What do you do when people start creating Halloween costumes based on your flagship product?
When Samsung launched the Note7 in August it received something of a standing ovation from the tech press worldwide. It was lauded as a phone with the world’s best screen, design, memory, performance and productivity. Launched just before the iPhone 7, it constituted the second part of the one-two punch to challenge Apple’s monopoly of the international market. There were reports that the pre-orders for the Note7 were several times higher than those recorded for Note5 (last year’s model).
Then, terror struck. Scattered reports started coming in of the Note7 bursting into flames. Now, let’s be clear: these days, absolutely no smartphone launch goes without experiencing problems. Apple had serious post-launch problems with the iPhone 4 (defective antennas) and iPhone 6 Plus (the phone bent in people’s pockets). There have even been reports about the iPhone 6S and iPhone7 bursting into flames (the cause is not clear as yet). One can, therefore forgive Samsung for not paying too much attention to these incidents (to be fair none of the iPhones’ faults were considered to be life-threatening).
Yet, slowly the momentum built up. The scattering of reports turned into dozens and airlines started to prohibit passengers from carrying the Note7 on board. This forced Samsung to issue a worldwide recall of the handset, with the promise that users would be provided with a safe replacement. Samsung was quick to replace and dispatch the replacement handsets; however, even the replacements exhibited a tendency to burst into flames. Samsung finally had to cease production of the handset and the recall is estimated to have cost the company $18 billion in return costs and lost sales so far.
However, despite what the media may you believing the majority of Note7 users are not switching to the iPhone 7 - the audiences for Android and iOS are not interchangeable. According to a survey published this week by androidcentral.com, 86% of respondents were willing to buy another Samsung phone and only 5.5% opted for an iPhone. Nevertheless, this is a monumental brand crisis; one that at one point, seemed to threaten the existence of the company.
The history of brand crises is as old as branding itself. Chrysler, under Lee Iacocca, was reeling from the effects of the oil crisis in the early 80s, and had to go to the US Congress for a bailout. Lee, instead of playing it safe, discarded most of the company’s products that were in the pipeline and oversaw the launch of K-cars and Minivans. Together, the two launches turned things around for Chrysler.
The most recent brand crises, prior to Note7, was ‘dieselgate’, or the Volkswagen emissions scandal. The media fallout of dieselgate was immense. Volkswagen eventually admitted to falsifying the emissions figures of 11 million cars and embarked upon the largest recall programme in history, costing billions of Euros. However, although in the US, VW sales are reported to have declined by 24%, the European and Asian markets remained unaffected. The reason? The excellence of the product itself, which was not in any way affected by the scandal.
Eventually every brand will face a crisis. How it handles that crisis determines its future course. Clearly the best thing is to address the problem, not the negative publicity. If you keep making excellent products, your customers will not lose faith in you.
Talha bin Hamid is an accountant by day and an opinionated observer of pop culture, an avid reader, a gamer and an all-around nerd by night.