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PR Fiascos Crisis Management Strategies

& Crisis Communication



Each group has been assigned a well-known organizational crisis / public relations fiasco
please read the information provided to your group.
Research the issue / scenario and the crisis management strategies that the company employed.
Moreover read up about the crisis communication plans that the company developed. It is very
important that you collect detailed and relevant information and read the opinions of various
experts in the field.
All important information is available online.
Present the fiasco, the crisis management strategies, the crisis communication plan etc to the
class in 5 minutes. You should also discuss why the organizations strategies were appropriate /
inappropriate. Maybe you wish to comment on implications of the CM strategy. Share the
lessons learned from this PR fiasco lessons in terms of what to do and what not to do.
For this purpose, during your information-sharing session remember to:
- address the issue
- make a statement about the organizations stance on the issue
- share the crisis management strategy & crisis communication plan
- discuss why the strategy worked
- share any implications that arose from the use of the CM strategy.

Each group will work together to read, discuss & analyze the information and then logically and
coherently organize their information-session.
You are not allowed to use any visual aids.
Duration for each information-session = 5 minutes
The information-sharing session = session 15




GROUP 1: PepsiCo's can tampering rumors (1993)

The crisis: A syringe was allegedly found in a can of Diet Pepsi in Washington state. The
following week, more than 50 reports of Diet Pepsi can tampering sprung up across the country.
It turned out to be a hoax.
How PepsiCo responded: Both PepsiCo and the FDA were confident that the reports were
fabrications, so the company came out hard, defending itself staunchly against the accusations.
But PepsiCo didn't make vague statements telling the public to simply trust it. The company
produced four videos throughout the crisis, such as a comprehensive report on its soda canning
process. The most compelling was a surveillance tape of a woman in a Colorado store putting a
syringe into a can of Diet Pepsi behind the store clerk's back.
PepsiCo North America CEO Craig Weatherup appeared on news stations armed not only with
visual evidence of the bogus reports, but with the explicit support of the FDA. He appeared most
notably on Nightline with FDA Commissioner David Kessler, and they both assured the public
that Diet Pepsi was safe.
The result: The rumors fizzled out within two weeks following multiple arrests by the FDA for
filing false reports. Diet Pepsi sales had fallen 2% during the crisis but recovered within a month.
The situation required an aggressive defense because PepsiCo hadn't done anything wrong. If the
company remained quiet and complacent the damage could have been far worse.


GROUP 2: Texaco's racial discrimination lawsuit (1994)



The crisis: Six of Texaco's African-American employees sued the company for racial
discrimination. Damning conversations between Texaco executives that were secretly recorded
seemed to confirm the issue.
How Texaco responded: CEO Peter Biljur started off with a public apology and admitted
embarrassment. The executives involved were suspended (with pay but without benefits),
pending the result of the investigations.
Texaco execs went on tour, visiting all branches and sites of the company in person to apologize
to the employees, and the company hired African-American owned advertising agency Uniworld
Group to run an ad campaign to help douse the flames.
The result: The Reverend Jesse Jackson was the most vocal opponent to the company, calling
for a boycott, but softened his view after Biljur's response. This was key to the company's image
recovery.
Texaco settled the suit, agreeing to pay $176 million. Additional discrimination checks for
executives and managers put in place by Biljur have prevented the problem from sprouting up
again.


GROUP 3: Odwalla Foods' apple juice E.coli outbreak
(1996)


The crisis: Washington state health officials confirmed a link between a local E.coli outbreak
and Odwalla's fresh, unpasteurized apple juice. One child died and more than 60 people became
sick, prompting more than 20 lawsuits.
How Odwalla responded: CEO Stephen Williamson immediately recalled all Odwalla products
containing apple or carrot juice, which cost the company around $6.5 million. He accepted
responsibility when talking to the media and promised to pay all medical costs for those affected
by the outbreak.
Daily press briefings by Odwalla were used to update the public, along with full-page newspaper
ads and a website explaining the situation.
The result: The company had faced its worst-case scenario: death caused by one of its food
products. Odwalla lost a third of its market value by the time everything subsided, and pled
guilty to criminal charges relating to the outbreak, which resulted in a $1.5 million fine from the
FDA.
But Odwalla was still standing. It focused on customer relations in the months following,
attempting to rebuild trust. Odwalla fixed the contamination issue and improved its quality
control and safety system.
Odwalla re-launched its apple juice two months later. In 2001, Coca-Cola bought Odwalla for
$186 million.


GROUP 4: Cadbury's worm infested candy bars (2003)

The crisis: Two Cadbury chocolate bars were found infested with worms in Mumbai, India. The
Maharashtra FDA quickly seized the chocolate stock at Cadbury's closest manufacturing plant in
Pune.
How Cadbury responded: The company was slow out of the gates. It released a statement
claiming that the infestation was not possible at the manufacturing stage, while the FDA
disagreed, prompting a tussle between the two. The media jumped on Cadbury, and the brand
was under widespread assault.
Cadbury took its advertising off the air and launched an educational PR project that targeted
retailers. It kept the media updated through press releases on the specific measures it was taking
to correct its manufacturing and storage processes. The company also imported new machinery
and changed the packaging of its Dairy Milk bars.
Four months later, Cadbury began advertising more aggressively. By then, the company's
relationship with the media had improved greatly.
The result: Cadbury's sales in India plunged 30% in the wake of all the negative media
coverage, and this was during a season when its sales usually increase by 15%. But over time,
Cadbury began to recover.
Within eight weeks of the introduction of its new packaging and advertising campaign, sales had
almost reached pre-crisis levels. The company announced eight months after the incident that its
consumer confidence was back to to normal. Cadbury has maintained its position at the top of
the Indian chocolate industry ever since.
But Cadbury suffered three years later when a salmonella outbreak wasn't handled nearly as well.


GROUP 5: Toyota's recall fiasco (2010)

The crisis: Toyota recalled a total of 8.8 million vehicles for safety defects, including a problem
where the car's accelerator would jam, which caused multiple deaths.
How Toyota responded: Toyota initially couldn't figure out the exact problem, but it sent out
PR teams to try and stop the media backlash anyway. The upper management was invisible in
the early stages of the crisis, skewing public perception further against the company.
Toyota's response was slow, with devastating results. But it served as a wake-up call for the
company, which somehow turned it around in the months following the debacle.
The company failed miserably in its initial crisis management, but that's what makes Toyota's
case so intriguing. Despite its monumental mistakes early on, Toyota still bounced back. Why?
It didn't take long for the public to remember Toyota's previously stellar reputation. The
company offered extended warranties and pumped up marketing, leveraging its long-term track
record and reassuring consumers about safety.
Its ads in the following months were more thoughtful and sincere, showing the company's
dedication to fixing the problem. Toyota's executives -- especially in the US -- became more
visible, speaking to the media and becoming active in the investigations.
The result: The Toyota brand showcased its resiliency, with its positive reputation built up over
decades of good performance. The company leveraged this, focusing its marketing once again on
safety and its proven track record. It had to show that this disaster -- including its own horrible
mishandling of the situation -- was an aberration.
And it worked, with a little bit a of luck. NASA exonerated Toyota of the blame for most of the
accidents in 2011 and the company's brand equity leapt 11% this year, according to WPP.
GROUP 6: The Red Cross' rogue tweet (2011)

The crisis: One of the Red Cross' social media employees accidentally sent the tweet -- which
was meant for her private account -- and didn't realize it. It stayed up for about an hour before the
company's social media director was alerted and took it down.
How the Red Cross responded: Social media director Wendy Harman followed up with a
humorous tweet from the official Twitter account and acknowledged the mistake.

It got support from Dogfish Head too, who embraced the hashtag #gettngslizzerd and encouraged
its followers to donate to the Red Cross.
The result: The tweet generated a bit of buzz among bloggers and the Twitterverse, but so did
the fun response by the company.
Fortunately for the Red Cross, although the nature of the tweet wasn't professional, it wasn't too
controversial. Nobody was outraged, and the Red Cross had to deal with nothing more than a
little embarrassment.

GROUP 7: THE EXXON CRISIS (1989)

What happened?

On March 24, 1989, Exxon was faced with a crisis when it spilled 11 million gallons of oil into Alaskas Prince William
Sound with the Exxon Valdez oil tanker. Some species were slightly affected by the oil spill like the brown bear, but others
like the harbor seals, sea otters and cormorants suffered a great loss in their population. Furthermore, Alaskas fisheries,
national parks, beaches and forests were greatly affected, which in turn affected tourism (Fritz-Gerald Piquion)
How did it happen?

One of the crew members was unable to properly maneuver the ship due to tiredness from work overload. Also, the crew
master was under the influence of alcohol and could not give the proper directions to his crew. Although the errors
occurred once on board, one of the mistakes was Exxons insufficient supply of trained crew members and the availability
of inadequate equipment on the ship.(Fritz-Gerald Piquion)

Reaction: Exxon vs. Tylenol

One of Johnson and Johnsons crisis management techniques with the tampering of Tylenol capsules, that was very
effective was its quick response to the product tamper. Exxon on the other hand, waited a long time before responding to
the oil spill and sending aid to Alaska. For example, an advertisement ran in the newspapers 10 days after the spill, and
Exxons chairman, Lawrence G. Rawl, did not fly to Alaska until two weeks after the spill. Instead, he sent a team of
individuals who were not trained in crisis management. This showed the public that Exxon didn't consider the spill a truly
environmental problem.

Furthermore, the communication between management and its publics was inefficient. Exxon chose to communicate
only to the people of the town of Valdez and not to the rest of the world. This made the dissemination of information
difficult. Unlike Johnson & Johnson, who immediately recalled its product and made public announcements about the
suspension of its usage through various media outlets.
It is the duty of the company to report to its publics and the reporters responsibility to obtain information about the
matter to distribute it to the population. When Exxons spokesman first answered the press with no comment after the
spill, it took credibility away from the company and made the public feel like top management was either hiding
something or had not yet gathered all of the information.
Finally, Exxon never took responsibility for what happened. On the other hand, it was proven
that Tylenol was not associated with the tampering, yet it still immediately assumed responsibility. This in turn restored
the confidence in the consumer about the safety of its product. Exxon completely failed at this task since it took a few
days to send individuals to help clean up the oil spill in Alaska. It proved to the people of Alaska and the world that it did
not care about the environment or the damage to the tourism and fishery industries in Alaska, which the country greatly
depends on.


GROUP 8: THE TYLENOL CRISIS (1982)
What happened?

In October of 1982, Tylenol, the leading pain-killer medicine in the
United States at the time, faced a tremendous crisis when seven
people in Chicago were reported dead after taking extra-strength
Tylenol capsules. It was reported that an unknown suspect/s put 65
milligrams of deadly cyanide into Tylenol capsules, 10,000 more
than what is necessary to kill a human.
The tampering occurred once the product reached the shelves. They
were removed from the shelves, infected with cyanide and returned
to the shelves (Mitchell, 1989). In 1982, Tylenol controlled 37
percent of its market with revenue of about $1.2 million.
Immediately after the cyanide poisonings, its market share was
reduced to seven percent (Mitchell 1989).
What did Johnson & Johnson do?
Once the connection was made between the Tylenol capsules and the reported deaths,
public announcements were made warning people about the consumption of the product.
Johnson & Johnson was faced with the dilemma of the best way to deal with the problem
without destroying the reputation of the company and its most profitable product.
Following one of our guidelines of protecting people first and property second, McNeil
Consumer Products, a subsidiary of Johnson & Johnson, conducted an immediate product
recall from the entire country which amounted to about 31 million bottles and a loss of more
than $100 million dollars. (Lazare, Chicago Sun-Times 2002) Additionally, they halted all
advertisement for the product.
Although Johnson & Johnson knew they were not responsible for the tampering of the
product, they assumed responsibility by ensuring public safety first and recalled all of their
capsules from the market. In fact, in February of 1986, when a woman was reported dead
from cyanide poisoning in Tylenol capsules, Johnson & Johnson permanently removed all of
the capsules from the market.
How did Johnson & Johnson re-introduce the product to the market?
Once the product was removed from the market, Johnson & Johnson had to come up with a
campaign to re-introduce its product and restore confidence back to the consumer.
1. Tylenol products were re-introduced containing a triple-seal tamper resistant packaging.
It became the first company to comply with the Food and Drug Administration mandate of
tamper-resistant packaging.(Mitchell 1989) Furthermore, they promoted caplets, which are
more resistant to tampering.

2. In order to motivate consumers to buy the product, they offered a $2.50 off coupon on
the purchase of their product. They were available in the newspapers as well as by calling a
toll-free number. (Mitchell 1989)

3. To recover loss stock from the crisis, Johnson & Johnson made a new pricing program
that gave consumers up to 25% off the purchase of the product. (Mitchell 1989)

4. Over 2250 sales people made presentations for the medical community to restore
confidence on the product. (Mitchell 1989)
What was Tylenol's basis for its crisis management program?
The reason Tylenol reacted so quickly and in such a positive manner to the crisis stems from
the companys mission statement. (Lazare Chicago Sun-Times 2002). On the companys
credo written in the mid-1940s by Robert Wood Johnson, he stated that the companys
responsibilities were to the consumers and medical professionals using its products,
employees, the communities where its people work and live, and its stockholders.
Therefore, it was essential to maintain the safety of its publics to maintain the company
alive. Johnson & Johnsons responsibility to its publics first proved to be its most efficient
public relations tool. It was the key to the brands survival.

Tylenol is one of thousands of companies who have faced a crisis that can be destructive to
its company if not handled properly. In 1999, 17 years later, when Coca-Cola was faced
with a crisis of its own, Nick Purdom of PR Week wrote that "the PR industry has an
important role to play in helping companies identify and manage risks that could damage
their reputation."