An immediate effect on profi tability and mar
ket share notwithstanding, analysts globally are unanimous in their view that the manner in which a company handles a recall crisis (giving consumers the impression of being an ethical player), decides the ultimate long-term impact of a recall on the company’s brand equity. Sample this: At the turn of the millennium, large swathes of people in western Japan began suffering from food poisoning after consuming milk and related products made by Snow Brand, Japan’s premier dairy foods company. The company sought to downplay the problem, covered up information and was more perturbed about saving its reputation than helping victims. When the cause was traced by city offi cials to the bacteria on the production line of Snow Brand’s Osaku factory, the company tried to get away by citing inventive excuses, including that the valve in which the bacteria was found was used rarely (when, in fact, it was used daily) and that the area of contamination was very small (investigations concluded it to be a much larger area). In its arrogance, the company tried to stall an offi cial recall for as long as possible. End result: Snow Brands had to tender a shamefaced public apology, the President and his seven key executives had to resign, followed by losses & a drasticcut in market share.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
ket share notwithstanding, analysts globally are unanimous in their view that the manner in which a company handles a recall crisis (giving consumers the impression of being an ethical player), decides the ultimate long-term impact of a recall on the company’s brand equity. Sample this: At the turn of the millennium, large swathes of people in western Japan began suffering from food poisoning after consuming milk and related products made by Snow Brand, Japan’s premier dairy foods company. The company sought to downplay the problem, covered up information and was more perturbed about saving its reputation than helping victims. When the cause was traced by city offi cials to the bacteria on the production line of Snow Brand’s Osaku factory, the company tried to get away by citing inventive excuses, including that the valve in which the bacteria was found was used rarely (when, in fact, it was used daily) and that the area of contamination was very small (investigations concluded it to be a much larger area). In its arrogance, the company tried to stall an offi cial recall for as long as possible. End result: Snow Brands had to tender a shamefaced public apology, the President and his seven key executives had to resign, followed by losses & a drasticcut in market share.For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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