Samsung started rolling out the Note7 on 19th August 2016. Reports soon emerged that the Note7 was prone to overheating, causing some devices to catch fire. Dissatisfied customers aired their displeasure with Samsung on social media sites like Twitter, creating memes which harmed the firm’s brand online.
Dealing with the problem, Samsung rolled out an informal product exchange, allowing consumers to trade faulty Note7’s for new devices. This initiative was however confusing and proved unfruitful, when reports emerged that the new devices were faulty as well. In the end, Samsung was left with no choice but to recall all devices and cease production of the Note7. This sparked a flurry of negative press reports.
Reputational crisis
Many investors are concerned that this incident could tarnish Samsung’s image long term. Writing to clients, Credit Suisse Analysts said: “Trust in the Samsung product by its major distributors took a knock… competitors to potentially gain market share.” The 2015 Edelman trust Barometer1 shows that 63% of consumers will not do business with a firm they distrust, so the Note7 incident could prove disastrous for Samsung.
Samsung’s actions exacerbated the crisis. Significantly, the issue was not resolved after the first recall. The Credit Suisse analysts also commented: “It is easy to overlook the first recall, but much more difficult to overlook the second,”. We do not know full extent of the damage to the Samsung’s brand yet. But it is key that they limit further fallout.
Repairing the damage
Samsung must now restore consumer trust in their brand. Ideally, before negative perceptions spread to other Samsung models such as Galaxy S8, which is due to launch in early 2017. The smartphone market is very competitive. Failing to take these steps could see Samsung customers defect to other well-known providers like LG, Huawei and Google Pixel.
The Director of the Center for Business Analytics at New York University, Anindya Ghose, outlined the actions Samsung needs to take; the brand should recall all Note7s, fully reimburse consumers and pinpoint the problem with the Note7, so it does not occur in other models. Samsung should also convince business partners “to give it another shot with the next set of product releases.”
In order to calm investor and partner concerns, Samsung needs to begin talking directly with consumers, particularly online through social media sites, which now guide purchasing decisions for 62% of UK consumers2. Samsung’s CEO should take an active role here. This shows consumers that the brand is committed to improvement.
Crisis management
Should your firm experience a reputation-damaging event, you should adopt a similar approach. It is key that you develop a crisis management plan. You then have the infrastructure needed to confront a crisis immediately, limiting damage. This should include a management team, with members of your marketing, HR and legal departments involved. This means they can maintain consistency across the brand when responding to the crisis.
It is also important to monitor brand mentions online and listen to what consumers say both before and during a crisis. Consequently, you can confront negative content head-on, reducing the impact on your image. Above all, maintain transparency in crisis communications. This means you can reassure consumers that you have heard their concerns and are committed to tackling issues, re-establishing trust and limiting the effect on your firm’s reputation.
Footnotes
1. http://www.edelman.com/insights/intellectual-property/2015-edelman-trust-barometer/trust-and-innovation-edelman-trust-barometer/executive-summary/” href=”#ref1″>↩
2. https://exchange.cim.co.uk/editorial/keep-social-honest-research/” href=”#ref1″>↩
