Nokia- A Bomb in your Pocket

A BOMB IN YOUR POCKET

KRITIKA JINDAL

MANAS RANJAN TRIPATHY

RUTVIZ DHANANI

SAHIL JAIN

UNNI KRISHNAN S

Nokia- An Overview

Started as Paper Pulp Business in 1865

Morphed into Global Telecom Leader

Operates in more than 150 countries

Net Sales(2007)- $66.7 billion

Operating Profit(2007)- $13.74 billion

Among Top 5 Best Global Brand in 2007

40% of Global Market Share

Estimated Brand Value- $33.69 billion

Nokia India Operations

Market Entry- 1995

Market Share(2006)- 76%

Customer Care Centres- 500+

Nokia Priority Dealers- 600+

R&D Centres- 3

Manufacturing Unit in Chennai

Case Basics:

Key People Involved:

Managing Director, Nokia India: D. Shivakumar

Director, Communications: Poonam Kaul

Scenario:

Company to release an advisory regarding replacement against a batch of defective batteries

Customers would have to log on to Nokias website to check if their product was affected

Concerns of Communications Director:

People wont differentiate between advisory and recall

Customers would not go online to check their if their poducts are affected

Problems with BL-5C

BL-5C is a Li-ion battery used in Nokia mobiles

More than 300 million units produced

100 units of BL-5C reported for over-heating globally

Units limited to batch produced by Matsushita between Dec 05

and Nov 06

46 million batteries in batch

Batteries over-heating while charging due to short circuit

Nokia issues advisory for free replacement of faulty units

Timeline of BL-5C Controversy

ENFOLDING CRISIS

Events of August 14, 2007

Day Starts:Nokia Advisory issued as press release to 200 publications and media outlets

Regional Managers notified

Total process to be online

Call Centres to operate normally

Starts as a normal day

5:00 PM Star News flashes There is a bomb

in your pocket Report is coupled with gory blast

footage Within the hour news van reach

Nokia office at Gurgaon TRP fight begins

Marketing Head assigned as media spokesperson

Company gets air time on every channel

Channels started to become neutral only after 10:30 PM

Customers throng customer care centres

Customers ask for replacements Customer Care Centres not

authorised to replace batteries Customers not willing to go

online to check for solutions

4:00 PMAaj Tak broadcasts advisory in

straight forward neutral manner

News is neutral at the beginning

Mayhem Begins

Crisis Management

Damage already done

MD returns to India Crisis Team set up Crisis Response planning

begins

Damage control and planning for next few days

Causes of Controversy

Lack of Knowledge among Indians

Over Sensitisation by Indian Media for Ratings

Mentality of Indians

Where Nokia went wrong…..

Inability to understand Indian Market and sentiments

Did not consider Socio-Cultural and Literacy factors

Projection of Global idea on India was wrong

Disregarding intuition of Communications Director

They should have started SMS service along with online advisory

Did not create a Toll-Free Helpline for customers

Did not keep Customer Care Centres open for longer duration and also did not stock extra batteries

Could not control media

Contingency plans were missing (Had to control crisis by forming a crisis team which wasted precious time)

Crisis Response by Nokia

MD returns to India

Crisis Team formed

Team conceptualizes ads for next day

Keep tabs on news reports

Telephones lines active and ready to take calls

New way to check status of product through sms service

Questions remain unanswered:

How to prevent false rumours?

How to handle irate customers?

How to control damage and save brand image?

How to manage logistics?

What will cost implications be?

Solutions to the Crisis

Create additional team for logistics management

Use SMS services for replacement procedure:

Create an SMS service so that customers could send their battery number

Make SMS service free of cost

Send SMS in local languages

If battery was defective ask customers to send their addresses

Send batteries to Priority Dealers and Customer Care Centers to directly

serve customers

Start a Toll Free Number for helping customers

Hire temporary workers to handle extra work load

Solutions to the Crisis (contd)

Tie up with a courier company to deliver products directly to the

customers

Make a provision so that customer can return the defective product in

the same package (to check if defective product exists and for safe

disposal)

Create a system to record outgoing and incoming batteries

System should help avoid duplicate queries and also keep tab on

batteries replaced

Setup a deadline for replacement operations (about 4 months)

Conclusions Concerns of customers can be dealt with directly

Customers will have choices for replacement (through

Customer Care Centres, online or SMS)

Environment Concerns taken care of as battery returned

to company for safe disposal

Replacement operations should end in 4 months

Brand image should remain intact

Nokia should learn from mistakes and follow some simple steps in the future:

It should try to understand its market and its customers

sentiments

Should prepare for the worst even if the matter is small

It should create contingencies for failure of its plans