tag:theconversation.com,2011:/global/topics/kuga-35280/articlesKuga – The Conversation2017-02-19T08:09:24Ztag:theconversation.com,2011:article/725922017-02-19T08:09:24Z2017-02-19T08:09:24ZFord still can repair its brand in South Africa but it needs to act quickly<figure><img src="https://images.theconversation.com/files/156955/original/image-20170215-27406-ms2eoz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Ford Kuga brand has been blemished in South Africa by its propensity to burst into flames which has caused a recall of over 4000 cars.
</span> <span class="attribution"><span class="source">REUTERS/Maxim Shemetov</span></span></figcaption></figure><p>There can be no doubt that the Ford Kuga brand in South Africa is in trouble following the model’s propensity to <a href="https://businesstech.co.za/news/general/150371/another-ford-kuga-bursts-into-flames-the-ninth-car-so-far-in-2017/">burst into flames</a>. Ford South Africa has not helped the situation with its lethargic reaction to what’s now a major crisis. </p>
<p>Some considerable damage has been done but Ford South African can still make amends. It will need to move with lighting speed because the window of opportunity to fix the public relations disaster, won’t stay open for long.</p>
<p>After more than a year of largely avoiding the issue Ford South Africa was finally compelled to announce a recall of more than <a href="http://www.biznews.com/motoring/2017/01/17/ford-recall-kuga-fires/">4000</a> Kuga 1.6-litre models in January 2017. This came after 51 Kugas burst into flames in South Africa as well as a couple in neighbouring countries. <a href="http://www.timeslive.co.za/local/2016/12/08/Burnt-to-death-in-a-Ford-Kuga-what-really-happened">One person lost his life</a>. </p>
<p>It didn’t help that the recall only came after the company was put under pressure by the <a href="http://www.702.co.za/articles/238948/consumer-commission-to-make-a-decision-on-the-burning-ford-kuga">National Consumer Commission</a>. Up until that point Ford South Africa had failed to produce a satisfactory response and was facing <a href="http://www.timeslive.co.za/consumerlive/2017/02/03/Ford-Kuga-sales-drop-by-50">increasing criticism</a>.</p>
<p>The company’s reputation has suffered and its brand is reeling. While it’s too soon to calculate the financial cost, one thing is certain; it’s not too late for Ford South Africa to embark on a massive PR campaign to rebuild trust with consumers and mitigate the damage done to its image.</p>
<h2>Consumers are forgiving</h2>
<p>Consumers are remarkably forgiving. Take the example of Volkswagen. In 2016 the German car giant suffered a major blow to its reputation when the company was found to be cheating in <a href="http://www.bbc.com/news/business-34324772">emission tests</a>. Volkswagen was found to have made its cars appear <a href="https://www.washingtonpost.com/news/the-switch/wp/2015/09/22/the-tech-behind-how-volkswagen-tricked-emissions-tests/">more environmentally friendly</a> than they were. The defect affected 11 million cars worldwide. </p>
<p>Yet a year later it had bounced back to regain its position as the <a href="http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/bertelschmitt/2017/01/30/its-official-volkswagen-worlds-largest-automaker-2016-or-maybe-toyota/&refURL=https://www.google.co.za/&referrer=https://www.google.co.za/">world’s biggest car manufacturer</a>, selling more vehicles than Toyota in 2016.</p>
<p>Volkswagen had to deal with <a href="http://www.cnbc.com/2016/12/20/volkswagen-strikes-deal-to-address-80000-polluting-diesel-vehicles-judge-says.html">car recalls</a>, fines prosecutions and settlements. But it was still able to record an overall 3.8% rise in vehicle sales. </p>
<p>Over the years, there have been many products tainted by scandal and <a href="https://www.bloomberg.com/news/photo-essays/2013-01-17/the-most-expensive-product-recalls">worldwide recall</a>. Yet companies have managed the crises, sometimes emerging stronger.</p>
<p>The most celebrated case is multinational <a href="http://www.biznews.com/thought-leaders/2013/11/15/five-key-lessons-from-tylenol-crisis/">Johnson & Johnson</a>. </p>
<h2>How Johnson & Johnson did it</h2>
<p>The company spent millions of dollars recalling the painkilling medication Tylenol http://time.com/3423136/tylenol-deaths-1982/ in the US in 1982 after <a href="http://www.pbs.org/newshour/updates/tylenol-murders-1982/">seven people died</a> following cases of potassium cyanide poisoning. It was revealed that the pills had been tampered with and new tamper proof holders had to be made for the medication. The company destroyed 31 million capsules valued at <a href="http://www.ft.com/cms/s/1/01e2330c-faa8-11d8-9a71-00000e2511c8.html?ft_site=falcon&desktop=true#axzz4YkQqqDPb">$100 million</a>.</p>
<p>The way in which Johnson & Johnson dealt with the Tylenol crisis is one of the most widely taught case studies of <a href="http://mallenbaker.net/article/clear-reflection/johnson-johnson-and-tylenol-crisis-management-case-study">effective crises management</a>. </p>
<p>The reasons are quite simple: Johnson & Johnson acted swiftly and decisively, turning its crisis into an opportunity. The company chairman appeared in commercials and did more than 50 interviews. When the new packaging for the medication had been designed he held a <a href="http://www.aerobiologicalengineering.com/wxk116/TylenolMurders/crisis.html">press conference</a> to introduce it. </p>
<p>But the crisis plan Johnson & Johnson’s put into action is widely believed to have saved the day. Tylenol’s <a href="http://mallenbaker.net/article/clear-reflection/johnson-johnson-and-tylenol-crisis-management-case-study">market share went up</a> from 33% before the crisis to 48% days after the relaunch of the medication. </p>
<p>Ford could follow in Johnson & Johnson’s footsteps with an action plan designed along the same lines.</p>
<h2>Ford needs to launch their own crisis plan</h2>
<p>The main action points would be the following. </p>
<p>It’s imperative that the company puts together some kind of war room or operational team to drive a public relations strategy around the Ford Kuga incidents. They need a marketing plan – not to sell more cars, but to restore consumer confidence. They need to appear to be open and honest and more concerned about customers than about the legal implications of the situation. Customer needs should be foregrounded.</p>
<p>Top of their action plan should be the hiring or seconding of a dedicated person to run a nationwide campaign and interact with the public. In addition, they should consider setting up a hotline where people can call in with their concerns and where customers can air their grievances rather than turning to public grievance platforms like <a href="https://www.hellopeter.com/">hello peter</a>.</p>
<p>Ford has provided a customer service number that people can call for information and assistance. But the goodwill of this has been offset by some Ford dealers <a href="https://businesstech.co.za/news/motoring/151901/ford-kuga-owners-turned-away-by-dealers-when-trying-to-trade-in-their-cars-report/">refusing to help</a> customers as instructed. The company needs to consider setting up dedicated centres where consumers can go with their cars for help and advice.</p>
<p>But it needs to act quickly. The window of opportunity is closing and it’s operating in a difficult economic environment. The latest car sales figures show a 15.3% year-on-year drop in new car sales in South Africa and 2017 is also expected to be tough. </p>
<p>Ford cannot afford to let its reputation be tarnished any further. It’s time to stop the Ford Kuga bleed and to make the most of the small window of opportunity for Ford South Africa to repair its name and reputation.</p><img src="https://counter.theconversation.com/content/72592/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nothing to disclose </span></em></p><p class="fine-print"><em><span>Mlenga Jere does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some considerable damage has been done to the Ford brand as a result of the Kuga fires but Ford South Africa can still make amends.Mlenga Jere, Associate Professor of Marketing, University of Cape TownRaymond van Niekerk, Adjunct Professor, with expertise in Branding, Marketing, Business Strategy, Corporate Citizenship and Social Responsibility, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/719092017-01-29T16:41:10Z2017-01-29T16:41:10ZFord South Africa reacted badly in a crisis: it doesn’t have to be that way<figure><img src="https://images.theconversation.com/files/154389/original/image-20170126-30413-8a7r9l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>In December 2015, <a href="http://www.timeslive.co.za/local/2017/01/24/Ford-broke-law-by-not-informing-consumer-commission-of-Kuga-death-police">Reshall Jimmy</a> burnt to death in his 1.6-litre EcoBoost Ford Kuga in South Africa. Since then a recorded <a href="http://www.timeslive.co.za/local/2017/01/19/Another-Kuga-burns1">51 Kugas</a> have caught alight across the country, and two more in Swaziland and Botswana. The Jimmy family recently announced they intend to bring a class <a href="http://ewn.co.za/2017/01/17/family-of-kuga-fire-victim-to-bring-class-action-suit-against-ford%20despite%20Ford%20denying%20his%20death%20was%20linked%20to%20the%20fault%20http://www.huffingtonpost.co.za/2017/01/18/ford-insists-that-reshall-jimmys-fiery-death-was-not-linked-to/">action suit</a> against Ford.</p>
<p>Yet it was more than a year after Jimmy’s death that Ford <a href="http://www.iol.co.za/motoring/industry-news/ford-sa-to-finally-recall-fiery-kugas-7418489">recalled</a> 4,556 1.6-litre EcoBoost Kugas in South Africa and more in other southern African countries. Ford took the decision only after the <a href="http://www.timeslive.co.za/local/2017/01/24/Ford-broke-law-by-not-informing-consumer-commission-of-Kuga-death-police">intervention</a> of the <a href="http://www.thencc.gov.za/">National Consumer Commission</a>, a statutory body designed to protect consumers in South Africa. At a joint media briefing, Commissioner Ebrahim Mohamed stated that Section 60 of the Consumer Protection Act had been invoked to compel Ford into corrective action.</p>
<p>When confronted with the possibility of having to decide on a recall, manufacturers can respond in one of four ways: </p>
<ul>
<li><p>denial, </p></li>
<li><p>involuntary recall, </p></li>
<li><p>voluntary recall and </p></li>
<li><p>super effort. </p></li>
</ul>
<p>That Ford only acted after the consumer commission got involved suggests that it was in denial. It required a push to at least get to the involuntary recall phase and only after overwhelming <a href="http://www.702.co.za/articles/239364/ford-kuga-owner-says-dealership-don-t-provide-courtesy-cars">negative publicity</a> and memes that spread around social media.</p>
<p>The Ford Kuga case adds to a growing list of similar experiences in the auto industry which seems incapable of learning from its own history. Ford and Toyota have both been involved in messy voluntary recalls where both companies took a long time to act. Evidence of safety issues with the <a href="https://philosophia.uncg.edu/phi361-metivier/module-2-why-does-business-need-ethics/case-the-ford-pinto/">Ford Pinto’s</a> fuel tank first emerged in 1973. It took another five years – and a number of explosions, deaths and court cases – for Ford to recall 1.5 million Pintos built between 1970 and 1976.</p>
<p>Toyota faced complaints about the <a href="https://www.washingtonpost.com/business/economy/toyota-reaches-12-billion-settlement-to-end-criminal-probe/2014/03/19/5738a3c4-af69-11e3-9627-c65021d6d572_story.html?utm_term=.3af43d08c2cc">sticky accelerators</a> in 2002. It took the company eight years to <a href="http://www.nytimes.com/2009/11/26/business/26toyota.html">recall</a> 7.7 million vehicles after a number of crashes and <a href="http://www.nytimes.com/2010/09/19/business/19autos.html">deaths</a>.</p>
<p>Empirical research into the effect of recalls confirms what rational people know to be true: they’re a good idea. Laval University scholars, Nizar Souiden and Frank Ponsen, <a href="http://www.emeraldinsight.com/doi/full/10.1108/JOCM-04-2015-0063">note</a> that</p>
<blockquote>
<p>Voluntary recalls and improvement campaigns can have a positive and significant impact on the manufacturer’s image.</p>
</blockquote>
<p>On top of this, it’s also <a href="https://faculty.fuqua.duke.edu/%7Emoorman/Marketing-Strategy-Seminar-2015/Session%206/Kalaignanam,%20Kurshwaha,%20and%20Eilert.pdf">self-evidently true</a> that product recalls can reduce the number of injuries and recalls in the future.</p>
<p>It’s therefore clear that the sooner a company reacts to a problem, the less of a negative impact there will be on customers, the brand and the bottom line. And, in addition, that if it makes a super effort to address the problem it can even build brand and customer loyalty like never before.</p>
<p>This is vital in the business of business because, as <a href="https://studentvillage.sv.co.za/careers-news/careers-vega-to-launch-new-degree">Gordon Cook</a>, co-founder of preeminent marketing school Vega, bluntly puts it: “Brands cause business”.</p>
<p>So if the evidence supports the contention that the survival of a business depends on acting quickly in a time of crisis, including instituting swift recalls, why should there be any reason to delay? </p>
<h2>Why firms freeze</h2>
<p>The answer lies partially in the realm of <a href="http://dx.doi.org/10.1108/JOCM-04-2015-0063">complexity theory</a> – that in the midst of a crisis many factors are at play, all of which have the potential to muddy the analysis and to pull the organisation in different directions. This often results in ill-conceived, naive and ineffective responses. </p>
<p>In the case of Ford, some commentators have even gone so far to say that there was <a href="http://www.timeslive.co.za/consumerlive/2016/12/22/Ford-confirms-Kuga-fires-confined-to-single-model%E2%80%9A-concedes-engine-overheating-a-possible-cause">no response</a> at all. </p>
<p>But it doesn’t have to be this way. There’s another side to <a href="http://dx.doi.org/10.1108/JOCM-04-2015-0063">complexity theory</a> that holds that organisations with two critical attributes can weather most storms. These are:</p>
<ul>
<li><p>a strong commitment to doing the right thing for stakeholders, and </p></li>
<li><p>a high readiness are most likely to effectively respond to crises. </p></li>
</ul>
<p>But organisations need both. If they’re lacking in one they are likely to have ineffective responses which in turn will lead to post-crisis losses. This could be in both their competitive edge, including market share, as well as financially if they face penalties or their share price dives.</p>
<p>Singapore Airlines handling of <a href="http://thinkbusiness.nus.edu/article/sia-crisis-response/">Flight SQ006 crash</a> is often cited as a model example of doing the right thing.</p>
<h2>Rebuilding confidence takes time</h2>
<p>The Kuga case is a classic example of being in the news for all the wrong reasons. And only time will tell if it will be able to bounce back from this as Toyota appears to have done. </p>
<p>It will need to rebuild brand equity. This will take time and will involve a great deal more than settling claims. And customers aren’t their only constituency. They must also restore faith with other stakeholders such as the dealer network. The company faces a hard journey ahead. </p>
<p>In the meantime, the Kuga fire story will continue to dominate the headlines. These will only cease being negative and become positive if Ford South Africa truly embraces a stakeholder inclusive approach and views events from a moral perspective. Debates on brand value will come across as off-centre if legitimate and reasonable demands to right a wrong are not addressed.</p><img src="https://counter.theconversation.com/content/71909/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Owen Skae does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The behavior of Ford South Africa around the fires that have engulfed its 1.6-litre EcoBoost Kugas model is a classic case of how not to handle a corporate crisis.Owen Skae, Associate Professor and Director of Rhodes Business School, Rhodes UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/718922017-01-26T09:39:48Z2017-01-26T09:39:48ZFord South Africa failed to protect its reputation. What it should have done<figure><img src="https://images.theconversation.com/files/154268/original/image-20170125-23854-1n6dkh4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Reuters/Bogdan Cristel</span></span></figcaption></figure><p>Ford South Africa has suffered huge damage to its reputation thanks to its poor handling of a crisis involving some of its Kuga cars.</p>
<p>The global car manufacturer’s local operation has been forced to <a href="http://www.iol.co.za/motoring/industry-news/ford-sa-to-finally-recall-fiery-kugas-7418489">recall</a> more than 4 000 Kuga Ecoboost 1.6 litre models manufactured between December 2012 and February 2014. Ford South Africa’s CEO Jeff Nemeth <a href="http://www.iol.co.za/motoring/industry-news/ford-sa-to-finally-recall-fiery-kugas-7418489">announced</a> the recall after over 40 cases of engine fires had been reported. To aggravate the situation, one <a href="http://ewn.co.za/2017/01/13/kuga-fire-victim-s-family-yet-to-hear-from-ford">death</a> allegedly resulted from a Ford Kuga exploding in December 2015. </p>
<p>There can be little doubt that the <a href="http://www.timeslive.co.za/local/2017/01/09/Resale-value-of-Ford-Kuga-plummets-following-fires-fiasco1">Ford Kuga crisis</a> has hurt the company’s reputation, and could even prove fatal to its South African operations. Ford South Africa has been attacked viciously in the media and radio stations have been inundated with calls from <a href="http://www.702.co.za/articles/239364/ford-kuga-owner-says-dealership-don-t-provide-courtesy-cars">angry customers</a> some of whom have resorted to legal action against the company.</p>
<p>Ford South Africa has clearly made some elementary <a href="https://www.infomart.com/4-reputation-management-mistakes-you-cant-afford-to-make/">mistakes</a> in managing the crisis. Companies today recognise the importance of a strong corporate reputation as a critical strategic asset, which translates into a source of competitive advantage. This is why a company’s reputation has become a top priority.</p>
<p>One reason why reputation has been put in the spotlight so much is the huge <a href="http://www.wsj.com/articles/SB1023409436545200">corporate reputational losses</a> in the last few decades. These include BP’s oil <a href="http://edition.cnn.com/2015/04/14/us/gulf-oil-spill-unknowns/">spillage disaster</a> and number of car manufacturers.</p>
<p>Toyota has had to <a href="http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/kbrauer/2014/07/01/why-massive-safety-recall-hurt-toyota-more-than-gm/&refURL=https://www.google.co.za/&referrer=https://www.google.co.za/">recall</a> millions of vehicles worldwide because of various mechanical issues. And in 2015 Volkswagen’s reputation took a <a href="https://www.bloomberg.com/news/articles/2015-09-21/volkswagen-drops-15-after-admitting-u-s-diesel-emissions-cheat">serious knock </a> after it was found to have manipulated its diesel vehicles’ software to pass environmental tests. <a href="http://www.reuters.com/article/us-gm-recall-trial-preview-idUSKCN0UP0G620160111">General Motors</a> also suffered reputational damage because of faulty ignition issues resulting in recalls. </p>
<p>So what did Ford South Africa get wrong? What should it have done to protect both its customers and its reputation?</p>
<h2>Proper reputation management</h2>
<p>Proper crisis management is crucial for a company. This is of course particularly true when a bad story breaks and a full-blown crisis is at hand. But in fact crisis management is only effective if there’s already a reputation management process in place. This should be done during the “good times”. </p>
<p>Also, a member of the executive should have been assigned responsibility for the company’s reputation. If this is done properly managing a crisis is always easier as goodwill would already have been built over time.</p>
<p>Once a crisis hits, it is extremely important to act immediately. Three things should be done:</p>
<ul>
<li><p>the company must acknowledge the problem immediately,</p></li>
<li><p>it must engage empathetically with customers, and </p></li>
<li><p>it must answer questions from the media as honestly as possible.</p></li>
<li><p>It then needs to plan its next steps – in order of priority.</p></li>
</ul>
<p>It seems as if some companies still think that they can keep facts away from the outside world. They think they have time to fix things on their own before deciding to come out in the open. In the old days, companies had the luxury to hide. But this was before the immediacy of the internet and social media arrived.</p>
<h2>A question of trust</h2>
<p>Reputations are built on trust. But in recent years the business world has been shaken by economic disruption, unethical and fraudulent practices, bad publicity and <a href="https://www.foreignaffairs.com/reviews/review-essay/2016-06-13/capitalism-crisis">cracks in capitalism’s foundations</a>. People have lost their trust in companies. A climate of anti-business activism, skepticism, pessimism, blame and cynicism has emerged.</p>
<p>So companies’ reputations come under attack more easily. This is fuelled by the media, the internet, social media and pressure groups. Customers are increasingly interested in the way large companies behave and have become more vocal in calling for transparency, accountability and social and environmental responsiveness. </p>
<p>Companies’ reputations <a href="http://www.leader.co.za/article.aspx?s=6&f=1&a=5871">are built more on emotional factors</a> like trust, pride, admiration, liking and a good feeling than on rational factors such as corporate performance or the quality of products and services. </p>
<p>Clients and customers are applying a whole new set of criteria before buying products and services. These include ethics, values and stakeholder democracy. Buying decisions and support of companies <a href="http://customerthink.com/5-factors-that-directly-influence-customer-purchase-decisions/">are influenced</a> by how companies themselves are perceived and <a href="http://www.marketingcharts.com/traditional/corporate-reputation-affects-consumer-purchase-decisions-20826/">to a lesser degree</a> by the perceptions of the companies’ products or services.</p>
<p>The media plays an important role in spreading the word about a company’s reputation. History has shown that companies with favourable reputations are given the “benefit of the doubt” when faced with a sudden crisis.</p>
<p>But reputation isn’t formed just by a company’s PR and branding efforts. Most people form their impressions based on limited information or others’ opinions. Factual information is not enough for customers to form an opinion. </p>
<p>To acquire a favourable brand reputation companies should make sure that they pay attention to a range of dimensions. The most important is that they should try and build a strong emotional bond with their customers and other stakeholders. They can do this by ensuring that the company is admired, trusted and respected and that customers are proud to be associated with it and have a general “good feeling” about it.</p>
<h2>Tangible issues matter too</h2>
<p>Looking after the company’s more tangible issues also plays a role. Companies should pay attention to:</p>
<ul>
<li><p>corporate social responsibility – including social engagement and being environmentally friendly, </p></li>
<li><p>a strong corporate performance. This includes strong and visionary leadership, sound financial decisions, strong financial performance, and solid market leadership, </p></li>
<li><p>being a good employer, and </p></li>
<li><p>making sure that customers have a good service experience – both in physical and online spaces. </p></li>
</ul>
<p>But given the scale of the anger and mistrust directed at Ford South Africa it’s clear that even if it had ticked all these boxes, its management of the current crisis has left a lot to be desired. Its reputation is so badly damaged that even a massive PR campaign won’t help it much at this stage. </p>
<p>What is essential, even at this late stage, is direct, honest and authentic communication with customers as well as stakeholders such as dealers, employees, the media and the National Consumer Commission. In particular, customers who have lost confidence in Ford and its products should be treated extremely well and be reassured. The company needs to give people a reason to trust it again.</p><img src="https://counter.theconversation.com/content/71892/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marietjie Theron-Wepener does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ford South Africa has made some elementary mistakes in handling the crisis caused by fire hazards in its Kuga Ecoboost 1.6 litre model.Marietjie Theron-Wepener, Doctor of business studies, Stellenbosch UniversityLicensed as Creative Commons – attribution, no derivatives.