicating.”
Mr. Ward adds that this is a view shared by his members, a majority of whose bosses said in a survey that in the event of a disaster their first port of call would indeed be their PR team and not their legal department. Mr Ward says: “If you have integrity running through your business then that’s the place from which you should act. It’s a platitude, but you should do the right thing. As Warren Buffett said, it takes years to build up a reputation and it takes minutes to destroy it.”
There was a similar case with Johnson & Johnson’s. In 1982 they made a recall of its best-selling Tylenol painkiller after seven people died in the Chicago area from cyanide-laced capsules. At a time when companies rarely recalled products, Johnson & Johnson put the consumer first and immediately withdrew 31 million bottles of Tylenol following the malicious attack by a still unknown person. A year later, the firm’s share price had almost recovered its dramatic losses following the sabotage and the company’s chairman, James Burke, emerged a hero for his handling of the crisis.
Mr McLeod says from a PR perspective, it is important for companies to have a recognizable face when confronted with a crisis, something he hasn’t yet seen at Samsung.
“I have seen statements from Samsung, but I have not seen the face of Samsung in all of this,” he says. “I have not seen a reassuring CEO, and I don’t know who’s leading in all of this. If you look at any crisis scenario, you need a strong leader to come out and reassure the public in their delivery, in their presence and in their response to the crisis.”
“It’s about being quick and being confident and taking responsibility,” he says. “Companies should not be in denial. Those that have tried to hide these things in the past have paid a much higher price in terms of loss of consumer trust. We didn’t try to hide behind lawyers,” he says.
Source: Peter Shadbolt.
Business reporter
