1. From Tata Group implosion to Samsung inferno, here’s what happens when brands suffer setbacks

From Tata Group implosion to Samsung inferno, here’s what happens when brands suffer setbacks

Some brands that have acquired positions at the top of the trust league over several years have, in the recent past, faced some difficult situations that will not be so simple to tide over.

Published: November 29, 2016 6:06 AM
Its impact on brand Tata has been enough spoken about, and the first response of most people clued/glued in is whether it could have been handled differently. (PTI) Its impact on brand Tata has been enough spoken about, and the first response of most people clued/glued in is whether it could have been handled differently. (PTI)

Some brands that have acquired positions at the top of the trust league over several years have, in the recent past, faced some difficult situations that will not be so simple to tide over. Let us consider two such brands here. First, Tata Group, which can no longer be spoken of today without mentioning Cyrus Mistry alongside, and the other, Samsung, which has had an unfortunate spate of product blow-ups, from phones to washing machines. In both cases, the brand trust has been affected. But the pertinent question is, have the brands identified the real problem? And what can they do from here on?

The Tata-Mistry issue: Its impact on brand Tata has been enough spoken about, and the first response of most people clued/glued in is whether it could have been handled differently. Perhaps, even the key advisors to Ratan Tata are probably thinking the same thing. The imbroglio has eroded the sheen around the Tata brand. The main foundation of trust that has been shaken is ‘capacity to trust’, something that Tata has built through the century. The two brand trust behaviours that have been impacted are empathy (from the seemingly abrupt dismissal of Mistry) and non-threatening ambience (since there is a firefight going on every day, within some Tata company or the other).

The trust repair will not be easy and a good starting point will be for Ratan Tata to offer the peace pipe to Mistry. If not, with the way the sides have spoken, it looks like there will be more brand blood on the streets in this war.

Samsung: Samsung phones continue to rule the smartphones chart with 19% global market share in the quarter ending September 2016, and due to this ‘sales effect’, the likelihood that the brand’s trust erosion may be swept under carpet is high. However, the brand has taken a strong trust thrashing and has lost out on the ‘demonstrating relevant competence’ parameter.

Under this foundation the two brand behaviours of trust that have been most impacted are ‘perceived competence’ (since the explosions happened in two different product categories) and ‘commanding respect’. Less communication is never a good idea in crisis. Apart from product recalls, Samsung should have announced steps to correct any issue in product and tightened product safety protocols.

Both the brands may not have adequately understood how their own issues have damaged the brands. But more importantly, what they are likely to miss is how these issues have forced customers and brand loyalists to recalibrate their own trust landscapes. If anything, the brand world is unpredictable making it imperative that brands begin to have brand trust custodians sitting on their boards, so that when a lawyer is defining battle lines, the custodian talks of building bridges.

N Chandramouli

The author is CEO, TRA Research

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