Brand management during an economic downturn
Consumers always try to keep up with new technology and this is very prevalent especially in the smart phone industry. Samsung was in the news recently for a not so complimentary reason; some users reported cases of burns arising from batteries in their Samsung note 7 devices. This incidence impacts all Samsung note 7 purchased prior to September 15th 2016, totalling about 2.5 million devices, of which as at the last count almost a million pieces had already been recalled.
Product recall is not a new thing as we have seen this happen to some products like mobile devices and most recently an automobile brand. What however makes Samsung’s case quite alarming is the unprecedented scale of the products to be recalled. What compounds the problem for Samsung is the fact that this has the tendency to trigger a generalization on consumer perception of their other products going by the propensity of consumers to give a blanket reaction to the entire products in its portfolio.
The Samsung note 7 was well received when it was launched and the company had huge expectations with respect to expected earnings, all of which is at risk with the present circumstance. This issue is said to have been caused by faulty lithium batteries arising from a manufacturing defect, which is causing the phones to explode and in some instances burn. So the question to be asked is this – for a brand as big as Samsung, how could this defect have passed their quality control system? It is assumed that due diligence and product testing would have been done prior to production and despatch of such a large scale of the products that are affected. So who dropped the ball?
The effect of the recall is already having an impact on airline passengers, with some airlines placing an outright ban on travellers bringing the phone on-board. The extent to which this will affect the brand is yet to be ascertained but it definitely will not be a “tea party”.
It is worthy of note however, the steps that Samsung has put in place to handle the recall, which may involve an exchange or a refund depending on consumer choice. It is definitely not a place that any company will like to find itself, but what is quite important is how they manage through this process and come out with as little scar as possible.
Most multinationals have well established process to manage defects and resultant product recall that may be triggered; the question to be asked is this – how widespread are these procedures with respect to most companies? What lessons can we take out of the Samsung experience?
1. Be proactive: Companies should not wait for regulators to swoop on them before getting on top of the situation. While it is important to work hand in hand with regulators, the company must be seen to be in charge of remedying the situation
2. Consumer safety should always be paramount: The company will definitely be impacted by loss of revenue as a result of the recall, this should not take precedence over doing the right thing and safeguarding the lives of their customers.
3. There should be a steady flow of communication: It is important not to keep consumers in the dark. At this time, adequate disclosure is very crucial and the company need to keep the information updated as things evolve.
4. Employees need to be well informed: at this critical time, anyone that works in the company may be taken to task by consumers. So it is necessary to have the same information going out. Employees need to be provided with a prepared response with which they can engage outsiders.
Given the attention this issue of recall has generated abroad, interestingly this seem not to be a predominant practice in Nigeria. Does this mean we don’t have cases of defective products?
Mike Umogun