a) To what extent a company foresees and understands certain risks as well take appropriate actions so that such risks are prevented even before it surfaces? This requires a proactive approach from the management in foreseeing, understanding and preventing risks that damages their reputation badly.
b) How effectively a company deals with risks once it surfaces its ugly head? This is more of fire fighting or a reactive approach.
If a company knows something fishy happening (assuming that there are processes or mechanisms in place to check) yet overlook them due to certain reasons (sheer negligence, focus only on company's bottom and top line instead of customer's well-being), then it becomes more of a self-imposed risk. This is called digging your own grave. It is like a time bomb ticking to explode and if it does, the repercussions could be catastrophic for the brand. If there is a significant gap between reputation (How a brand is being perceived by stakeholders) and reality (What the brand is actually) then the risks are quite substantial for the brand. Besides if the reputation risks are mismanaged, then it may have far reaching implications on brand. (Maggi’s social media strategy to handle food safety concerns falls flat)
The current controversy brand Maggi facing today is well known to many. The controversy is around the higher than permissible level of MSG and lead content in Nestle's flagship noodle brand " Maggi". According to Food Safety and Standards regulations 2011, the permissible level of lead in instant noodles is 2.5 ppm(parts per million). The samples that were tested in some parts of India found to have higher than permissible levels of MSG and Lead hence banned the sale of Maggi Noodles in certain parts of the country. ( New Delhi bans Nestlé’s Maggi noodles.) Nestle says it regularly monitors the lead content in accredited labs including its own and the levels are found to be within permissible limits.
We need to wait and see how the controversy would unfold as more states ordered for the test of lead and MSG content present in Maggi Instant noodles.One could already see the impact of the controversy on the brand. According to some sources ( In a soup over Maggi noodles, what’s the worst for Nestle?,) Nestle India's share fell by 9.1% and many stores have withdrawn the product. I could also see mixed but mostly negative sentiments harping on in Maggi's social media pages (https://www.facebook.com/IndiaMaggi?fref=ts).
Given the dominance Maggi brand has in the noodle category ( Market share of 70% in instant noodles category), a bad reputation means serious challenges for the company. Some consumers might stop buying, Some might adopt a wait and watch approach, some might reduce their consumption and some might shift their loyalty to competing brands. What sort of an impact it might have on other brands of Nestle? To what extent this controversy would affect the reputation of corporate brand Nestle especially when the brand's rallying cry (AKA brand essence or mantra) stands for "Good Food Good Life". Should the government also test competing brands for MSG and lead content (Higher than permissible level) instead of limiting the test only to a particular brand?
Should Nestle India Ltd do what J&J did with the Tylenol brand? Can a villain be turned in to a hero? or is there a better way to manage this controversy?
Tylenol, a pain killer brand of J&J contributed 17 % of the company's net income in 1981. The brand faced a terrible crisis following the death of 7 people after taking the capsule. Its share nosedived to 7 per cent from 37 per cent following the crisis. But the way the company managed to catapult the flagging sales and bad reputation to normal is worth recalling. The company recalled 31 million bottles of Tylenol capsules and offered replacement product in a tablet form free of charge. The then chairman James Burke in a news conference gave a chronology of what the company has done. ( Tylenol made a hero of Johnson & Johnson : The recall that started them all). The company spent more than $100 million for the recall and relaunch of the brand.
How brand Maggi which is loved by many can win back the trust of customers? Here is my wishlist
If the facts are true then the company instead of getting in to a defensive mode admits and try to rectify the problem come what may. It could be like adding stringent measures to monitor the quality of raw materials for the presence of toxic contents. A well integrated media campaign to inform the consumers and other stakeholders of the changes the company has made might work. (Recall Cadbury's tamper proof packaging and media campaign). A well respected spokesperson can be roped in to communicate the authenticity of the brand
The company may even think of encouraging customer visits to the factory to check the stringent quality measures they undertake in manufacturing.
If there is a gap between perception and reality, then the company should address the gap by meeting the expectations of consumers (In the context of topic being discussed, it would be reducing the MSG and lead content to permissible limits or a clear and honest communication about the quality of brand is critical in managing the reputation of the brand).
Constant updates of ongoing action from the company to tackle the challenge should be posted in all social media networks.
Respond quickly and prudently to customers and media. Inform what you are doing to cooperate with the authorities or officials concerned
Let the individual states test Maggi for lead and MSG content. Do a parallel testing (large samples across the country) done by an accredited lab. Run a campaign "The Maggi ultimate test challenge" and publish the results in social media. A well driven PR campaign would not be a bad idea.
A brand stands for a promise. It exists for a purpose beyond just top line and bottom line growth. Successful brands are built on delivering promises better than others consistently thereby earning customer's trust, confidence and respect. People turn their back if trust is broken and it is very hard to earn it back.
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