Product failure an innovative opportunity

The decision by Dell to recall and replace up to 4.1 million notebook batteries is firing up the computer world. Demonstrated so vividly by images of an exploding laptop, web reports claim Dell had been aware of the overheating problems for at least two years.

The internet has added a new layer of visibility to product failures and ensuing product recalls. This year alone there have been hundreds of product recalls, including those by big names such as Cadbury Schweppes, IKEA and Reebok.

However, product recalls need not turn into a brand crisis. A well-managed corporate response, such as Tylenol’s handling of the terrorist painkiller capsule poisoning incident in the early 1980s, can leave the brand stronger. Research has identified “four Cs� of product recall management that should guide companies in troubled times: be candid, contrite, compassionate and committed.

Being candid implies addressing the problem openly. Unfortunately, many companies stonewall the public or, even worse, issue outright denials.

Being contrite starts with assuming responsibility, Johnson & Johnson (J&J) immediately took responsibility over the tampering with Tylenol, even though it was hardly to blame. In contrast, Exxon confused taking responsibility with taking blame.

Being compassionate requires being personal. Press releases simply will not do. J&J managers were seen weeping on television as they attended victims’ funerals. In contrast, Lawrence Rawl, then Exxon’s chairman, waited two weeks after the oil spill to fly to Alaska. Sadly, all too often the only personal attention those affected received is being ambushed by company lawyers.

Being committed requires a cross-functional response team and should not be a public relations exercise. This team’s priority should be to immediately assess the source and potential impact of the crisis. Who was hurt? Does it require free servicing, partial recall or total recall? Once the program is announced, how will the company commit itself to making the process as customer-friendly as possible? Obviously, preparation helps. A well-prepared company goes beyond buying crisis insurance. It has mechanisms, people and policies to help avoid and to manage crises.

The brand also needs to consider how to get back on its feet. J&J introduced triple tamper-proof seals on its packaging, coupons and deep price cuts to win back the market and seminars by its sales force to doctors. Goodwill still has to be converted into sales.

Dell’s brand value is $ 12 billion. The pro-duct failure is a moment of truth. A poorly managed response can unmask a brand promise as a hollow boast. A well-managed product recall, however, converts the crisis into a chance to demonstrate a company’s regard for its customers.

In India the car owners may remember Tatas recalling more than 100,000 Diesel Engine cars and fixing the design defective fuel pumps with modified and new ones. This customer attitude has strengthened their brand image and they could successfully launch further car models in India as well as for exports. Following the 4 Cs by the marketer / manufacturer will not only lead to strengthening of Brand image but at the same time leads them into innovative ideas preventing future product failures.