Lecture 11 Brand Crisis Management Notes

Branding

  • Reinforcing Brands:
    • Maintaining brand consistency is crucial.
    • Protecting sources of brand equity.
    • Fortifying and leveraging existing brand strengths.
    • Fine-tuning the marketing support program.
  • Revitalizing Brands:
    • Expanding brand awareness to reach new audiences.
    • Improving brand image to stay relevant and appealing.
  • Adjusting the Brand Portfolio:
    • Implementing a migration strategy to guide customers through brand transitions.
    • Acquiring new customers to expand the brand's reach.
    • Retiring brands that no longer align with the company's goals.

Brand in Crisis

  • The Five Stages of a PR Disaster (according to marketoonist.com):
    • Denial: "It will all blow over."
    • Anger: "How dare anyone criticize?"
    • Bargaining: "Please leave our Facebook wall out of it."
    • Depression: "We're the victims!"
    • Acceptance: "We accept that our lawyers will draft a heartfelt non-apology."
  • This is a humorous take on the emotional stages a brand might go through during a crisis, mirroring the Kubler-Ross model of grief.

Crisis Management: Air India Example

  • Questions for Discussion:
    • What could Air India have done to manage things effectively during a crisis?
    • How can Air India prevent such instances in the future?

Steps in Handling a Crisis

  • Assess the incident.
  • Acknowledge the problem.
  • Formulate a strategic response.
  • Implement response tactics.
  • Communication strategies are crucial when handling a crisis.
  • How to respond to true versus false accusations.
  • The importance of a crisis communication network.

Case Studies: Crisis Examples

  • Milk Scandal in China:
    • Contaminated milk affected numerous consumers.
  • The Optus Data Breach:
    • A cyberattack resulted in the disclosure of personal information.
    • Information leaked included driver's license numbers, passport numbers, Medicare details, phone numbers, and email addresses.
    • Optus expressed deep regret for the incident.

Step 1: Assess the Incident

  • Key questions to consider:
    • Is the incident surprising?
    • Is it vivid and emotional?
    • Is it pertinent to a central attribute of the company or brand?
  • The Spill-over Effect: How the crisis might affect other areas of the company/brand.
  • The Rebound Effect: The potential for recovery and positive change after the crisis.
  • Understanding the customers’ mindset.
  • Let the Response Fit the Scandal - Alice Tybout and Michelle Roehm HBR December 2009

Step 2: Acknowledge the Problem

  • Example: Tylenol Crisis (1982)
    • Seven people died after taking Tylenol capsules laced with cyanide in the Chicago area.
    • Johnson & Johnson quickly recalled all Tylenol products and worked with authorities.

Step 3: Formulate a Strategic Response

  • Determine the truth of the matter: is the accusation true or false?
    • Wendy's example mentioned, but details are not provided in the transcript.

Step 4: Implement Response Tactics

  • Marketing and communications specialists are essential in this phase.
  • Critical questions to address:
    • Which issues should be addressed?
    • What level of detail should be provided?
    • Who should deliver the response to maintain credibility?
    • What should be the tone of delivery?

The Banking Royal Commission (Australian Example)

  • The Banking Royal Commission in Australia revealed extensive misconduct across the banking sector.
  • The results included:
    • Resignation of 3 out of the 4 CEOs of the Big Four banks.
    • ANZ fired 200 staff members, including 10 senior executives.
    • CommBank fired 41 senior staff, and an additional 9 resigned.
    • NAB's Chair and CEO both resigned.
    • AMP's Chair and CEO both resigned.

Case Study: Cadbury

  • Worms were found in Cadbury Dairy Milk chocolate bars.
  • The State Food and Drugs Administration (FDA) ordered a seizure of Dairy Milk stocks.
  • The infestation could have occurred during storage near grains and cereals or in unhygienic conditions.
  • Festival season sales plummeted by 30%.

Crisis Management Principle

  • "It takes many good deeds to build a good reputation, and only one bad one to lose it." - Benjamin Franklin

Cadbury's First Response

  • Not denying the fact.
  • "We are concerned about these reports and are investigating the matter"

Cadbury - Internal Communication

  • Re-assuring the employees.
  • Asking employees to go to retailers and check stocks.
  • Regular updates.

Cadbury: Steps to Ensure Quality and Regain Confidence

  • New double packaging, even for the smallest offerings.
  • Investing up to Rs150Rs 150 million on imported machinery to revamp Dairy Milk packaging.
  • The new packaging was costlier by 10%−15%10\%-15\%, but Cadbury did not pass the cost onto the consumer.
  • The company also carried out quality checks.

Cadbury - Project Vishwas (Means Trust)

  • The project focused on:
    1. Quality Control
    2. Education
    3. PR (Public Relations)

Cadbury: Recovery

  • The company bounced back soon after the campaign hit the screens.
  • Between October 2003 and January 2004, Cadbury's value share melted from 73 per cent to 69.4 per cent.
  • The recovery began in May 2004 when Cadbury's value share went up to 71 per cent.