The Hindu Business Line : Saving face

Blessing because the controversy and subsequent consumer curiosity may turn out to be an opportunity for an increase in sales. Nightmare because it threatens to damage the credibility of the brand.

And with the pesticide-in-cola controversy rearing its head again, soft drink majors Coca-Cola and PepsiCo are scrambling to come out of the nightmare which threatens to hit not only sales but the credibility of their brands.

Not that controversy is a new phenomenon for brands present in the country. The recent years have seen a fair share of MNC brands courting it.

These include Cadbury's having to fend off accusations of worms in its chocolates, McDonald's of beef tallow in its fries, KFC of monosodium glutamate (MSG) in its products, and even Johnson & Johnson for the alleged presence of harmful chemicals in its baby products.

But the regularity of controversies does not undermine their seriousness, for as marketers will tell you, the worst of controversies can even wipe out a brand, especially a relatively new one.

A case in point is KFC. KFC entered India in 1995, but a controversy surrounding the levels of MSG in its preparations and subsequent protests from farmers' groups and animal rights activists spelt trouble for the company. Ultimately, the company had to shut all but one outlet in the country. Only recently it made a quiet re-entry into the Indian market.

Even in international markets, controversies have been known to wipe out brands. Coca-Cola, for instance, had to withdraw its newly launched bottled water brand, Dasani, in the UK in 2004 after it was found to contain higher than permissible levels of the chemical bromate and the issue snowballed in the UK press.

However, in a situation in which consumer-connect with a brand already exists, what is the best way out for marketers when faced with a controversy threatening to go out of control?

"The best way to respond is to come upfront, meet the problem head on, be transparent, recognise the problem and importantly, be seen to be taking utmost care and corrective action," says Sam Balsara, Chairman and Managing Director, Madison Communications.

It has been observed that established brands do better with controversies, and far more quickly, if they are perceived to be taking corrective measures.

This could be noticed in the case of the Cadbury's controversy three years ago, in which some of the company's chocolates were reportedly found to be infested with worms. Following this, Cadbury went into overdrive to inform consumers how improper storage may result in such things happening.

Further, the company improved the packaging of its chocolates and also focused on altering the way they were stored across the retail outlets. It also launched Project Vishwas to educate retailers about improving storage conditions. Even the company's advertising at the time sought to assure consumers that with the new packaging, its products are totally safe.

"At that time, unlike the soft drink majors, the company did not go into denial mode. It recognised the problem and addressed it in a transparent manner. Resultantly, Cadbury was able to recover from the controversy in a short span of time," says an executive with an advertising firm.

In fact, corrective measures are known to quickly help in rebuilding a brand's credibility as the high incidence globally of product recall and subsequent replacements shows.

In such cases, the challenge for companies is to create the perception that they are taking care of the consumer's interest first, rather than their own.

This can be seen in the now-famous case study of the Johnson & Johnson Tylenol controversy which hit headlines in the US in 1982. After it came to light that several people in Chicago died after taking cyanide-laced capsules of the pain reliever, Tylenol, the organisation took the decision to recall all Tylenol bottles and repackage them at a cost of more than $100 million rather than disown responsibility for the tampering with of some of its medicine samples.

The company was lauded for its transparent and swift reaction, and was able to regain market share in a short span of time.

In the global automotive industry also, for instance, product recalls are an increasingly regular feature. However, they do not appear to affect the core credibility of the auto brand in question. In fact, the current year has seen millions of vehicles being recalled by automakers such as Nissan, Toyota and Ford. If anything, a recall can even work in a positive manner by showing that the brand cares about the customer. Further, recalls can even save a brand from potentially more harmful controversies.

"The best way to handle controversies is to not allow them to develop in the first place. And if, because of external factors, a controversy does occur, the issue should be faced directly. Further, as a brand stands for trust, it makes sense for the company to focus on the credibility and not the celebrity aspect. The celebrity should not be the base and credibility the icing, but the other way round," says Jagdeep Kapoor, Chairman and Managing Director, Samsika Marketing Consultants.

In other words, a brand can't hope to rid itself of a controversy by ignoring it or hoping that its celebrity brand ambassador can pull it out of trouble.

Kapoor adds that an escalating controversy could hint at larger issues of brand trust and perhaps even a lack of confidence building between the company and the consumer.

"Controversies come up when there is a difference between the actual and the perceptual image of the brand. The attempt of the brand manager should be to reduce the difference between the two to the minimum by engaging the consumer. When there is a gap, then issues related to either credibility or even incredibility come up. Further, treat the relationship between a brand and the consumer as that between two people. Thereby if a controversy does break out, the company should directly interact with the consumer," he says. The interaction should be done through on-ground activities rather than through the media or advertising.

Of course, certain brands tend to be more susceptible to controversy than others, say marketers. "The bigger MNC brands are more likely to court controversy, as anyone can point a finger at them," says Balsara. Further health-related controversies, which affect FMCG and pharma brands the most, are more likely to balloon into major issues.

Not surprisingly, cola sales declined by 30 per cent the first time the cola controversy broke, and sales have already come down by about 15 per cent this time around. But the major worry is not the immediate but potentially long-term damage that the controversy may have.

While there is no ideal way to respond to such situations, most marketers are in agreement that when the controversy is on a nationwide scale, ignoring the issue and waiting for the controversy to blow over is not the best strategy. But it's a call the company in question will have to take.

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