Mktg 450 Session 3 Winter 2003

Mktg 450

Session 3

Winter 2003

Crisis

• Product becomes linked to unfavorable characteristics or events.

Imaginary Problems

• Imaginary

– Tropical Fantasy

Tropical Fantasy - 1

1. Brooklyn Bottling Company was founded in 1937

2. Near bankruptcy in mid-1980s when (33 year-old) Eric Miller inherited it from his grandfather.

a. Targeted the Jamaican and minority communities of New York City

b. Product's name changed Crown & Glory to Tropical Fantasyc. 49¢ price printed on the bottle capd. Bottle size increased from 12 oz. to 20 oz.

3. Product sales increased 50% to $15 million

Tropical Fantasy - 24. In April 1991, a rumor campaign was launched against

the company

5. Handbills were distributed by kids paid $5 by an unknown person.

ATTENTION!!! ATTENTION!!!  Please be advise. Top Pop and Tropical Fantasy, also Treat 50 sodas are being manufactured by the Klu Klux Klan. Sodas contain stimulants to sterilize the black man, and who knows what else!!! You have been warned.

Save the Children

Tropical Fantasy 36. Quickly, the company launched a counterattack.

– A black PR firm was hired to address the media. – Free samples were distributed and additional monies

were spent on advertising.– The company hired a detective firm to find the source.– A spokesperson from the Klu Klux Klan announced

that they were not in the soft drink bottling business– Minority newspapers printed editorials and columns

denouncing the rumor.

7. About 3 months later, sales returned to normal

Crisis Management

• Product Design– P&G – Rely

tampons (toxic shock syndrome) – after allegations of causing 38 deaths, the brand withdrawn from market

Crisis Management

• Product Tampering

– Tylenol – deaths caused by attempt at corporate extortion (Chicago)

– Sudafed – deaths caused by marital strife(Seattle)

Crisis Management

• Product Design

– P&G – Rely tampons (toxic shock syndrome) – brand withdrawn from market

– Audi – Sudden Acceleration Syndrome(lost sales for many years)

Audi “Sudden Acceleration Syndrome”

Production & Labor Problems

• Production– Fur industry– Circus Animals– Makah Indians – whale hunting

Makah Indians

Production & Labor Problems

• Production– Fur industry– Circus Animals– Makah Indians – whale hunting

• Labor– Nike, Kathy Lee Gifford – child labor– Airport security

McDonald’s Study

Crisis Management

• Product Design– P&G – Rely tampons (toxic shock syndrome) –

brand withdrawn from market

– Audi – Sudden Acceleration Syndrome(lost sales for many years)

– Intel – Pentium Chip math error(internet as powerful Word of Mouth)

– Quicken – Income Tax errors (quick response, no lasting effect)

Production & Labor Problems

• Production– Coca Cola – European bottling problems– Jack in the Box – eColi

• Labor– Nike, Kathy Lee Gifford – child labor– Airport security

Imaginery Problems

• Imaginary

– Tropical Fantasy

– Corona Beer

– Mountain Dew

– P&G’s devil worshippers

Corona

Mountain Dew

Mountain Dew

Mountain Dew

P&G

Approaches to Crises

• Do Nothing

• Refutation

• Storage strategy

• Retrieval strategy

• Counterattack

• Apologize and go on

Information Flow in Public Opinion

2 -S tep F low o f In fo rm ation

M ass P u b lic M ass P u b lic M ass P u b lic

M ass M ed ia

O rg an iza tion in C ris is

Do Little or Nothing

• Microsoft’s Hidden Messages(why does N Y C = )?

• Starbucks – Central Area Boycott in reaction to police shooting of black man.

Do Little or Nothing

• When to use – information lacks credibility, represents a short-term problem and/or is unlikely to be widely known.

• Ford – anti-environmentalist boycott

Refutation

• Acknowledge the crisis and then try to dispel it or its consequences

– Foreign objects in Diet Pepsi cans

– Ford vs. Firestone

Information Flow in Public Opinion

2 -S tep F low o f In fo rm ation

M ass P u b lic M ass P u b lic M ass P u b lic

M ass M ed ia

O rg an iza tion in C ris is

Refutation

• When to use – when likely to gain the trust and support of the media

Storage

• When & how – use early in the crisis to set the agenda and influence how individuals think about the problem.– E.g., Clinton-Lewinsky (private action, all

about sex versus public official lying under oath)

– Microsoft – Giving consumers better software not destroying the competition.

Retrieval

• When and how – Focus on positive thoughts not likely to remind individuals of the problem.

• E.g., Philip Morris – “Meals on Wheels”

– name change– ALTRIA – Latin for “high”

Counterattack

• When and How – focus on the negatives of the individuals spreading information about your problem.

• E.g., – GM attacks NBC News

– Phillip Morris attacks ABC News

– Political “quick response teams”

Apologize and Go On

• When and How – other methods will be ineffective or will prolong the problem

• E.g., Lee Iacocca apologized for Chrysler’s turning back the odometer on cars before reselling them

Approaches to Crises

• Do Nothing

• Refutation

• Storage strategy

• Retrieval strategy

• Counterattack

• Apologize and go on