5 Cautionary Tales of Brand Image Disasters

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It’s hard to overemphasise the importance of positive brand equity for your organisation. That means building a great reputation that stands up under scrutiny. Ensuring you deliver reliable products or services with outstanding customer service is one part of that, but avoiding the kind of headline scandals that keep CEOs up at night is just as vital in today’s interconnected world.

With almost 30% of Malaysian consumers reportedly having boycotted a brand, it’s clear that brand image is an essential part of any modern business story. The international marketplace is littered with terrifying examples of brand image disasters that significantly impacted brand value. So here are 5 cautionary tales to remind you – the public, and the markets, are watching.

 

Volkswagen – Emissions Scandal

Climate change? I bet you’ve heard of it. It’s a particularly contentious challenge in the automotive industry, with producers working to deliver better, more efficient cars, as increasingly informed consumer seek to find the most environmentally friendly way of getting from A to B. So what did German carmakers Volkswagen do to improve that positive image? They cheated of course.

The 2015 Volkswagen emissions scandal saw revelations that the iconic company had been cheating emissions tests to make their cars look more positively environmentally friendly to consumers. The initial costs to the company amounted to the tune of US$16.2 billion dollars, and the first annual loss for Volkswagen in two decades.

Further revelations that the company had been testing toxic diesel fumes on monkeys did little to restore a positive brand image. While the stock price has finally recovered, the question remains how much ground VW has lost to competitors, and how the damaged brand image will play into their financial future.

 

Price Waterhouse Coopers(PWC) – Oscars Debacle

You’ve got a starring role at one of the world’s most glamorous media events. It’s the kind of thing boring accountancy firms dream of. So best you get it right.

The 2017 Oscars brought hilarity and heartbreak to screens around the world as foot-tapping soiree of Hollywood self-congratulation La La Land was wrongly pronounced winner of the Best Picture Award, bumping much-fancied Moonlight into the sidelines. Of course it turns out Moonlight was the actual winner, and some over-excitable accountants from PWC had handed over the wrong envelope.

 

When you’re a high ranking employee of one of the world’s largest accounting firms, there’s probably a fair bit of expectation you can account for a few envelopes. Not the greatest slice of brand image for PWC.

Kobe Steel – Fake Data

When you’re involved in a product that forms the very foundations for the modern world, people want to be sure those foundations are solid. So it was that Japan’s Kobe Steel received some rather astonished reactions to revelations that the company had been tampering with key product data over a 40 year period.

Shares in Kobe Steel dropped in value by roughly 40% in the months that followed, and with recent news that the CEO has resigned, and governments and customers around the world mulling over the possibility of further action against the company, it looks like the negative brand image fallout isn’t over yet.

Bell Pottinger – Racism in South Africa

You’d think that one of the key lessons for a world-class public relations firm is always remember not to be racist. It’s a pretty good lesson for life all round to be honest. But when someone dangles a reported GBP100,000 a month contract in front of you, standards can slip. Just ask Bell Pottinger.

The British founded and globally successful PR firm had never been one to shy away from controversial clients, but a South African campaign designed around stoking racial tension in order to influence the nation’s social media audience was, as it turns out, the final straw.

After the controversial campaign was revealed, Bell Pottinger were kicked out of the U.K. public relations industry body, lost basically all its clients, before collapsing a few months later. It just goes to show you can create a brand image that’s so toxic, it’s impossible to recover.

BP – Deepwater Horizon Disaster

This final example goes way beyond brand image disaster to a true tragedy. After years of campaigning to try and be seen as an environmentally responsible brand, somewhat of an oxymoronic struggle in itself for an oil company, the Deepwater Horizon Disaster delivered a tragic blow to BP’s brand.

This disastrous accident occurred in 2010 in the Gulf of Mexico, leading to the death of 11 crew on the Deepwater Horizon drilling platform, and resulting in a massive oil spill. It’s hard to put a dollar value beside the tragic loss of life, but the impact to BP is estimated at around US$65 billion to date.

Investigations that followed revealed a complacency in BP’s operational procedure that ultimately led to the disaster. Poor public relations handling by the CEO at the time further deepened the impact on BP’s brand image.

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