Big Brands Averting a PR Disaster
For effective crisis management, companies need more than a well-written press release or a “talking head” on a cable news network. News can make it around the world within minutes, and companies should be ready and able to respond to emergencies quickly via a variety of platforms.
Successful brands take responsibility for their mistakes in many ways; here are five examples of businesses which were able to get through times of crisis.
The Tylenol Crisis Of 1982
In that year, Johnson & Johnson faced disaster when seven people were killed by potassium cyanide-laced Extra Strength Tylenol capsules. The company responded by pulling over thirty million bottles of the drug off store shelves, and it halted all production and advertising efforts.
Johnson & Johnson worked closely with the FDA, FBI and Chicago police, even offering a $100,000 reward (unfortunately, the person responsible wasn’t found).
After the crisis ended, the company began making Tylenol in tamper-proof packages. J&J’s response to the Tylenol fiasco is now used as a case study in MBA classes, and it was done so effectively that the brand recovered completely.
Pepsi and Product Tampering Rumors
In 1993, a syringe was reportedly found in a full can of Diet Pepsi. By the next week, over 50 additional reports of Pepsi tampering were made, but the entire situation was a hoax. Pepsi took the reports very seriously, as did the FDA.
The company took decisive action to defend itself against the rumors, producing reports on its production processes and providing videotaped evidence as to who was responsible. Because Pepsi’s defense was so successful (and because of false-report arrests by the FDA), the rumors died down and sales recovered within a month.
Allegations Of Racial Discrimination at Texaco
In 1994, six African-American Texaco employees sued on the grounds of bias and discrimination. The allegations were all but confirmed when recorded conversations between executives were produced; the company responded by suspending the executives without benefits, issuing a public apology and hiring Uniworld Group (an ad agency owned by African-Americans) to create a campaign promoting racial diversity.
Texaco settled the case for $176 million, and put checks in place at the managerial and executive levels. The Rev. Jesse Jackson initially called for a Texaco boycott, but the company’s response encouraged him to soften his stance.
E. coli Crisis at Odwalla
In 1996, there was a confirmed e. coli outbreak at Odwalla Foods in WA, and the cases were connected to the company’s unpasteurized apple juice. The outbreak sickened over 60 people, killing a child and prompting dozens of lawsuits.
Odwalla responded by recalling all apple juice-containing products, accepting full responsibility and paying the medical costs of all who were affected.
The company kept the public up to date through newspaper ads, the company website, and daily press releases. It faced every food company’s greatest fear: a fatal flaw in a product. Because of the outbreak, the company lost almost a third of its value and was fined $1.5 million by the FDA.
It recovered by focusing on rebuilding its relationship with its customers, and fixing the issues that led to the e. coli outbreak. Odwalla was bought by Coca-Cola for $186 million in 2001.
Worm-Infested Cadbury Chocolate
In 2003 in Mumbai, India, two of the company’s chocolate bars were found to be full of worms. The food safety administration quickly seized all stock, but Cadbury’s crisis management team was slow to respond at first.
Cadbury offered a statement that the problem wasn’t their fault, but the administration disagreed, leading to a protracted legal battle and a media assault.
Cadbury responded by stopping all advertising and launching a retailer-targeted PR effort. It kept customers and media outlets up to date through press releases detailing the steps it was taking to correct the problem. The company revamped its machinery and manufacturing processes.
The company began advertising again after four months, but sales fell by 30%. Within two months of the debut of the new advertising and packaging, sales were almost back to normal, and Cadbury stayed at the top of the chocolate market in India until a 2006 salmonella outbreak wasn’t handled properly.