President and grandson of the founder of Toyota Motor Corporation appeared before the press publicly acknowledging that there were genuine problems with Toyota cars. Around 8 million units across the world had already been recalled. Even as he further stated his and the company’s commitment to address consumer grievances, the epidemic had touched even Toyota’s hybrid car, Prius, forcing the company to recall thousands of the iconic car model. Toyota knows it’s going to be a long drive back to highway with a couple of bumps to maneuver — first to re-paint the tarnished image of the brand and second, win back consumers’ confidence.
Back home, officials at the auto brand Maruti Suzuki are bracing themselves for any eventuality as the company announced a recall of nearly 100,000 A-Star car models with faulty fuel tank problems. Even as the response from the company has been swift, it’s too early to assess the damage done to the brand. Damage could well have a rub off on the other car models in the Maruti Suzuki portfolio. Product recall is the worst possible nightmare for every marketer. A scenario which gives them sleepless nights as marketers watch years of painstakingly built brands go down the drain in almost no time. Most product recalls are handled quietly and efficiently, inviting scant public attention, but the ones that blow up are akin to a perfectly scripted soap opera going awry on stage, that too in front of the audience.
So how exactly do brands facing product recall haul themselves out of the ditch? That too while ensuring minimum possible damage to the brand? Brand consultants and marketers say there is no quick fix solution to a product recall crisis. The best thing to do is not look for a quick fix solution. The healing process takes time and there’s no quick plaster. In India, the A-Star episode is perhaps the most recent high decibel product recall, but brands across categories faced crisis situations which came close to nearly pulling products off the shelves. Beverage majors Coca Cola and Pepsi found themselves embroiled in a case of contamination of colas. Cadbury too faced a similar back lash when worms were discovered in its flagship product, Cadbury Dairy Milk (CDM). In the mobile handsets segment, faulty batteries in one of the mobile handsets prompted Nokia to replace the particular battery.
Faced with such a potentially explosive situation in hand, the first step to restore confidence in the brand is to quickly acknowledge the problem. Dithering over it, or worse, living in denial only adds to the suspicion that a brand is trying to hide something. It’s something Toyota learnt this time as public reports indicate that its cars were facing mechanical problems for years before accepting the serious nature of the situation. During the ‘BL 5C battery crisis’, Nokia India quickly sent out an advisory to customers articulating the exact nature of the problem. Even as roughly 45 million batteries across the world were affected, there were only 100 cases of overheating reported. India, admits a senior official at Nokia, however was highly impacted. If there’s a problem, be responsible and transparent about to it to the end users. A senior official at one of the cola majors says crisis management involves stating all the critical facts to quash all rumors. Because half truth is dangerous, recalling the pesticide controversy, the official says the facts had to be customized depending on the different stake holders the company was talking to at that time. For scientists, it was about figures and statistics, for consumers, it was about simplifying the communication. Likewise, even shareholders and employees were included.
Companies need to evaluate exactly what is at stake when a crisis happens. This is particularly relevant when a company is reliant on branding to drive sales – the higher the reliance, the more quickly a company needs to act. And unlike advertising, which makes a promise before the experience, recalls are occurrences after the consumers’ have experienced the brand. So don’t give an impression of insincerity. Most consumers forgive the first mistake by a brand. But the question of intent has to be addressed swiftly and unconditionally.
Swift redressal means going the extra mile to win back public confidence. For Nokia, it meant replacing nearly a million batteries for free even though not even a single case of over heating was reported in India. They say they did this to assuage any perception that the company is not serious about the issue though there was no legal binding on replacement. In the case of Maruti A-Star recalls, there could be only a fraction of the 100,000 cars which face the problem, but the opportunity to even attend to those who haven’t faced any issue, observers say, will lead to stickiness. It’s possible to convert the problem into a positive. There are people who never faced any problem with the car model, but take those extra steps to make it a pleasant experience even for them.
The next stage of tackling the crisis is to have an effective communication in place. Here, TVCs ranging from informative ads to celebrity ads to CEO testimonials have been used by brands. Both Coca Cola and PepsiCo had their respective CEOs appearing in ads assuring consumers about the product during the pesticide controversy. Later, Coke also used Bollywood actor Aamir Khan to endorse the safety of the product.
Likewise, Cadbury used Amitabh Bachchan in its commercials to allay any public fears. Cadbury declined to participate in the story. Alongside, initiatives like improved packaging of the product, better storage at retail outlets through coolers enabled Cadbury to tide the crisis. The fact is Cadbury has been able to grow in the market post the controversy. This shows all the moves taken were in the right direction. However the market place today is different as access to information comes from various sources. So galvanizing the entire network in a crisis, which means even the retail touch points is important, as Nokia learnt during the battery crisis. Overnight, replacements were made available at the company ‘Care’ outlets. It’s the lessons learnt during the battery crisis that helped the company tackle the charger replacement problem that arose last year. They weren’t affected and there was hardly any ripple because we knew what measures to put in place.
In the end, there are no short cuts to crisis management, and most brands who have survived such battles learn from it and hope not to get caught napping if it ever occurs again.