Product recall for crisis management: Why should it be considered?
Product recall is costly, but taking the product off the market, corporation are potentially averting a major crisis whilst at the same time investing in consumer trust for future or continued relationship. Actually, corporations that recall products from the market are not only protecting their brand reputation (which may otherwise be badly affected if the product is left on the market), but also protecting their consumers from further harm. It is the best approach to reach out and own up for their oversight whilst steering clear of a reputation crisis.
Product recall is not a very recent or new phenomenon. For years, companies that care about their market and brand reputation have resorted to product recall once the first impacts of product malfunction are felt on the market. Even so, other corporations get to do it the hard way - when they are forced by consumer protection bodies or commissions to invoke or adopt such policies.
For companies that have built great brands, their brand reputation and its value-offering is their number one bank account from which they can ‘withdraw’ to protect their brand when things do not go well. As such, recalling products is one such effort to salvage brand reputation from any crises that may arise from product malfunctions. With issues mapping and crisis management plans in place, such corporations can (at the slightest signal of their brand having issues that may escalate into a crises), invoke a product recall policy.
In 2006, Dell, a leading global seller of personal computers at the time, was affected by a crisis in which its laptop computers were renowned for exploding. It all started with an article featured in an online technology news in June 2006. The article stated that a Dell Inc laptop exploded and went up in flames at a Japanese business conference. The cause of the explosion was from overheating batteries (which were supplied by Sony). It soon became apparent that the problem may have been rampant throughout the Dell laptop market. For example, as early as 2003, a Dell laptop caught fire in South Africa, causing second-degree burns to a fifteen-year-old girl. Again in July 2006, a truck in Nevada-USA, caught fire after a Dell laptop left in the cab of the vehicle exploded. The media frenzy around the issues after the June 2006 incident, coupled with increased public and stakeholder reaction, escalated the issues into a crisis to the extent that airlines started banning passengers from carrying Dell laptops with them.
Although delayed, Dell, in a joint initiative with Sony eventually recalled 4.1 million laptop batteries from its global market. Even though the recall cost approximately US $300 million, the beauty in it was that the industry regulations for making, transporting and using laptop batteries was scrutinised and has been improving since. The crisis eventually affected Dell’s market leadership for so many years, since.
As recent as June 2016, Toyota Motor Corp (Japan) recalled 3.37 million cars from the global market because of a possible deficiency affecting vehicles’ airbags and emission control units. No injuries have been associated with the manufacturing deficiency yet, but Toyota nevertheless took an initiative immediately to recall their vehicles before the issue could turn into a major talking point. It is yet to be seen how much more this plays out in terms of consumer trust and brand loyalty as Toyota Corporation has had many recalls in the recent years.
When executed promptly, product recall can not only serve corporations better in dealing with issues and avoiding crises, but also assist in retaining consumer trust and improving certain procedures in the production line. Product recall is in essence a corporation accepting responsibility for the problem and any crisis that may arise thereafter. Crises can affect the physical as well as the psychological wellbeing of consumers. It is therefore ethical for a corporation to recall product to reduce harm on its brand reputation, but most importantly for their consumers’ wellbeing. Although it can be an expensive undertaking, product recall positions a corporation’s actions as taking into account the fears, frustrations, anger and other emotions end-users may go through if they continued using the product.
Product recall expounds on the notion that the best actions in issues and crisis management must always be taken in the best interest of all parties that may be affected by issues and crises.