In this series of articles, we analyse how some big brands have dealt with serious crisis situations.
By serious crisis situations, we don’t mean one-off communication mishaps, but far-reaching reputational problems resulting from issues related to the product, customer service or severe misconduct of one or more key company executives, potentially affecting the brand’s performance over both the short and long term.
In 2015, Volkswagen went through one of the biggest reputation crises in recent history dubbed “Dieselgate” or “Emissionsgate”. The company was accused of and later admitted to installing in its cars special software, which could detect when the car was undergoing an official emissions test and reduce nitrogen oxide emission levels during inspection. It allowed its vehicles to emit up to 40 times more nitrogen oxide than permitted, outside of tests.
Volkswagen’s sales were expected to be negatively affected by the crisis. However, not only did this not happen (which is a testament to how strong and relevant the brand is) but also, according to some business analysts, Volkswagen advanced towards becoming the bestselling car brand in the world. The reason why the brand didn’t reach this status had nothing to do with Dieselgate but the fact that it didn’t catch up with the SUV trend (in particular in China).
In the aftermath of the scandal, Volkswagen introduced a few changes to its strategy. In 2016, it announced a new plan for the next decade, Transform 2025+. At the core of the new approach was the repositioning of Volkswagen as a higher premium brand than previously (“at the top end of the volume segment, near to the premium competitors”) through changes in its product strategy – placing a stronger emphasis on SUV vehicles in the first phase and on electric cars in the second. Volkswagen’s ambition is to become “the world’s most sustainable volume automobile brand” and a leader in electric cars (“The iconic car of the electric age must be a Volkswagen”). Additional elements of the plan included focus on car connectivity and building a new internal culture promoting more open and entrepreneurial ways of working.
In 2019, as a follow-up to the Transform 2025+ strategy, Volkswagen underwent a rebranding process (“the logical consequence of this strategic reorientation”). It also introduced changes to its advertising style and replaced the “Das Auto” tagline with a sound signature.
In the 1980s, 1990s and early 2000s, Stella Artois was using a famous communication platform, “Reassuringly Expensive” highlighting its premium positioning. However, its premium brand strategy was not coupled with a premium distribution and pricing strategy, and Stella Artois became a victim of its own success in the UK. Despite its sophisticated advertising, the brand was sold almost everywhere, often at discounted prices and as a result, attracted a group of drinkers who liked their Stella mostly for its relatively high alcohol content.
Between the 1980s and 2000s, the brand was associated with binge drinking and violence; it was even given a nickname, “wife beater”. The image problems ultimately contributed to the brand’s decreasing sales in the 2000s. In 2007, however, Anheuser-Busch InBev started implementing a thorough turnaround programme which led to an improved perception of the Stella Artois brand.
Starting in 2007, Stella Artois underwent a radical overhaul of its entire strategy with the objective of making its brand image more premium. After 25 years, it discontinued the “Reassuringly Expensive” communication platform and introduced a new tagline, “Pass on Something Good”, which was later replaced with “She’s a Thing of Beauty” adding a more female undertone to the brand’s personality. The brand started using its full name Stella Artois rather than just Stella and placed a stronger emphasis on the product and the brand’s heritage in its communications.
According to Anheuser-Busch InBev executives, the most effective element of the turnaround was the popularization of the Stella Artois chalice glass, which was meant to be too “feminine” for a certain type of a pub drinker. Additionally, the company began accentuating a nine-step ritual of pouring Stella Artois (including step number six — “the skimming”, often dramatized in Stella Artois’s adverts). To counter the binge drinking accusations, the company also launched a lighter, 4% version of the beer. Currently, Stella Artois’ perception is that of a mainstream premium beer and the previous negative associations have been almost eliminated.
In 1982, Johnson & Johnson underwent a massive reputation crisis, after seven people from the Chicago area died as a result of taking Tylenol (Johnson & Johnson’s painkiller brand, ubiquitous in the American market). It was later discovered that some Tylenol capsules had been laced with potassium cyanide by an unknown individual.
The way Johnson & Johnson dealt with the situation is still a textbook example of how companies should handle crises. Even though the Tylenol tampering incident was treated and investigated as murder and Johnson & Johnson was not required to take any action, the company took a bold decision to withdraw all 31 million bottles of Tylenol in circulation at the time and offered tablet substitutes to people who had already bought Tylenol capsules. Additionally, it launched a huge communication programme, sent warnings to hospitals and advertised the recall in the national media. On top of that, it changed packages of its products, making them tamper-proof.
Despite the fact that Johnson & Johnson lost hundreds of millions of dollars in sales and invested significantly in its recall campaign, in the long run this strategy paid off. Tylenol’s sales came back to the pre-crisis levels and the brand once again became the most popular painkiller in the US.
In 2018, Johnson & Johnson went through another reputation scandal related to its role in the opioid crisis in the US. However, it didn’t deal with this incident as well as back in the 1980s and was criticized for its approach, which is a topic for another series of articles.
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