Rising from the ashes: How to tackle brand crisis?

Thu, Nov 5, 2015

Education

A betrayal of not just two minutes but that of long emotional association. Ban on Maggi was as much a shock to you as it was to me. On a trek with friends, in hostel with that electric kettle – not allowed by the hostel administration, watching late night movies, a Sunday brunch, at the
road-side chai corner opposite Oracle Corporation – “meri wali Maggi” has always been like the one trusted friend delivering the brand promise on each encounter. A marquee brand for more than three decades, which slowly moved up to the Brand Resonance Pyramid, had a huge loyal
customer community.

Let’s look at some facts about Maggi. Maggi brand was born in Switzerland in 1872, and came under the Nestle umbrella in 1947. However, rendezvous with India happened in 1982-83. With more than 30 years of its existence, it is still among the most recognized brands in India. Brand Finance, the London-based consultancy firm, ranked (i) Maggi 23rd globally, with a value of $2.4 billion and (ii) Nestle, at the top of the list, with a value of $21.2 billion. These figures were however, quoted by the consultancy firm before the major recall this year. According to sources, the category of “prepared dishes and cooking aids” of Nestle India, which broadly translate into Maggi, accounted for 31.5 per cent of sales in 2014. The Maggi unit saw 8.1% rise in value at Rs 21.4 billion in 2014. Its “value market share” has been stable at 80 per cent in noodles. With such a strong presence in the lives of Indian consumers, what can Maggi or any brand do to bring back its glory?

It all started when a sample from a small town in Uttar Pradesh, was found to have very high levels of lead, which resulted in FSSAI banning its further production, sale and export. This is not something unique that happened to Maggi. There are several instances from the past, such as that witnessed by Cadbury when in October 2003, just before Diwali, customers in Mumbai started complaining of worms in Cadbury Dairy Milk chocolates costing huge damage to the brand.

As mentioned by the Wharton marketing professor Barbara Kahn, companies can take a slow and steady approach to brand repair, or a swift “silver bullet” solution. One can start by associating the company with more nutritious offerings and slowly move the image in a believable way. Companies should focus on communicating their core value like innovation or leadership or target some emotional appeal. With each baby step one can extend brand meaning but the important point to remember is that the customer should also be willing to take that jump. According to Wharton management professor Katherine Klein, when people hear of a brand/ product crisis, the questions that come to their mind are: What is the nature of the scandal? Who was hurt and how badly? I will add a few more questions to this list such as (i) is it true? (ii) Is it a publicity stunt or politics? (iii) What are my friends and other experts saying about this? (iv) Can I as a consumer face this situation again? (v) What are the substitutes available? (vi) Are other substitutes safe? Getting answers to these questions is important to design the right strategy to face the crisis. Lou Rubin, managing director of DPrime Consulting, a unit of Omnicom Group, the marketing communications firm, says that successful brand rehabilitation begins with openness and honesty, “The first issue is, you can’t hide. You must acknowledge the problem. People want to
forgive, and contrition is an accepted part of our culture. Lying is not.” So accepting the fault, and showing that you are committed to health and safety of customers is important to win a lost battle. Combining a research study done by Greyser (2009) and a study published in MIT Sloan Management Review (2010) evaluating a situation should be done based on these dimensions: a. Is the crisis real? b. Severity of crisis? c. Do customers identify with the brand? d. Brand elements

In the case of a highly severe crisis, especially when people connect with the brand strongly, like in the case of Maggi, the top management should apologize quickly, sympathize with the customers and accept responsibility. All bad news (whether coming from customers during/ after product purchase/ consumption or laboratory tests) should be communicated sooner and in one shot. Slow communications at intervals keep reminding people of the crisis and can worsen the situation even more. The top management and owners of the brand should come upfront to explain the lapse as customers really look up to them for their reaction and to see them in action. The company should ensure that all the laws, safety measures, standards are in place and be strictly followed. The same has to be communicated to public at large without using flowery language. Keep it simple and crisp. In case of product recall there should be clear instructions on how to return the product, and replacement
and compensations. Brand advertising and PR activities should follow apology. Sometimes a company can also adopt “not just me” attitude and explain to customers that this can happen with any product in the market. This would help appeasing not just the distressed loyal customers but also potential customers, who should not make even stronger negative associations about this brand in their mind. In a discussion I got to know that some components like mono-sodium glutamate/ lead cannot be completely removed due to contamination and excessive use of fertilizers and pesticides. In that case print a statutory warning on the food packets, also the action that the company has taken to minimize the effects of such chemicals.

To conclude, in the eye of storm, a company should safeguard on all posts. The brand revival steps should be taken with respect to all stakeholders. Nestle should communicate with all stakeholders and adopt integrated marketing communication strategy encompassing all types of media (TV, print ads, social media, online, radio, events, etc.). The important part is to win back the trust of all: consumers, investors and government.

The company should try championing some social cause to get positive reviews and good media coverage. Work with the retailers and kirana stores for cooperative advertising and to maintain the relationship. At regular intervals, the companies should perform independent tests as well as in conjunction with government agencies and publish the test results. If some issue is found, take corrective action right at the inception rather than waiting for the whistle to be blown. Some NGOs should also party in this cause. Also, companies should keep upgrading their quality standards and see the utility, performance and accuracy of different machines and equipments in their factories.

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Priyanka Sharma

PhD, IME Department, IIT Kanpur

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