How do brands handle scandals: Samsung, Trump, Clinton, VW, Theranos...

VW brand scandal

A list of few recent big brand scandals:

– Samsung recalls washing machines and cell phones;
USA presidential candidate Donald J. Trump tape;
USA presidential candidate Hillary Clinton email leak;
Theranos no product;
Volkswagen cheating on emissions.

See more 2015 and 2016 brand scandals on Inc.com.

 

Brand scandal definition

Brand scandal is a new and negative brand value. This negative value is added to a set of values already owned by a brand.

 

VW example

Example of VW values:
– Mid-cost car;
– Reliable engineering;
– Modest innovation;
– Modest design*;
– Wide range of models.

* New Beetle is the only car with non-conservative design, but in non-standard design car category it is again more conservative.

More simplified VW values would be:
– Modest;
– Reliable.

VW cheating scandal added “unreliable management” value to VW brand. VW was careful to direct the perception of the scandal towards the management. Management is not a systemic error and therefore can be easily eliminated. Also cheating was not assigned to the VW culture as much. Either way “unreliable management” value is not in direct conflict with any of the values VW brand has. It could be in an indirect conflict, but majority of customers will not make that connection as it requires a more interest. Simply put: when people need to buy cars they will not consider the cheating scandal as a big factor in their decision, because it is not related to car performance itself.

VW example shows that negative value will remain, but as long as it is not in conflict with core values it will not hurt the brand and revenue in long term. Same applies to Samsung and other multinational brands like Nestle, McDonalds, etc.

This also applies to USA presidential candidates Hillary Clinton and Donald J. Trump. Negative values assigned to them in their brand scandals do not directly compete with their core values. Hillary and Trump are the only members of the presidential candidate category and therefore their values are relative to each other. This makes them bulletproof to scandals so far because no scandal has touched values defined by the category.

Theranos – a startup – is substantially damaged by the brand scandal because scandal has damaged its core value – the product.

 

Conclusion

Brands of any size can survive or be destroyed by brand scandals. Difference between the two is if scandal assigns negative values which directly compete with already established core values.

Brands that have well established core values, which is mostly done through having many products, will overcome scandals much easier. Having many products is not about diversifying, but makes the brand abstract – a strategy we refer to as Abstraction Strategy – and therefore more resilient to scandals which are often specific limited events.

 

PS

Great Britain is one the brands which is going through a transition with Brexit and it is not clear if this is a scandal or success.

Written by: Nikola Tosic
Publishing date: 5 Nov 2016