• When your reputation takes a hit

    By Felicia Ho, Strategy Consultant on January 29 , 2019

    How these companies managed in the wake of reputation-damaging crises

    In our fast-moving a-tweet-a-minute world, there is no longer a ‘minor incident’. Thanks to social media, brands have been known to stumble and crumble within just minutes when a ‘minor incident’ quickly goes viral and turns into a major fiasco.

    Here, we take a look at how some of these brands have managed their reputation in the wake of such crises.

     

    Starbucks : racial profiling

    The incident

    On April 12, 2018, two black men were arrested within the Philadelphia outlet, on a charge of ‘alleged trespassing’. Their ‘offense’ ? Not ordering food, and asking to use the bathroom while waiting for a friend to arrive.

    The aftermath

    The incident was caught on video, went viral (with nearly 9 million views), and escalated into protests, a nation-wide boycott, and elevated social media conversations on Starbucks’ racial profiling.

    What Starbucks did

    CEO Kevin Johnson quickly apologized, and one day later, announced that the company would conduct an ‘anti-bias’ training for their staff. On May 29, in an unprecedented move, the company closed its more than 8,000 stores across the country for a day, to train their 175,000 employees.

    Conclusion

    A swift & contrite apology from the CEO, followed almost immediately with a decisive action to close stores & conduct the training, showed earnestness in making amends for the fiasco. But the brand also realized that more would have to be done, to ensure that the one-day training was not merely a knee-jerk quick fix and PR exercise, but a bold first step, to address the deeper issue of racial profiling.

     

    Dolce & Gabbana : cultural / racist video

    The incident

    On 18 Nov 2018, Dolce & Gabbana aired a video for their “D&G Loves China” ad campaign, which showed a Chinese woman struggling to use a pair of large chopsticks to consume Italian food.

    The aftermath

    Slamming the ad as racist and culturally insensitive, Chinese netizens, celebrities & brand ambassadors, both in China & abroad, displayed their outrage & disgust with the brand by boycotting and cutting off ties with it. A huge fashion show in Shanghai had to be called off. Bloomberg reported massive pull-outs of D&G products from shops online and offline.

    What D&G did

    5 days later, both founders issued an apology through a short video, which culminated in a lame attempt of a ‘sorry’ in Mandarin.

    Conclusion

    Other than the video, there was no further commitment from the brand on how they intended to go about making further amends. Clearly, a 1 ½ minute apology was not sufficient to convince the public that they fully understood the culture of a country which they had mocked.

     

    Johnson & Johnson asbestos-in-talc findings

    The incident

    A Reuters report in Dec 2018 claimed that J&J knew that asbestos, a known carcinogen, was found in its talc product, but kept it under wraps for decades (since 1971). The company has vehemently denied the claims in print and in court.

    The aftermath

    J&J stocks took a hefty 11% beating on the day of the report, losing almost US$45 billion, its biggest single-day loss since 2002. Consumers were naturally incensed that a product targeted at babies could have been tainted, and worse still, knowingly hidden from the public.

    What J&J did

    To calm and reassure consumers and investors, the company responded on social media, rebutted the report on its website, ran ‘Science, Not Sensationalism’ ads across national media and directed the public to a dedicated website FactsAboutTalc.com. A $5 billion stock buyback was also announced by Chairman and CEO Alex Gorsky, who later appeared in a company video, and on an American finance TV program, to clarify & strengthen the company’s position on the issue.

    Conclusion

    What’s different in this crisis, is that J&J is concurrently facing multiple lawsuits, and as with every crisis, the question of admission to liability can  have a lot of consequences.  Yet it is important to acknowledge the distress and hurt that has been caused. PR experts are still keeping tabs on the company’s attempts to staunch a badly bruised reputation. However, J&J is a strong brand; as long as they continue with their crisis practices, periodic audits and ensure that all future plans are carefully & strategically thought out, they should be able to recover from this fallout.

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