Samsung’s decision to terminate the Galaxy Note 7 smartphone is a huge decision and is worth a further look.
It takes a page from the Tylenol book of crisis management. In what has become the textbook (although rarely followed) response to a critical product flaw, back in 1982, Johnson & Johnson pulled every bottle of Tylenol in the U.S. off store shelves and made public appeals for customers to turn in their stocks for replacement. This in response to several deaths in Chicago caused by a man injecting cyanide into Tylenol bottles. The physical problem was in Chicago. The brand problem was nationwide. J&J correctly responded to the brand problem and replaced over $100M worth of product. Their brand came out even more respected than it had been, and the halo of J&J as a company that cared for people over products still adds luster to their brand today.
In the last 10 years we have seen a tremendous shift, driven by software companies, to “test on the road” i.e., go to market with a minimally viable product and deal with issues as they come up. It has been a seismic shift in what customers will accept. It was a similar approach to product introduction that brought the GM brand to its knees in the face of the relative perfection of Toyota and Honda. Yet these days, Tesla gets away with repair costs 2-3 times greater than those of GM and Ford. And people are still lining up for years to buy one. (More on this, next blog.)
The coolness of Tesla outweighs the fire of Samsung…
Now we have flaming Samsungs. Many feel that their push to leapfrog the iPhone in technology and (less likely) popularity, stretched their quality controls too thinly. Commercial airline pilots have recently been announcing to passengers that if they have a Notebook 7 on board, they need to power it down as a fire risk. Hard to imagine a worse branding problem.
You may have heard me define a brand as “the answer to the question: what do people think of, when they think about me?” For Apple, Toyota, Microsoft, Coke, you have responses that go beyond what they do and into what they represent to you, emotionally. Another guiding credo I offer clients: “no one cares about what you do; they care about what happens because of what you do.” By and large, that exists for the above companies, but not so much for Samsung. For the level of success Samsung wants for their phones and other products, it needs to become so.
So I have to respect the informed boldness of their response. Kill the Note 7. It is a wise move. Although Samsung is something of a blend between a “branded house” (e.g., Ford) and a “house of brands” (e.g., Proctor and Gamble), their brand is still weak enough that, for most people, the name Samsung does not really conjure up anything except their product lines.
Right now, in this case, they are making their brand deficit work for them. The phone is the focus, not the company, and killing the phone will take much of the negativity with it. And they also get to create and ride the PR bonus of “how Samsung takes care of its customers.” They are laying great groundwork to ensure that the Galaxy Note 8 (or better yet, some other name) is the phoenix that will rise from the ashes of the Note 7. And that their brand will come out burnished, not burnt.
For Samsung, just like for you, your brand is what truly attaches you to your customers. Do you have a Samsung-level of awareness of your brand’s position, so you can make thus informed decisions?
If the answer is no, do your homework and make your brand more fire resistant.
— Simon Dixon