The past few months have been characterized by a scandal that is set to re-shape our trust in the automotive sector. More importantly this bad publicity is damaging one of the most loved and trusted brands in the sector, Germany’s Volkswagen.
Experienced brand marketers know very well that building a brand takes time and effort, and making steps ahead is a lengthy and costly process, while even small mistakes can destroy years of efforts in few seconds. This is even truer in the digital era, where information becomes global in a split-second, and consumers outrage can’t be controlled as in the era of one-way advertising campaigns.
The true nightmare scenario for brand marketers is the scandal: the bad publicity effect can tier down years of good work in a very limited time-span. This is even truer for brands which rely on more emotional connections with their consumers, because emotions are a filters to brand associations and value perceptions (they can dilute them or amplify them), which – as Aaker taught us – are the two pillars of brand loyalty.
The difficulty of responding to a scandal comes from the fact that scandals are not perceived the same. As a matter of facts consumers have very different emotional responses to product scandals and non-product scandals. In the first, the emotional response triggered by the scandal is self-centered, and effects directly the perception of the brand. The latter triggers an emotional response dealing more with moral emotions, which have an impact on the brand as much as on the way we perceive an industry, a country and the society overall.
In product related scandals, the loss of brand equity is counterbalanced or hampered by the perceived morality of the response of the firm. Which is how J&J overcame the Tylenol problems in the past. On the other end, the product value perception is what counter-balances the non-product scandal, by rebuilding a scandal-impaired brand, as in the case of Martha Steward’s tax evasion affaire.
In a nutshell, the moral emotions can save a brand from a product scandal, whereas our product value perception can attenuate the fall of a non-product related scandal. The two dimensions are key in managing each-others crisis. And this is why VW’s recent emission scandal is particularly nasty for the brand. Because it is – at the same time – a product and non-product related scandal. And therefore the emotional responses triggered are both at individual and societal level. This generates an almost unprecedented scenario, where the emotional responses are multiplying each other in a non-linear way.
In this case there is no easy way out, and there is no available benchmark, which is a troublesome scenario for VW brand marketers and management.
As a matter of facts, I would recommend both marketing and management, to – first and foremost – gather as much data as possible on the early effects of the scandal, rather they making choices based on gut-feeling. Data should be collected through the process, and brand related measures should be driving decisions. Gathering data might be a time-consuming step, which is why – during the process – all promotional efforts should stop and should have been stopped: albeit this was not the VW response, because in many European countries their campaigns were still airing during the first weeks of the scandal, by fueling further negative consumers’ response. In certain cases the media-buying machine is slow to come to a stop – although I can’t imagine that to be the case for VW – and I would therefore have envisioned a change in the advertising assets by using this opportunity to apologize rather than to promote. As a matter of facts, an apology is in order, and it is probably unexpected and – at the same time – required by consumers. By all means and purposes, the apology is better than the finger-pointing exercise which is as brand destroying as pretending that the scandal did not happen at all. A mea-culpa, even when all the facts are not known, is what a responsible leader should do.
Finally when the extent of the damage is measured, it is imperative to build a relevant response. And relevancy is a function of co-designing an action plan with consumers, customers, suppliers, partners and any other important stakeholder. Any action short of being very relevant, will hamper dilution rather then savaging then brand.
It should be clear that in the case of VW the damage to the brand is more complex to manage, and any faux-pas moving forward can undermine any progress that might have been reached until that stage.