From dream to debacle

A success story can sour all too soon. Samsung sold over 2 million handsets of the Galaxy Notepad 7 to customers the world over but has had to recall them due to safety reasons. Initially it sought to replace the handsets but its problems worsened when the replaced handsets too proved to be unsafe, forcing the company to halt the sale of the brand variant.

Brand recall isn’t new but in today’s digital world, consumer experiences go viral instantly. There’s also ever-growing competition from rivals. Samsung faces a formidable challenge as a top-notch brand that is present in several categories other than just mobile phones.

Leading brands that managed brand recall include Toyota, J&J and closer home, Cadbury‘s, Maggi and Maruti cars with respect to Baleno and Swift DZire.

Impact on trust perception Consumers expect consistent values associated with tangible benefits from brands, especially if they are established. When a brand delivers such consistent values, consumers develop goodwill towards the brand (applicable to both fast moving goods as well as durable categories).

While symbolism also holds a place in a brand’s benefits, in durable categories, established brands need to fulfil the functional aspects (features and benefits) as a basic requirement of consumer’s expectations. These predisposed expectations of the consumer from a brand is the aspect that affects a brand recall. In brand recall it is just not the expectations about the functional features that occupy the psyche of the consumer: when safety issues like poisoning or fire accidents are involved, the perceived risk gets heightened to the extent of eclipsing the top performance of the brand on a variety of features.

One of the fundamental promises of a good brand is reducing the perceived risk and a brand recall in many contexts involves personal risks. Brand appreciation turns into “fight or flight” thoughts and that spells more trouble for the brand under recall.

Sometimes when such incidents are associated with mega brands that have a huge loyal or admirer base they are forgiven. After all, most humans are not cold-hearted! At some point during the recent times Toyota Camry continued to be one of the best selling cars in the US despite safety concerns and recalls.

Brand association Brand association is another aspect of brand equity that could get affected due to brand recall. The sum total of associations in the memory is called schema that has knowledge structures and interlinkages of nodes. Nestle, for instance, can trigger a concept that has nodes of coffee, chocolate, Switzerland (country of origin) or even dairy products and cows associated with the country. A good brand has several favourable associations and intensity of associations that add to these favourable associations.

Such a state adds to the brand equity of the brand that, in turn, builds a strong brand attitude.

Brand commitment, trust and loyalty too are created by a strong attitude towards the brand. Brand recall affects the knowledge structure of the brand. A brand that faces the misfortune of a huge recall banks heavily on the brand attitude created by it. Would consumers continue to have faith in Samsung?

Do consumers form relationships with brands? Quite a few consumers across categories form different kind of relationships with brands either implicitly or consciously. Do we not have our favourite brand of coffee? iPhone owners may miss out on something through the day if they are without their phone.

Consumer-brand relationship A brand can be a romantic partner, friend, intimate technology-savvy companion knowing the consumer well and so on. Brand recall is an acid test of this relationship. Would consumers forgive a brand especially one that is expensive if there is a brand recall? Would they be satisfied with the back-up measures taken by the company? How can a brand make use of sentiment analysis with respect to the social media? Are the relationships between the consumer and brand affected? These are important questions on brand management during times of crisis.

Financial impact All aspects of managing a brand have an impact on the financial performance of the brand.

Samsung, going by projections from financial analysts, is likely to lose $17 billion due to the abandonment of Note 7!

The technological prowess of an illustrious brand such as Samsung (which had worked up from a low-cost brand to a major one in technology) is at stake when safety issues lead to a disaster. During times of customer lifecycle value and cross selling of categories (happens when a strong brand is present in a number of categories like Samsung), brand recall raises difficult challenges.

Brand recall management This is a complex question that does not have a fixed answer. Cadbury’s used Amitabh Bachchan as a damage control measure following the worms episode. Tylenol, the analgesic, burned millions of worth of stocks after acknowledging its problem when a few persons died after consuming it. Maggi, after taking corrective action, has a spate of commercials on nostalgia. Brand managers will have to perform in an outstanding manner during times of brand recall as it is unpredictable in the destiny of a brand, however established it may be. Que Sera Sera!

S Ramesh Kumar is Professor of Marketing, IIM, Bangalore