Tuesday, 22 December 2015

TV Show: Secrets of Branding - Crisis

Branding is one of the most critical parts of a successful business marketing strategy. A strong brand goes way beyond its visual logo or business name – it’s a set of associations that a consumer has with a particular product, and good brand identity can create an emotional relationship of trust, credibility and quality that carries immense power.

The Secrets of Branding asks the question, “What’s behind the label?” This fascinating and insightful series looks at how brands are first created and shares the insights of the world’s leading business entrepreneurs as to why some brands succeed and others don’t. The episodes examine some of the latest brand strategies and marketing techniques adopted across Europe and America which include the growing use of social media and the concept of augmented reality.
Crisis discovers the secrets behind the brands recognised the world over, as this insightful series looks at how brands are created and explores why some succeed where others fail.

Looking at the latest techniques and marketing strategies in Europe and America – including the use of social media and augmented reality – Secrets of Branding shows how luxury brands are often ‘refreshed’ to attract new generations of customers across the globe.

Crisis reveals the secret marketing tactics of some of the world’s most successful brands, while leading business entrepreneurs, advertising and marketing gurus share insights into the do's and don'ts of brand development.

This episode looks at how an unexpected crisis can bring even the most powerful brand to its knees, and what steps can be taken to protect global brands from major reputational damage. Being prepared for a brand crisis is a vital part of developing a brand and marketing strategy.
Incidents like the Pan American Airliner bombing of 1988 and the recent disappearance of flight MH370 have shaken the airline industry and specifically these two brands to the very core. It has also raised questions on airline safety and making people think twice whenever they are opting to travel by these two airliners.

The fact that people started cancelling Pan Am flights and the compensation pan Am had to give affected their business heavily. The brand had lost brand equity and the brand was on its way to a diminution.
Post that consumer confidence on the brand fell considerably and from being ranked 23rd on Superbrand list (at that time) it failed to make it into the top 500 list the next year.

Three things a brand need to keep in mind while sustaining a brand and that is:

1. An unfortunate disaster is not the brand’s fault but to aloof your business from the disaster and shying away from taking responsibility and that to too quickly can have a negative impact on the brand.
2. Showing compassion for the mishap and dealing the situation in a honest and candid way helps to regain consumer trust and pulls the brand from declining.

3. Consumers don’t blame brand for this kind of mishaps but if the brands lack an emergency damage control or crisis management infrastructure then the onus comes back to the brand.


Fords Edsel development issue of 1955 is also another brand failure’s classic example. Ford completely ignored the market research report, went against it and did something on their own. their add campaigns promised more than what the car was people’s expectation went high but when the car came out eventually it was not what it promised.

The Edsel was saddled with quality and reliability issues from the very beginning. Its price was another sticking point: It started at $2,500 and topped out at $3,800, which was much more expensive than other Ford models at the time. Adding to the Edsel’s woes was the fact that it debuted at the beginning of a recession. An expensive Ford didn’t look like a good option for most consumers.

In 1982, Johnson & Johnson's Tylenol medication commanded 35 per cent of the US over-the-counter analgesic market - representing something like 15 per cent of the company's profits.
Unfortunately, at that point one individual succeeded in lacing the drug with cyanide. Seven people died as a result, and a widespread panic ensued about how widespread the contamination might be.
By the end of the episode, everyone knew that Tylenol was associated with the scare. The company's market value fell by $1bn as a result.

When the same situation happened in 1986, the company had learned its lessons well. It acted quickly - ordering that Tylenol should be recalled from every outlet - not just those in the state where it had been tampered with. Not only that, but the company decided the product would not be re-established on the shelves until something had been done to provide better product protection.
As a result, Johnson & Johnson developed the tamperproof packaging that would make it much more difficult for a similar incident to occur in future.

The cost was a high one. In addition to the impact on the company's share price when the crisis first hit, the lost production and destroyed goods as a result of the recall were considerable.
However, the company won praise for its quick and appropriate action. Having sidestepped the position others have found themselves in - of having been slow to act in the face of consumer concern - they achieved the status of consumer champion.

Within five months of the disaster, the company had recovered 70% of its market share for the drug - and the fact this went on to improve over time showed that the company had succeeded in preserving the long term value of the brand. Companies such as Perrier, who had been criticised for less adept handling of a crisis, found their reputation damaged for as long as five years after an incident.

In fact, there is some evidence that it was rewarded by consumers who were so reassured by the steps taken that they switched from other painkillers to Tylenol.

Conclusion

The features that made Johnson & Johnson's handling of the crisis a success included the following:

  • They acted quickly, with complete openness about what had happened, and immediately sought to remove any source of danger based on the worst case scenario - not waiting for evidence to see whether the contamination might be more widespread
  • Having acted quickly, they then sought to ensure that measures were taken which would prevent as far as possible a recurrence of the problem
  • They showed themselves to be prepared to bear the short term cost in the name of consumer safety. That more than anything else established a basis for trust with their customers.

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