1. How a brand can maneuver its way out of a crisis

How a brand can maneuver its way out of a crisis

What’s common to Nestle India, Uber, TinyOwl, Unilever and AirAsia in recent times? The word ‘crisis’. And here’s how a brand can maneuver its way out of a problem

By: | Updated: November 24, 2015 11:37 AM
maggi noodles online, maggi noodles snapdeal

FMCG conglomerate Nestle India’s Maggi was probably the most talked about crisis of this year. Maggi was banned and taken off the shelves when the Food Safety and Standards Authority of India (FSSAI) found unacceptable amounts of monosodium glutamate (MSG) and lead in the product.

It’s like going through a death in the family. But the urgency of bringing about Tylenol’s recovery makes it important we move out of the mourning stage faster than usual.”

The above mentioned statement by former Johnson & Johnson CEO, the late James E Burke, was made while addressing the aftermath of the Tylenol crisis. It may be recalled that seven people died in 1982 in Chicago after consuming J&J’s painkiller brand Tylenol which had been injected with cyanide.

The company identified the problem swiftly and withdrew all 31 million Tylenol bottles from the market. It was quick to attach itself to the media to communicate to the public. It also closely worked together with the authorities that were examining the crime. It decided to stay honest in its communication. And finally, it re-launched Tylenol with tamperproof packaging, and started mobilising its sales staff to urge medical practitioners to recommend Tylenol, again. This crisis is considered to be one of the biggest ever faced by a brand; and also one that was handled just as competently.

Closer home, 2015 marks the year where we saw many a brand face a crisis coupled with harsh market sentiment. FMCG conglomerate Nestle India’s Maggi was probably the most talked about crisis of this year. Maggi was banned and taken off the shelves when the Food Safety and Standards Authority of India (FSSAI) found unacceptable amounts of monosodium glutamate (MSG) and lead in the product. The brand has very recently been given a clean chit, and is in the midst of rolling out across retail shelves in India. Its grand comeback on Snapdeal is an especially positive sign.

Another brand that was in the spotlight recently is Volkswagen for its emission scandal, now also referred to as ‘diesel dupe’. The company had admitted that it had been illegally using software in its products so that it can manipulate the exhaust emissions during official tests. Martin Winterkorn, who was the CEO of the automobile giant at the time, publicly declared that his company has indeed “broken the trust of our customers and the public”. Following the scandal, he resigned from his position.

Mother Dairy milk was declared to be infested with detergent, according to the initial FDA findings.

Mother Dairy milk was declared to be infested with detergent, according to the initial FDA findings.

Other brands that have been mired in controversy this year include FMCG giant Hindustan Unilever for the supposed negative effects of mercury poisoning that its thermometer factory in Kodaikanal has been allegedly causing over the years. This was brought to the public’s attention after Chennai-based Sofia Ashraf’s sharp rap about the situation went viral, eliciting a press release from the company stating that it is committed to taking such issues seriously, and that safety is its number one priority. Or take Mother Dairy milk, which was declared to be infested with detergent, according to the initial FDA findings.

Gr1

Scandals come in many shapes and forms, and sometimes, even internal situations get escalated to the outside world. Take the clutch of food technology startups in India like Zomato, LocalBanya and TinyOwl, which have been in the news lately for mass layoffs and in many cases, clearing of dues for exiting employees hasn’t been addressed. One of the most shocking consequences of this was the recent hostage situation at TinyOwl’s Pune office where co-founder Gaurav Chaudhary was kept captive by the sacked employees for two days. Even Housing.com had a similar crisis sometime back which included layoffs and the exit of its then CEO, Rahul Yadav. All these scenarios have led to some very bad press for these companies, and tainted relationships with their employees and in some cases, investors.

With the number of crises on a constant upswing, reparation of botched up brand images becomes a crucial affair. It may just be a good idea to go back to the basics and highlight the most ideal ways that a brand should perform crisis
management.

Taking stock

Perhaps the first thing that the brand needs to do is analyse the crisis thoroughly and then deal with the breach of trust that different stakeholders have experienced. It is critical to assess the level of damage that has been caused, before developing the bounce back strategy. “Typically, management tends to overreact as they overestimate the negative impact. Not all stakeholders are equally affected — the crisis might have affected retailers differently than consumers, for example,” says Pranesh Misra, chairman & managing director, Brandscapes Worldwide.

“Shareholders might be highly sensitive as they face a share price meltdown, but if that has been corrected, their concerns might have diminished. Certain stakeholders are more forgiving than others.”

Therefore, measuring the extent to which perception has been affected, how this perception change is affecting current behaviour/ will affect future behaviour, which are the key unresolved issues remaining in the minds of stakeholders, and lastly, taking stock of the differences across various stakeholder groups, are key to brands maintaining trust and handling crises efficiently  and effectively.

After this, the second step is to develop the action plan on how to correct the source of the problem. What systemic changes will help prevent a recurrence of the problem in future? What checks and balances need to be put in place?
The third step is to develop appropriate communication programs for each stakeholder group. The communication need of each group may be different, and the company has to be sensitive to this fact. Some audiences might be better reached via mass media, while others via direct mail, social media, or person-to-person communication.

In this context, take the example of Cadbury India and the worms controversy some years ago. The brand acknowledged the problem, recalled the affected stock from the market, corrected the source of the issue, and used a credible brand ambassador like Amitabh Bachchan as a spokesperson.

Furthermore, the significance of PR and employees cannot be ignored. “There is a limit to how much perception correction paid-for advertising can achieve; positive PR tends to be more effective in changing perceptions,” Misra opines. “And employees should be the first target group for communication, because they are the best brand ambassadors for the company.” If the employees are convinced, they will help amplify the perception change. Often, in the rush to respond to government or consumer pressures, companies tend to forget to talk to their own employees.

Nabankur Gupta, founder of Nobby Brand Architects & Strategic Marketing Consultants, also stresses on having honest conversations with stakeholders. Confess and reassure, he suggests, is the best strategy if the brands have actually faltered. They should also tell shareholders to warn the brand in the future whenever they see signs of bad diligence. “If you see some of the top automobiles brands in the world, they all have been through a crisis one time or the other,” Gupta says. “However, those who have dealt with it honestly in terms of recalling the cars back at their cost and confessing their mistakes have managed to hold onto their customers.”

If a brand is trying to cover up, the public is bound to lose trust. Although the Maggi comeback is being welcomed by consumers because of sheer brand affinity, Nestle India could have done much more than they did in terms of crisis management, according to branding experts. “Nestle did not admit what was going on, nor did they communicate. Initially, there were cover up attempts,” says Gupta. “Now when the storm has passed, and they seem to be on the right track, Nestle is keeping a straight face and saying that ‘we did the right thing’. That’s not correct. You still have to clarify what went wrong.”

Or take the air disasters faced by AirAsia and Malaysian Airlines over the last two years — and a marked difference in both their approaches. Unlike AirAsia, Malaysian Airlines was reluctant to admit that there was any problem. It refused to be honest and open with different stakeholders at a delicate time when one of its planes went missing. AirAsia, on the other hand, responded with more honesty and transparency and at a much quicker pace when faced with a similar crisis.

Living in a digital world

It’s quite surprising how the wild ubiquity of social media is still underestimated by some brands when one talks of managing a scandal. Social media, simply put, will make issues spiral out of control in a matter of minutes if not handled tactfully. And who will know this better than Uber, which keeps running into scandals in virtually every country it operates in, so social media is doubly important for service brands.

As Brandscapes’ Misra puts it, social media is “impatient”. “If a company doesn’t respond fast enough, or doesn’t acknowledge the issue in real time, the negative buzz rapidly amplifies.” So, the social media control centre has to work 24X7 during the crisis and weeks after the event. Social media listening, backed up with appropriate response mechanisms, would help manage the negativity and if the brand is lucky, even turn that into positivity.

Interestingly, while social media is impatient, it is also forgiving. If people sense the company is listening, acknowledging there might be a problem and working towards addressing it, then the angst rapidly falls and disappears.

Raghu B Viswanath, founder, director and chief vision holder, Vertebrand Management Consulting, suggests brands should try and find a way in which the truth can be manifested across social media channels. This could be through a video communication by the company spokesperson, live chat sessions, or sharing a toll free number/e-mail id on social media so that affected parties can send in their grievances directly and elicit a response.

Hopefully, the next brand that finds itself embroiled itself in a crisis can avoid the some of the pitfalls by learning from others and by sticking to the fundamentals. Burying one’s head in the sand till the controversy blows over may not be the best option.

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