Brand Crisis – How to Manage, Survive and Thrive

September 13, 2016/0 Comments/in Brand Audit, Brand Auditing, Brand Audits, Brand Crisis, Brand Failures, Brand Health Check, Brand Relaunch, Brand Reputation, Brand Revitalisation, Brand Risk Management, Brand Risk Mitigation, Brand Strategy, Brand Values, Branding, Customer Engagement, Entrepreneur, Rebranding, Situation Analysis /by Lorraine Carter

The one thing every brand product or service can count on is that there is a brand crisis in your future. No brand is immune. And, because bad news travels fast (faster than ever, due to social media), time is of the essence.

When do you have a brand crisis on your hands? Whenever there are “unexpected events that threaten a brand’s perceived ability to deliver expected benefits, thereby weakening brand equity.” ^[1]

It’s a Brand Crisis: First Things First

Step 1: Damage Control

Whether Mother Nature or manmade forces are at work, it’s critical that no matter how robust a brand you have built, you do have a “just-in-case” plan on the Public Relations shelf. A crisis management professional will guide you on the immediate essential steps and basic principles^[2] of crisis management, and importantly, on your specific scenario.

From the very first moment that a sudden event, a mistake, or a piece of news impacts a brand negatively, savvy brand managers need to know:

what to do first
what never to say to the media
how to prioritize
what social media tactics are best

Step 2: Assessing the Brand Damage

According to the Financial Times, “When a brand crisis breaks out, consumers and other stakeholders (e.g., shareholders, the media, regulators) are likely to raise questions about the affected brand and why the crisis happened such as: who is to blame? Is the event likely to happen again? Is it true? What does the crisis signal about the brand?”^[3]

When the frenzy begins to abate, your brand requires large amounts of tender loving care. The central question to be answered relates to the prognosis and timing for recovery. That is, brand owners and managers need to analyze both the short-term and long-term effects of the damage caused by the crisis for complete, cool-headed consideration.

Step 3: Short-Term Brand Damage

Assuming no loss of life or property, your short-term considerations are typically:

sales
consumer confidence
an attack mounted by opportunist challenger brand(s).

Therefore, the task is to recover revenue, earn consumers’ trust, and deal with competitors in the right way.

A silver lining comes from gaining positive lessons learned from a negative experience…it’s never more important than when one’s “dirty laundry” has been on display for all to observe.

Nevertheless, a brand audit followed by a refresh or re-branding may very well be in order at this critical moment.

After the Brand Crisis: Getting Back to Normal

Step 4: Long-Term Brand Damage

A crisis is a harsh teacher and requires cool heads to respond rationally to an irrational situation. Ultimately, every crisis has a resolution.

How a brand deals with a crisis during the short-term damage control step will have a lasting effect on its reputation in the long-term, where it matters most. Indeed, that behaviour becomes a benchmark for the brand as conversations in the public sphere revolve around the brand’s handling of the event.

Because every situation is different, it’s impossible to say how long after the initial crisis occurs that step 4 will begin. It could be days, weeks, or months. Experts agree, “The scale and duration of this impact depends on a number of factors, including a brand’s track record and established consumer goodwill, as well as how quickly brand custodians respond to the crisis.” ^[4]

If you need to evaluate your brand’s vulnerabilities, weak points and areas in need of change then now is the time to use the Auditing Analysis Accelerator™. It’s an online programme that walks you through, step-by-step, the process of giving your brand an audit. A critical management tool in every brand owners arsenal.

Step 5: The Problem Gets Fixed

In a widely shared 2005 op-ed published by the Wall Street Journal^[5] following the devastating Hurricane Katrina, the former chairman of General Electric presented his thought leadership memo about the five stages of a crisis. According to Jack Welch, the fifth and final stage in crisis management is when the problem gets fixed.

A benefit derived from a crisis is that it lets us know where things are broken and can help us to identify solutions so that future similar crises may be avoided. But this benefit applies only if we take the appropriate steps to learn those lessons and to apply that wisdom to our brand.

It’s mandatory to undertake the post-crisis approach strategically. In the words of Jawaharlal Nehru, statesman of India, “Every little thing counts in a crisis.”

What Now For My Brand?

As a branding expert, Persona Design can provide insights and advice about getting your brand back to ship-shape by determining:

Whether the original brand strategy needs adjustment
How to create a new brand promise
To what extent the brand can recover
Whether a brand refresh is appropriate
Does the brand need repositioning?
Whether a re-branding is required
What a re-branding should look like

This process begins with a detailed brand audit focused on recovery. This procedure determines your brand’s market position versus competitors, identifies where brand strengths and weaknesses lie, reveals inconsistencies and opportunities for improvement, and flags new developments.

Option 1: A Brand Refresh

In the wake of a crisis, a refreshed brand must create and clearly communicate new company values.

Option 2: A Re-branding

A brand audit will determine whether the brand can survive. Some brands, including large ones like Arthur Andersen (now Accenture), cannot survive a deep crisis.

Calculated and deliberate brand re-building to repair brand reputation is not a frivolous process. It requires a serious and thoughtful strategy based on customer perception, behaviour and values.

Let’s look at five types of crises that commonly occur in a small-to-mid-sized company and use illustrations found within larger corporations. Note that the strength of a brand image will mitigate damage in crisis aftermath, with smaller brands being more vulnerable than these household names.

A Bump in the Road for Brands

1. Product Failures

As a small-to-medium retailer, you can be caught up in a failed product originating with one of your suppliers. It’s a costly headache for retail management having to refund customers’ money, give them replacements, deal with the supplier, while hoping the problem doesn’t get any worse or rub off on your own brand. When a product failure occurs, you may benefit from professional brand reputation management.

Example: Due to six fatal incidents, millions of unstable dresser units have been recalled by IKEA^[6], which is responsible for their own supply chain as manufacturer and reseller. This product recall is one of 17 for IKEA in 2015 through mid-2016.^[7]

IKEA Malm dressers (IKEA Corporate News website)

Result: Surveys indicates that the world’s largest furniture retailer’s reputation is hit hard, but the brand will survive, according to experts like Stephan Shakespeare, founder and CEO of YouGov, who writes in July 2016, “The good news is that IKEA’s overall Value Score remains relatively untroubled – in the UK at least. While this remains the case, IKEA can be assured its offering will continue to be popular…IKEA should be thankful that it has such a strong brand image, and indeed one that people around the world have a connection and loyalty to.”^[8]

Image via Buzz Score (YouGov)

2. Brand Embarrassment

Keep your clearly defined brand values front and centre in the mind of the customer. If something embarrassing does occur, seek advice from a professional branding agency to prevent customers from expressing dismay with their feet and their wallets.

“People buy a brand because it says something about who they are and what they believe in,” according to Deborah MacInnis, PhD, a professor of marketing at the University of Southern California Marshall School of Business. “If there’s a brand that does something bad, people feel betrayed but also feel that wearing it would signal that they agree with the values of the company.”^[9]

Example: High priced teen apparel brand Abercrombie & Fitch lost its status as darling of the Millennials when the CEO made disparaging comments about customers who didn’t fit the store’s skinny sizing. An employee with an eating disorder gained 68,000 petition signatures and an apology.

Result: Sales have been impacted to the degree that store closings are the only option. The brand continues to close sizeable chunks of its portfolio of (previously) 946 U.S. store locations.

Image via Fortune, source Abercrombie & Fitch filings

3. High Profile Dishonesty

Just one untruthful comment by one top executive can negatively affect a brand. This can be particularly disruptive for service brands where the emphasis is on people. A renewed brand promise will help get things back on track.

A Canadian-based digital strategy specialist writes, “Brands aren’t heartless, mindless, soulless, brick and mortar stores. They are built by people. And no customer wants to associate with brands that comprise of unscrupulous, unreliable people. Honesty is always number one on buyers’ desirability index.”^[10]

Example: After a 22-year career, NBC’s former national news anchor, Brian Williams, lost his job after exaggerating a report about his experience on the front lines in Iraq.

Result: With a quick response from NBC, a Williams apology, and a seven-month suspension for its news anchor, the network weathered the storm around trustworthiness. The popular news announcer who had enjoyed a 10-year, $15 million/year contract was brought back on air, albeit with a demotion to the network’s related cable brand, MSNBC.^[11]

4. Broken Brand Promises

In the consumer’s mind, Whole Food stands for healthy eating, responsibly grown, and high quality standards, so that shoppers can buy with confidence around issues they care about.^[12] A series of giant consumer let downs have occurred. Whole Foods Market, Inc. is big enough to fund their own newly hired full-time professional global VP to handle post-crisis brand strategy.^[13]

Example: Whole Foods dropped the ball on their own brand promise. Last year, Whole Foods was found guilty of price mischarging from California to New York. In another salvo at Whole Foods in June 2016, the U.S. Food & Drug Administration issued a series of safety standard warnings^[14] regarding fundamental cleanliness standards.

Result: Consumers were unimpressed when Whole Foods responded with a video from the company’s CEOs. People reportedly found the performance insincere, punctuated with the kind of overt gesticulation that students of body language are trained to spot. No discount was offered to entice customers back. Share prices for Whole Foods Market, Inc. have depreciated 25 percent in 12 months^[15] and they’re pivoting to an ancillary brand, a smaller store with less selection, called 365, aimed at Millennials.^[16]

What happened to “The Customer is Always Right”? Harry Gordon Selfridge may have overdone customer service with that mantra back in 1909. However, when a business’s explanation is open to interpretation as “we’re sorry we got caught,” you can be sure that savvy consumers aren’t buying it.

Image via YouTube

5. Scandals

When internal and external brand values are out of alignment and don’t match, the result can be devastating. FIFA, Volkswagen, Sports Direct, Chipotle, Bill Cosby, Ryan Lochte. And now Wells Fargo, one of the world’s largest banks (with a comfy Old West stagecoach brand image) was fined $185 million and released 5,300 when a fabricated bank account scandal broke.

Image via Mirror UK

Example: For Findus, 50 years in the UK grocer’s frozen food aisles, it was one scandal too many. Following the uproar of 2013, when the beef lasagne was found to contain 60 to 100 percent horse meat, the product was pulled and the brand was sold. Time did not heal, as it became known that the brand had been served in 2,300 schools, hospitals, prisons, armed forces and senior housing,

Result: From spring 2017, the Findus brand is no more.^[17]

Are you struggling with how to reposition your brand, rebuild your brand values, improve your brand promise — make your brand standout for the right reasons so it’s memorable and distinctive in ways that make it much loved? Then the Personality Profile Performer™ online programme is a perfect fit for you. Enroll today and make your brand highly visible and loved.

Questions to ask while reinforcing or rebuilding your brand:

• How strong is your brand reputation?

• What problem does your brand solve for its customers?

• Are your brand values clearly defined and communicated?

• How does your brand deliver on its promise?

• How do your employees, partners, vendors, suppliers and owners view your brand?

• When was the last time you conducted a brand audit?

^[1] http://blog.ebiquity.com/2015/07/why-it-pays-to-take-the-drama-out-of-a-crisis

^[2] Bendel, Peggy. “It’s a Crisis! Now What?” SutherlandHousePublishing.com, 2012.

^[3] http://lexicon.ft.com/Term?term=brand-crisis

^[4] http://blog.ebiquity.com/2015/07/why-it-pays-to-take-the-drama-out-of-a-crisis

^[5] http://www.wsj.com/articles/SB112666533279540108

^[6] http://www.ikea.com/us/en/about_ikea/newsitem/062816-recall-chest-and-dressers

^[7] http://www.ikea.com/us/en/about_ikea/newsroom/product_recalls

^[8] https://yougov.co.uk/news/2016/07/06/ikeas-drawer-debacle-wont-destroy-uk-image/

^[9] https://mic.com/articles/130147/researchers-are-now-able-to-measure-just-how-embarrassing-an-uncool-brand-is#.T70A15Xkv

^[10] http://www.business2community.com/branding/4-reasons-dishonesty-can-kill-brand-faster-bad-strategy-01084600#5XME1zbb2yep2m34.97

^[11] https://www.washingtonpost.com/lifestyle/style/at-long-last-brian-williams-is-back–humbled-and-demoted-to-low-rated-msnbc/2015/09/21/ea423408-6077-11e5-b38e-06883aacba64_story.html

^[12] http://www.wholefoodsmarket.com/mission-values

^[13] http://www.vanityfair.com/news/2016/09/brooke-buchanan-theranos-whole-foods

^[14]http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2016/ucm506089.htm

^[15] http://www.investopedia.com/articles/markets/062016/what-whole-foods-latest-woes-mean-stock-wfm.asp

^[16] http://money.cnn.com/2016/07/27/investing/whole-foods-earnings-july

^[17] http://metro.co.uk/2016/01/31/goodbye-findus-crispy-pancakes-brand-dogged-by-horsemeat-scandal-is-to-disappear-5654449/

Brand Flops: 5 Lessons Brand Managers Can Learn From Epic Brand Failures

July 12, 2016/0 Comments/in Brand Ambassador, Brand Audit, Brand Auditing, Brand Champions, Brand Failures, Brand Relevance, Brand Reputation, Brand Research, Brand Risk Management, Brand Risk Mitigation, Brand Strategy /by Lorraine Carter

Successful branding is not easy. That’s why Coca-Cola, Sony, Microsoft, Ford, Colgate-Palmolive, McDonald’s and more — a few of the world’s biggest brands — have been responsible for some giant-sized branding flops.

In 1957, the introduction of the Edsel by Ford Motor Company was such a big failure that the name “Edsel” has become synonymous with “huge marketing failure.” In fact, Microsoft founder Bill Gates has singled out this example as one of his favorite case studies in what not to do.^{^[1]}

In each of the following cases there are numerous reasons for each of these famous brands falling short. In quite few a thorough brand audit would have flagged up some of the risks before they became text book flops.

Let’s take a look at how Ford Motor Company, Coca-Cola, Apple, and other famous names have taught us that even the best brands can perform some of the biggest belly flops ever, providing us with a look at pitfalls to avoid and lessons to be learned.

Lesson #1: Brands Must Understand Customers Needs, Wants and Behaviours

Edsel

In 1955, in America’s motor city of Detroit, Ford’s gas-guzzling Edsel automobile was on the drawing boards. Meant to be the full-sized answer to fill every American suburban dream, they named the car posthumously after Henry Ford’s son.

However, by the time this full-sized automobile was launched in 1957, consumer preference had shifted toward compact cars — a shift that was cemented by a stock market dive. Positioned as the car of the future, Edsel was overpriced, over-hyped and entirely the wrong car at the wrong time. Production was ceased within two years in the costliest mistake American industry had ever known.

1958 Edsel – Henry Ford Museum, Credit: Michael Barera, Wikimedia Commons 2.5

Coca Cola

In the 1980s, nobody considered the branding of fast-moving consumer goods under the category of apparel, other than as corporate giveaways or inexpensive T-shirts and baseball caps. Yet, Coca-Cola agreed a merchandising deal to create an upmarket fashion line of Coca-Cola Clothing designed by a young, unknown Tommy Hilfiger.

First sold at an Upper West Side New York City store called Fizzazz, the in-store marketing revolved around a soda counter shopping experience, an interactive video screens, and hole-in-the-wall credit card machines called Eric that didn’t appeal to consumers.^{^[2]} Instead of print catalogues for its mail order distribution, Coca-Cola Clothing distributed free CDs bearing a message that tried hard to connect the soft drink and the clothing. It read: “Pop this cassette open for a sparkling, carbonated fashion video.”

Coca Cola print ad from the 80s (Credit: 237, eBay Store)

The concept was ahead of its time, even for trendy Manhattan audiences; only five of the 650 planned stores ever opened. The Hong Kong-made clothing felt cheap to the touch, featured a poorly designed fit, and the whole thing fizzled out fast.

Apple

Apple, too, once had a momentous flop in 1993. In those days, business cards and a Filofax diary were the tools of networking and time management. Apple tried to change all that by introducing a bulky Apple Newton handheld PC device which debuted at the Computerworld convention.

Apple Newton (Credit: Ralf Pfeifer, Wikimedia Commons 3.0)

The world wasn’t ready and the product wasn’t right. Starting at $700, some said it was too expensive, others said too chunky, and everyone agreed it was very poor at reading the handwriting that people made using its stylus. Later versions of personal digital assistants (PDAs) by Apple competitors were enhanced, more broadly accepted by consumers, and sold far better.

Lesson #2: Brand Purpose Must Stay On Point

Brand extensions can be a tricky business. Colgate, Cosmopolitan magazine and Harley Davidson have clearly demonstrated what not to do. It’s difficult to imagine how some of these rather odd multi-million dollar spin-offs made it out of the boardroom, but they did.

Colgate

Colgate is a toothpaste; it promises pearly whites and fresh breath. Yet, in 1982, the toothpaste brand launched Colgate Kitchen Entrées, looking to capture the market in frozen ready-to-eat meals.

Colgate Kitchen Entrees (via Marketing Directo, Madrid)

Why? Minty toothpaste and frozen peas? This mind-blowing branding concept was as unappealing as its packaging and promptly headed straight for the consumer graveyard, but not before hurting sales of Colgate toothpaste.

Cosmopolitan

In 1999 there was another weird marketing leap by the leading international women’s fashion magazine. Cosmopolitan introduced a line of yogurt on the already crowded refrigerated supermarket shelves.

Cosmopolitan yogurt (Credit: Marketing Week)

Pricing it above the competition and calling it “sophisticated and aspirational,” this misguided off-message product line included Cosmopolitan Light Soft Cheese and Cosmopolitan Fromage Frais. If the brand strategy was, “Cosmo can sell anything,” consumer reaction said that they got that wrong.^{^[3]}

Harley Davidson

In 2000, Harley Davidson famously crashed into a wall when it went too far off centre with its drive into branded cologne and aftershave. In hindsight, critics point out that customer audience research and some well developed purchaser personas would have indicated that Harley rider brand values are not focused on smelling divine.

Image via aazperfumes.com.br

Obvious? It’s hardly a surprise that these brand values include: freedom, authenticity, masculinity, toughness…and have absolutely zero to do with wanting to smell charming.^{^[4]}

Lesson #3: Brands Must Not Get Lost in Translation

American companies in particular have a long and checkered history of making blunders beyond their ethno-centric shores. General Motors, Pepsi, General Mills and Revlon are among the brands to have messed up on the world branding stage.

Even in the increasingly global marketplace, regional and national differences in traditions, cultural norms and taboos still matter greatly. Well-known translation examples fill the pages of business school case studies.

General Motors introduced the Chevy Nova in Mexico, which translates as “It doesn’t go.” Coors Beer messed up the translation of the tagline, “Keep It Loose” into Spanish as “Suffer from Diarrhea.” In Taiwan, “Come Alive With Pepsi” was interpreted as “Pepsi Brings Back Your Ancestors From the Dead.”^{^[5]} Scandinavian vacuum manufacturer Electrolux launched an American ad campaign with, “Nothing sucks like an Electrolux.”

Kellogg’s

Occasionally, deeper cultural gulfs are breached at great expense. In 1994, Kellogg’s invested $65 million introducing its Corn Flakes breakfast cereal to the massive consumer market in India. However, a light breakfast is not the way Indians prefer to start their day.

Cornflakes (Credit: fir0002/Flagstaffotos, Wikimedia Commons)

Furthermore, hot milk on cornflakes (using cold milk was unthinkable to the Indian consumer) turned the product instantly soggy.^{^[6]} Pursuing cold drinks, Nestlé fared no better with the idea of iced tea in India.

Revlon

In Brazil, Revlon launched its top-selling Charlie perfume featuring the floral scent of camellias. Since camellias are that nation’s funeral flower, Revlon’s effort was obviously wasted. Money wasted, reputation damaged, the LA Times reported in 1999 that Revlon unsuccessfully sought a buyer for their struggling Latin American businesses.^{^[7]}

Lesson #4: Brands Must Evolve With the Times and Stay Relevant

Eastman Kodak

Kodak is a prime example of a legacy brand and market leader which did not keep pace with emerging technology.

In this case, it was the move from film to digital that outdid the brand. Founded in Rochester, NY in 1888, Eastman Kodak Company sent cameras to the moon, encouraged loyal consumers to capture personal “Kodak Moments” for decades, and employed an extended family of 70,000.

Ironically, filmless photography was invented by Steve Sasson, a Kodak engineer, in the mid-1970’s. “It could have been Kodak’s second act,” reported The Street in its article “Kodak: From Blue Chip to Bankrupt.” Instead, Kodak filed for bankruptcy in 2012.

Lesson #5: Choose Your Brand Ambassadors Carefully

Putting your money where someone else’s mouth is can lead to trouble, as demonstrated by brand after brand, including market leaders like Hertz and Nike. Leveraging a CEO, an employee, or a celebrity ambassador as the face of a the brand is a risky business strategy due to the unpleasant surprises that can — and do — crop up.

Hertz

As the very prominent longtime spokesperson for Hertz Car Rental, National Football League hero O.J. Simpson, known as “The Superstar,” had a locktight association with the brand.

The handsome, popular football running back was featured in a TV commercial dashing through airports to get to the Hertz rental counter. A decade as the face of the brand came to a screeching halt in 1994 when he was accused of the murder of his wife and a friend in an internationally publicized criminal trial.

Nike

In 2009, when pro golfing champion Tiger Woods was embroiled in a high-profile sex scandal, Nike suffered for having had him as their brand spokesperson. In a YouTube video aimed at damage control, Nike has Tiger’s father asking him what he was thinking.

The awkward video has had more than 4 million views but raises more questions than it answers. Nike’s bad luck continued with other disgraced sports figures: Lance Armstrong and Oscar Pistorius.

According to an article from London’s Cass Business School, personal circumstances are impossible to predict and extremely difficult to mitigate risk. The lesson learned is “to cut the ties between the brand and the brand ambassador as quickly as possible.”^{^[8]}

In all cases perhaps one of the biggest learnings is you should most definitely conduct a brand audit to evaluate your brand’s weak spots and identify new areas for innovation and growth before rushing headlong into a new venture.

Five Questions to Consider:

Do any other epic flops come to mind, and if so, do you think one of these five reasons accounted for the failure?

Would you say that having a popular brand ambassador is worth the risk?

Can you think of other branding examples where a thorough brand audit and proper market research could have avoided a huge mistake at great cost?

In addition to Kodak, what other brands lost their way by failing to use brand audits, purchaser personas or keep up with rapidly changing consumer preferences in the 21st century?

Which do you think are the world’s top 10 most valuable brands in 2016…and why?