BRAND SEMINAR: When Brand Hurts

DrKKJohan's Speech Highlights at Impiana KLCC on November 15, 2016.

PRESIDENT of The BrandLaureate DrKKJohan spoke on the topic: “When Brand Hurts: Brand Damage is like Brain Damage,” during the half-day Brand Seminar at Impiana KLCC. He urged corporations to guard their brands zealously, and not to make the same mistakes as Samsung did, whose exploding Note 7 phone became the joke of the day, with costly and irreparable damages which almost sank the electronic giant.

Why is BRAND DAMAGE likened to BRAIN DAMAGE?

Simple, when the brain is damaged, one cannot function properly. Our cognitive senses are down and out. We cannot comprehend, learn, understand and feel what is happening. Imagine, if this will to happen to your brand, what would be the outcome of your business? Brand Damage would mean that your brand cannot function at its optimum best and this would put you at a disadvantage.

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The correlation of the brain and the brand in affecting the disposition of a person or business is so great that I made it the subject of my lecture at the recent The BrandLaureate seminar held on November 15th at the Impiana Hotel, Kuala Lumpur.
The brain has many different sections that affect the functioning of the body.

The temporal lobe controls your memory, the cerebellum is about balance and co-ordination of movement while the occipital lobe is about vision and perception. When one suffers from brain damage, one is unable to conceive and perceive matters and if I may say, as good as dead.
Now, if this situation will to happen to your brand, it will be damaged and as the brand is the key driver of growth for your organisation and business, you need to protect your brand and ensure that it is in good health at all cost.

Once a brand is damaged, organisations will do a recall exercise. A recall hurts the brand’s reputation and image severely with long term damage such as drop in sales and revenue and most important of all the loss of trust, respect and confidence amongst its consumers.

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In recent times, many organisations have recalled their brands because of product defects that affect the safety of consumers. Honda and Toyota comes to mind as they had to recall their cars because of faulty airbags. Their airbags were manufactured by Takata, which is one of the largest airbag manufacturers in the world. Instead of saving lives, these airbags actually caused the death of many drivers.
Then we had the case of Volkswagen who had to recall their cars because of the usage of a “defeat device” software to enable its diesel cars to pass strict emission tests. And the latest incident is the Samsung Galaxy Note 7, Samsung’s latest phablet innovation which was launched on August 19th.

A week or so after the Note 7 hit the market in USA, users were complaining that the battery caught fire or exploded. Samsung implemented an exchange program for those who had purchased the Note 7 and assumed that all would be well. Unfortunately, the battery defect continued in the exchanged phablets and Samsung had to make a call to stop production of the Note 7, when an airline passenger’s Note 7 caught fire as he was about to embark on a flight in USA. This incident also led airlines to disallow Note 7 to be carried on board flights.

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Since its launch on August 19th, 112 cases of the Note 7 catching fire was recorded as of September 15th , as reported by the Consumer Safety Product Commission of USA.

It was the intensity of the Note 7 catching fire that made Samsung decide to discontinue the model and this goes down in history as the shortest lifespan of any product and the worst technology brand fiasco in the world.

The Note 7 came with the latest technology and was launched 3 weeks ahead of its rival the iPhone 7 and in a rush to launch the phablet, the brand fell short of its quality control.
“It’s an unfortunate event: it feels like Samsung rushed a bit and it’s possible that this led suppliers also being hurried” said Chang Sea-Jin, Professor at Korea Advanced Institute of Science & Technology.

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Damage to the Samsung brand was grave. On the day that Samsung decided to ditch the Note 7, the stock plummeted 8 percent and wiped out USD 17b of company’s market value. There was a 96 percent fall in third quarter earnings for mobile phones and the Samsung expects USD5.1 billion loss for 2017. Equally damaging is the loss of customers and market share to iPhone which is estimated to be 5-7 million users.

As Samsung is the largest conglomerate listed in South Korea’s stock exchange, its market capitalisation accounts for 17 percent of South Korea’s GDP. The Note 7 disruption has led the South Korean government to revise its 2017 country’s growth estimate from 2.9% to 2.8%.

I always talk about how brands drive the economy and this is a good example of it. Samsung’s contribution to the national economy is so great that any disruption to the brand will have a great impact on the nation.

As a global brand and market leader, Samsung is highly respected for its leadership and innovation. With the Note 7 incident, its reputation, image, trust, leadership, perception, confidence, integrity and responsibility, attributes of a brand commanding market leadership is lost.
The fall in brand image is further reinforced by what is circulating on social media and airlines banning it and associating the Note 7 with dangerous items such as knives and explosives.

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The biggest issue is that Samsung has lost the trust and confidence of its customers. Trust is important in relationships and it takes years to build a good and trusting relationship, but seconds to shatter it. And a brand that loses its desirability is left with nothing.

At the end of the day, will Samsung, the icon in innovation and technology be able to survive from this debacle? It will be a long road to recovery as they will have to ensure that their next product, the Samsung Galaxy S8 is problem free to gain back the trust of its customers.
As it is Samsung is facing numerous woes, as its washing machines in the USA are being recalled amidst reports that the top of the machine becomes detached during use. Samsung’s electrical and electronic sales have seen a decline for 3 straight years, caused by stiff competition from other brands and Samsung’s headquarter was raided recently concerning the company’s involvement with a political scandal involving South Korea’s President, Park Guen –hye.

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What are the lessons learned from Note 7’s collapse?

  • FIRST of all, we must push aside the mentality that a big brand cannot fail or fall. Samsung is a global brand and who would have thought that a battery, small and hidden in the phablet would give so much problem. But the BATTERY is like the BRAIN…if the brain is damaged, other parts of the body is affected, similarly if the brand is damaged, the business suffers.The big mentality causes brands to be complacent, assuming and taking everything for granted. In building the brand, you have to take no chances, make no mistakes and leave no stones unturned. Just One failure can be the fall of an empire. Note 7 failure is a wake up call for Samsung.
  • SECONDLY, do not rush into a decision when you are not ready in brand building. In wanting to come up with the latest technology and most sleek and slimmest device to beat its main rival, Apple, the Note 7 was not put through proper QC testing before it was launched. Everything was definitely not in order, hence the catastrophe.
  • THIRDLY, we are always faced with the issue of Capability versus Want. In this case, Samsung wants to launch the Note 7 with the latest technology and speed up the timing of its launch. In reality, could Samsung’s research and manufacturing sections meet the wants of the leaders?
    We may want to but can we do it? Do we have the competency, the muscle and the strength?
  • FOURTHLY, the question of Expectations versus Reactions. When expectations are running high, but the product is a letdown, the reaction is disastrous. Customers condemn and criticize the brand.
    When your brand fails to meet expectations, it does not only hurt the brand, it also hurts you. The brand not only failed but you have also failed as the brand and you are interrelated and interdependent. In this case, Note 7 has failed and the whole organisation has failed.

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The biggest disaster is failing to meet and deliver on your brand promise.

 

  • FIFTHLY, we it comes to building a brand, you need to be tough. Competition is tough, so you cannot afford to take your brand lightly. You must protect your brand in order to survive the test of time and adversary.

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Brand Protectionism is important.

If you care for your brand, protect it at all cost.
The most important lesson of all is that, Brands must put purpose before profit and not profit before purpose. With this in mind, you will be able to champion the cause of your brand and build a strong and sustainable foundation.

 

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