This white paper explores how chaos has affected specific brands and what the company or brand did to survive or even thrive after the chaos.
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2. Shikatani Lacroix is a leading branding and design firm
located in Toronto, Canada. The company wins
commissions from all around the world, across CPG, retail
and service industries, helping clients achieve success
within their operating markets. It does this by enabling its
clients’ brands to better connect with consumers through a
variety of core services including corporate identity,
naming and communication, brand experience, packaging,
retail, wayfinding and product design.
About the Author
Karen Tsoutsos, Account Director at Shikatani Lacroix
Karen has more than a decade’s worth of experience as an
account director and design manager for top CPG brands
on both the client and agency side of the business.
With a background in visual arts and design, Karen has
overseen a number of successful packaging redesigns and
new product rollouts. She has worked for such notable
national brands as Kraft, Quaker and Life Brand.
White paper | September 2012 | Can You Survive? | 1
3. Introduction
When a company or brand faces chaos, no matter how
severe, the first question that usually comes to mind is:
“How will the company or brand recover?”
The dictionary definition of chaos is “a state of utter
confusion or disorder; a total lack of organization or order.”
A notable example of chaos that has heavily affected the
prosperity of brands is the recent recession. It was a time
when consumers really thought about their purchases,
bought in bulk, and relied on private label brands, which
greatly affected national brand sales.
Brands can also be affected by chaos of a different nature,
like natural disasters such as Hurricane Katrina, the 2011
earthquake and tsunami in Japan or the H1N1 crisis, or
experience chaos of their own doing such as faulty
products causing product recalls.
This white paper will explore how chaos has affected
specific brands and what the company or brand did to
survive or even thrive after the chaos.
More specifically, this white paper will cover:
• The impact chaos can have on a brand
• How a crisis can improve brand perception
• How chaos can positively affect your brand
• What can happen if you do not react
• Insights on how to survive and thrive in chaos
White paper | September 2012 | Can You Survive? | 2
4. The impact chaos can have on a brand
The Costa Concordia disaster, which killed 32 people when
the cruise liner sank off the coast of Tuscany in January, has
undoubtedly instilled fear in the minds of many cruise-
goers. The ship tragedy has either prevented vacationers
from taking cruises altogether, has delayed them from
taking vacations until the uncertainty has passed, or has
directed their attention to Costa Cruise’s competition.
Either way, cruise lines are forced to rethink their marketing
strategies as they are automatically associated with the
chaos Costa Cruises has caused. According to
TheParliament.com’s account of the 2012 European Cruise
Council conference in June, council chairman Manfredi
Lefebvre D’Ovidio said, “It has cast a shadow over the
industry and we want to try and ensure that nothing like
this happens again.” He told conference delegates the
industry needs to project a “positive” image.
Yet, according to Carnival (Costa Cruise’s parent company),
“we believe the incident will not have a significant long-
term impact on our business.” In fact, Costa Cruises has
decided to reduce its level of traditional marketing by
expanding its use of digital marketing and social media,
including Facebook, Twitter (for customer service and
public relations) and YouTube.
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“It has cast a
shadow over
the industry
and we want
to try and
ensure that
nothing like
this happens
again”
Manfredi Lefebvre D’Ovidio,
Council Chairman
European Cruise Council
5. The short-term impact, however, has been evident. In its
Form 10-Q for the quarterly period ended May 31, 2012,
Carnival reported cruise passenger ticket revenues for its
European, Australian and Asian brands decreased by $154
million, or 12.4%, to $1.1 billion in 2012 from $1.2 billion in
2011. The Form 10-Q stated, “Our cruise ticket pricing and
occupancy was affected by the direct and indirect financial
consequences of the ship incident and the challenging
economic environment in Europe.”
While Carnival may not have suffered major revenue losses,
sentiment for the brand is low. Costa Cruises has been
heavily criticized for its handling of the disaster, accused of
being insensitive and insulting by offering Costa Concordia
survivors a 30% discount off future cruises. The company
later offered full reimbursement of all incurred expenses
and $14,000 in compensation for emotional trauma, but the
harm was done.
And the public relations damage continues. With the recent
filing of U.S. lawsuits seeking millions of dollars in damages,
Costa Cruises released a statement in September rejecting
any accountability for the disaster and instead placing
blame on the ship’s captain.
The Costa Concordia disaster is a tragic example of how a
brand can cause further damage to its credibility in the
face of chaos by not responding correctly to the crisis.
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6. How a crisis can improve brand perception
Maple Leaf Foods
When a brand is negatively affected by chaos, responding
in a timely manner is very important. Canadian food
company Maple Leaf Foods faced a severe and deadly
crisis when the Canadian Food Inspection Agency and
Public Health Agency of Canada determined that a strain of
listeria bacteria afflicting several consumers matched the
strain identified in some Maple Leaf food products.
According to the CBC, the outbreak was “…linked to 12
deaths out of 26 confirmed cases of the disease in British
Columbia, Ontario, Quebec and Saskatchewan.”
One cannot properly describe the severity of this situation.
Here is Canada’s largest meat company facing the biggest
crisis in its 100-year history, and is responsible for the
deaths and illnesses of many of its consumers.
What can a company possibly do in this situation? A
natural response would be to hire a spokesperson to
handle the media or work on resolving the issue. Instead,
Maple Leaf did the opposite. CEO Michael McCain took
the media head on. He expressed heartfelt emotion as his
organization took responsibility for the death, pain and
despair that had been caused. McCain said, “Going through
the crisis, there are two advisers I’ve paid no attention
to... the first are the lawyers, and the second are the
accountants. It’s not about money or legal liability — this is
about our being accountable for providing consumers with
safe food.”
White paper | September 2012 | Can You Survive? | 5
“Going
through the
crisis, there are
two advisers
I’ve paid no
attention to...
the first are
the lawyers,
and the
second are the
accountants”
Michael McCain, CEO
Maple Leaf Foods
7. Maple Leaf handled the crisis publicly and the face time
with the media went a long way. Many Canadian consumers
were open to hear what it had to say, and at the very least
respected McCain’s honest approach. I worked at Kraft
Foods during that time and remember how McCain’s
response was discussed internally with high regard
amongst my colleagues and upper management. His
approach was a monumental factor in holding on to
whatever brand equity was left for the MLF brand.
As time passed, Maple Leaf focused on
launching natural food products and
putting greater emphasis on the healthy
products across many of its brands. In
2010, the company launched Maple Leaf
Natural Selections deli meats that are
filler- and preservative-free. In 2011,
Maple Leaf launched Schneiders Country
Naturals products made with only
recognizable ingredients such as lemon
juice, sea salt celery extract and vinegar.
Marketing Magazine believes Maple Leaf’s
strategy paid off. It reported that third-quarter results
released in October 2011 showed overall profitability of $43
million compared to a $19.9 million loss for the same period
the previous year. In the 2011 Marketing/Leger Corporate
Reputation Survey, Maple Leaf climbed 30 spots to 56th
place on the top 100 list. Impressed with its hard work to
“rebuild consumer confidence and its brand with an
increased focus on product innovation and marketing,”
Magazine Magazine voted Maple Leaf marketer of the year
for 2011.
White paper | September 2012 | Can You Survive? | 6
8. Ford
During the recent recession there was a
tremendous financial threat for car
manufacturers such as General Motors and
Chrysler, whereas Ford remained financially
independent from government support. That
being said, Ford still lost money during the
recession, recording a loss of $14.7 billion in
2008 and another $1.4 billion in 2009’s first
quarter. However, as Ford worked through
the financial turmoil it did not lose sight of
its vision and mission. It seems like a pretty
basic plan to practice, however in chaos or crisis it is very
easy to lose sight of what you stand for as an organization,
especially if that’s what you desperately need to focus on .
CEO Alan Mulally printed out the corporate mission and
vision on cards and passed them out to employees, making
everyone accountable for the livelihood of the organization.
However, Ford still had a lot of work to do. One of the first
tasks for Mulally was to streamline the product portfolio.
Ford removed brands such as Jaguar, Land Rover and
Volvo in order to put more focus and resources on the core
brand. Bringing back Taurus, a brand name synonymous
with Ford, was considered a risky move to some, but
Mulally went back to basics and focused on investing in the
future of Ford’s core brand.
As of January 2010, Ford Motor Company reported that
vehicle sales rose 43% and the company’s share of the U.S.
market rose 3 percentage points to 17%, compared to the
same period the previous year.
White paper | September 2012 | Can You Survive? | 7
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9. How chaos can positively affect your brand
Domino’s Pizza
What do you do when sales are declining and consumers
have negative feedback on your core product offering?
Expose it and take advantage of it. In 2009, Domino’s Pizza
took a negative situation and leveraged it to its benefit.
After a product research session, Domino’s was shocked to
discover that consumers thought its pizza crust tasted like
“cardboard” and its sauce like “ketchup” — hence the
decline in sales. Horrifying comments to hear when your
core product offering is being negatively criticized.
Domino’s started from scratch and
focused on changing consumer
perception of its brand through
product reformulation. It embraced
the criticism and even took new
product back to the respondents for
another taste test and opinion.
Although the Domino’s crisis was
not as serious as Maple Leaf Foods’,
Domino’s Pizza’s response was the
same — it was honest and admitted
the product could be better. It was a
risky move, but it worked.
Domino’s launched the “Oh Yes We Did” and “PizzaTurn
around.com” campaign, which showed how it changed its
pizza formulation as a result of listening to its customers. In
Q4 2009, Domino’s increased sales by $23.6 million.
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10. What happens if you do not react?
Abercrombie & Fitch
When a company or brand is faced with a crisis the normal
response is to react. But what if you don’t? What if you
decide not to change or react at all?
During the recent recession, clothing retailer
Abercrombie & Fitch faced almost a year of double-digit
sales declines. In Q2 of 2009 alone, sales declined a
staggering 30% across its three brand name outlets
(Abercrombie & Fitch, Hollister and Ruehl). This was
partly due to A&F closing Ruehl, but another factor was
pricing. Abercrombie refused to lower its price. As the
economy spiraled downward and competitors like
Aéropostale started discounting, Abercrombie insisted
that price cutting would cheapen the cachet of the brand.
Discounting would be an automatic strategy to strengthen
or continue customer loyalty. The more loyal customers you
have, the greater the possibility of leveraging the upswing
associated with an economic recovery and raising prices
again when the market improves. However, Abercrombie
didn’t budge and as of January 2012, net sales for A&F
increased 16% to $1.329 billion for the quarter, compared to
net sales of $1.149 billion for the fiscal quarter ended
January 29, 2011.
One could respect the clothing retailer for not jeopardizing
its brand equity by associating itself with low prices,
however it was a risky move that wouldn’t necessarily work
for every brand or company.
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11. Insights on how to survive and thrive in chaos
There are some common threads with how companies
address chaos. Consider the following when facing chaos:
Remain focused on your brand positioning and core values
Do not alter the brand’s core market position in an attempt
to stay relevant. Ford reacquainted itself with what it stood
for. This created focus and accountability within the
organization. Everyone worked towards a common goal.
Become a solution to a problem
In the early 1980s, seven people died after taking extra-
strength Tylenol that had been laced with cyanide. The
company pulled the product off the shelves across the U.S.
and developed strict safety measures moving forward.
Johnson & Johnson's response to the tampered Tylenol is
widely cited as the gold standard response to a crisis. It
would ultimately introduce three-way, tamper-proof pill
bottles. J&J set the stage for proper safety standards that
are actively practiced to this day.
Determine how to remain relevant after the crisis
The H1N1 scare created a prime opportunity for hand-
sanitizer brand Purell to take advantage of a desperate
need state. Not only did the product provide reassurance
by allowing consumers to protect themselves, it has
become an everyday-use item with portable versions of the
product made easily available – hand-sanitizer dispensers
are now seen in most malls, doctor’s offices and hospitals.
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12. Be timely with your message and face the crisis
Acknowledge the seriousness of the problem in a timely
fashion. Maple Leaf Foods had severe issues to deal with as
a result of its contaminated food. Its approach enabled
MLF to maintain brand loyalty and market share, and to
focus on making better, safer products for the Canadian
market.
Give customers extra incentive
Whether it is saving money through multipacks, using
coupons, or receiving extra points with a loyalty rewards
card, consumers want more. In January 2009, Hyundai
announced a program called Hyundai Assurance after
experiencing a 39% drop in sales
during the height of the economic
recession. The program was set up to
offer customers added protection.
Should they lose their job in the first
year of ownership, Hyundai would
help by making payments and giving
customers the opportunity to buy
back their vehicle. This program
increased sales for Hyundai, doubling
market share from 2.4% to 4.1%. It
was a great plan to revive sales as it
resonated with customers who were
dealing with a very real problem.
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13. Focus on the long term
Although it is a common reaction to generate short-term
sales during a chaotic period, a portion of your marketing
budget should be retained for long-term brand building
activities. If not, when the chaos ends, such as the
recession, organizations will find they own irrelevant,
confused brands that have been abandoned by their core
customers.
Streamline portfolio but continue to innovate
During the recession, it was commonly known that it would
take 12 to 18 months before the economy starts to recover.
Look at your current product portfolio to see if you can
make room for new, relevant product innovations as did
Ford. Plan for innovation now to be ready for your
customers when the chaos has subsided.
Conclusion
As we have learned, some brands can thrive as a result of
chaos. Whatever kind of chaos it may be, either market,
social or environmental, it is important for a brand to
remain true to its positioning, and for marketers to react in
a timely fashion. It is not the time to confuse the consumer
with mixed messages, or to launch irrelevant products. A
brand needs to take the journey with the consumer, provide
solutions and stay true to its core values.
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14. Reference materials
The BrandGymBlog — Post recession branding: What next?
http://wheresthesausage.typepad.com/my_weblog/
2009/10/postrecession-branding-what-next-part-1.html
Canadian Food Inspection Agency
http://www.inspection.gc.ca/1300991336455
CBC — Meat recall could cost millions more: Maple Leaf
http://www.cbc.ca/news/business/story/2008/08/25/
maple-leaf-listeria.html?ref=rss
Dell Financial Reporting – Fiscal Year 2008 in Review
http://content.dell.com/us/en/corp/d/corp-comm/ir-FY08-
in-Review
Ford News Center
http://corporate.ford.com/news-center
The Huffington Post — Domino's new recipe helps pizza
maker more than double its profits
http://www.huffingtonpost.com/2010/03/02/dominos-
profit-more-than-_n_483198.html
Marketing Magazine — Maple Leaf Foods: All the right
moves
http://www.marketingmag.ca/news/marketer-news/all-the-
right-moves-43656
TheParliament.com — Cruise sector “will learn” from Costa
Concordia disaster
http://www.theparliament.com/policy-focus/transport/
transport-article/newsarticle/cruise-sector-will-learn-from-
costa-concordia-disaster/
Public Health Agency of Canada
http://www.phac-aspc.gc.ca/
White paper | September 2012 | Can You Survive? | 13
15. Report on Business, Globe and Mail — Concordia operator
rejects blame in cruise ship disaster
http://www.theglobeandmail.com/report-on-business/
international-business/european-business/concordia-
operator-rejects-blame-in-cruise-ship-disaster/
article4542464/?cmpid=rss1
Reuters — Abercrombie & Fitch reports fourth quarter and
fiscal year 2011 results
http://in.reuters.com/article/2012/02/15/idUS113086+15-
Feb-2012+HUG20120215
The Telegraph — Costa Concordia: “insulting” cruise offer to
survivors
http://www.telegraph.co.uk/news/worldnews/europe/italy/
9030212/Costa-Concordia-insulting-cruise-offer-to-
survivors.html
The Toronto Star — U.S. lawsuits target Carnival in Italy’s
Costa Concordia cruise crash
http://www.thestar.com/news/world/article/1254994--u-s-
lawsuits-target-carnival-in-italy-s-costa-concordia-cruise-
crash
United States Securities and Exchange Commission — Form
10-Q Carnival Corporation
http://www.sec.gov/Archives/edgar/data/
815097/000119312512290985/d334963d10q.htm
USA Today Travel — Costa Concordia update
http://travel.usatoday.com/alliance/cruises/shipcriticblog/
post/2012/01/Costa-Concordia-Update/618082/1
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16. For more information, contact:
Jean-Pierre Lacroix, President
Shikatani Lacroix
387 Richmond Street East
Toronto, Ontario
M5A 1P6
Telephone: 416-367-1999
Email: jplacroix@sld.com
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