With the second recall of the Galaxy Note 7 and decision to halt production of the flagship device entirely, it’s an understatement to say that Samsung has hit a rough patch. A device that was intended to compete with the iPhone 7 is now off the shelf, allowing loyal Samsung fans to jump ship to Apple, or the new Google Pixel for that matter. This, just as Samsung was solidifying its place as a high quality smartphone manufacturer and serious competitor to Apple. Samsung executives need to be thinking beyond how to deal with plunging stock prices. Consumer perception and long-term brand sentiment is at stake, so they must protect that equity.
Whether through accident, negligence or intentional actions, brands face crises all the time, and technology is a category riddled with product mishaps. As devices become more complex and manufacturers depend on multiple suppliers, no brand is immune to the risk of failure. Consumers understand this and are somewhat desensitized, particularly in the technology category. Except in rare cases, how the brand handles the failure is more important. It’s a test of company values, a chance to showcase the brand’s true colors. And Samsung can learn from plenty of examples:
Take charge of the conversation and be transparent. When hit with a crisis, taking a passive or defensive stance is the worst move a company can make. Customers’ trust has been shaken, and for it to be restored they need to know that the company is taking responsibility and fixing the problem. J&J famously took charge of the conversation with an immediate recall of 31 million bottles of Tylenol in 1982 after 7 people died when bottles were tampered with and capsules were laced with cyanide. The company’s prompt response and quick launch of tamper-resistant packaging has become a hallmark for good crisis management. Samsung is on the right track by halting production of the device, a rare move in the industry. However, much of the conversation around the initial issue, first recall and now second recall, has been driven by consumers, media and regulatory agencies. Executives need to reassure the public that their best engineers are on the case, moving from a position of defense to one of authoritative and trustworthy problem-solver.
Reinforce your values. A brand is a promise to consumers, telling them what to expect. It’s a symbol of trust between a manufacturer and a consumer. No matter the product, a Patagonia logo assures consumers that they’ve made an earth-friendly choice; any product with an Apple logo is understood to be high quality. When things go wrong, that mythology cracks and the meaning of the brand mark is questioned. JetBlue understood this when, in February 2007, an ice storm set off an operational breakdown that left consumers stranded as over 1,000 flights were cancelled in just five days. As a brand built on differentiated customer service, it was imperative to show customers that it could follow through. CEO David Neeleman issued a public letter of apology and introduced a customer’s bill of rights with details on specific customer compensation for affected passengers, quickly stemming any ill will. To reassure consumers of their commitment to quality and reliability, Samsung must disclose any missteps that could have caused the product failure and communicate steps they will take to reinstate the level of quality the brand has become associated with.
Learn, and improve. A stumble can be a jolt to the status quo, spurring the company to improve and become an industry leader for doing so. In 2007, it surfaced that certain Mattel toys produced in China were manufactured using lead paints. Mattel responded swiftly, with product recalls, apologies and new procedures to prevent the possibility of lead paint being used in future production. As it became clear that many companies faced similar challenges with the unsanctioned use of lead paint when manufacturing in China, Mattel stood out for its appropriate response and preventative measures. In its 1982 Tylenol fiasco, J&J similarly used the incident to make tamper-proof packaging the new standard, becoming a leader and likely preventing future calamities. Depending on the outcome of its investigation into the cause of the Galaxy Note 7 problems, Samsung may have the opportunity to change processes or materials in such a way as to raise the bar for all of its products, potentially influencing the industry standards as well.
Samsung’s Note 7 woes are certainly not good news for the company, but with appropriate steps, Samsung could emerge a stronger brand. The company must demonstrate that it is on top of the issue in order to reassure consumers and give them reason to believe that the Samsung brand is still a mark of quality.