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Università   Master          Issues
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006




                             Managing Communications in a Crisis

                             Expect the Unexpected
                             Three exemplificative cases of crisis:
                             Perrier, Johnson & Johnson, Mercedes “A-Class”



                             by
                             Cammarata Vincenzo, Kurucz Veronika, Maj Valentina,
                             Salgirli Seda, Schulte Jan
Università    Master          Issues                           Managing Communications in a Crisis

                                                               Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                               Three exemplificative cases of crisis:
                                                               Perrier, Johnson & Johnson, Mercedes “A Class”.




             What is a Crisis?
             ‘A crisis is a major occurrence with a potentially
             negative outcome affecting an organization as well as
             its publics, services, products, and/or good name.’

             Two different views of Crisis:
             > Traditional view:
                        ‘An event that can destroy or affect en entire
                         organization.’ (Mitroff et al.1996)


             > Strategic view:
                         ‘A decisive moment, a turning point
                          for a better or worse.’
Università   Master          Issues                      Managing Communications in a Crisis

                                                         Expect the Unexpected
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006
                                                         Three exemplificative cases of crisis:
                                                         Perrier, Johnson & Johnson, Mercedes “A Class”.


             Crisis are not unusual…
    1982                                  Deaths caused by Tylenol

    1990                                  Benzene in water

    1993                                  Syringe hoax

    1996                                  Suspect for poisoned candies

    1997                                  Woman discrimination

    1997                                  The A-Class failed the moose-test

    2000                                  Privacy & Security on the web

    2000                                  Deaths caused by Baycol/Lipobay
Università    Master          Issues                  Managing Communications in a Crisis

                                                      Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                      Three exemplificative cases of crisis:
                                                      Perrier, Johnson & Johnson, Mercedes “A Class”.




             Common elements to all crisis
             > A rude awakening
             > The rapid speed an escalation of an event
             > The presence of panic
             > The tendency to act irrationally and preciptiously
               when feeling intense emotions
             > Chaos in internal commnications
              (even if they have a crisis communication plan)

             > The omnipresent press
             > A threat to the company’s reputation
Università     Master          Issues       Managing Communications in a Crisis

                                            Expect the Unexpected
della          of Science in   & Crisis
Svizzera       Communication   Management
Italiana       and Economics   SE 2006
                                            Three exemplificative cases of crisis:
                                            Perrier, Johnson & Johnson, Mercedes “A Class”.




              Crisis Management

             - Strategic planning to prevent and respond
              during a crisis or negative occurrence

             - A process that removes some of the risk
              and uncertainty and allows the organization
              to be in greater control of its destiny

             - Dynamic and enduring process.
Università   Master          Issues           Managing Communications in a Crisis

                                              Expect the Unexpected
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006
                                              Three exemplificative cases of crisis:
                                              Perrier, Johnson & Johnson, Mercedes “A Class”.




             Three exemplificative cases
             in Managing Communications in a Crisis:


     1990                                 Negative approach


     1982                                 Positive approach


     1997                                 A well-known case
Università    Master          Issues                   Managing Communications in a Crisis

                                                       Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                       Three exemplificative cases of crisis:
                                                       Perrier, Johnson & Johnson, Mercedes “A Class”.




             Perrier & Benzene - Facts

             1989 – Leader in the sparkling water market
             > High reputation – 13% of the Market share – 1mio bottle sold



             ’80s High Health Consciousness
             (Hot spot among consumers)


             1990 – Benzene scandal
             > Presence of the chemical Benzene at levels above standards
Università    Master          Issues                        Managing Communications in a Crisis

                                                            Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                            Three exemplificative cases of crisis:
                                                            Perrier, Johnson & Johnson, Mercedes “A Class”.




             Perrier & Benzene - Actions
             - 7mio bottles recalled from North America
             > Ronald Davis’ (Perrier America President) declarations
                        problem limited to North America
                        Cleaning Fluid on a production line machine mistakenly used
                        Declaration done before identifying the source of contamination.



             Three days later… discovery:


             - 6 months’ worth of production affected
             - Not only North America but also Global Market
Università    Master          Issues                   Managing Communications in a Crisis

                                                       Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                       Three exemplificative cases of crisis:
                                                       Perrier, Johnson & Johnson, Mercedes “A Class”.




             Perrier & Benzene - Actions
             > Frederik Zimmer (Perrier’s International Division President)


             “Perrier water naturally contains several gases,
             Including Benzene.”…


             “The Benzene entered the water because
             of a dirty pipe filter at an underground spring
             at Vergeze in southern France.”


             It means that “Natural” Perrier
             was in reality processed.
Università    Master          Issues              Managing Communications in a Crisis

                                                  Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                  Three exemplificative cases of crisis:
                                                  Perrier, Johnson & Johnson, Mercedes “A Class”.




             Perrier & Benzene – Effects on the market
             > Financial effects

             - Perrier’s stock price declined
             - Market share declined (13%>9%)
             - Price to consumers declined

             > Plans to restructure

             - Management structure and bottom line
              Firing of Gustave Leven (CEO & Founder)
Università    Master          Issues                   Managing Communications in a Crisis

                                                       Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                       Three exemplificative cases of crisis:
                                                       Perrier, Johnson & Johnson, Mercedes “A Class”.




             Perrier & Benzene – Analysis 1/3
             Lack of internal
             communication and coordination
             > contradictory explanations
             > convey misinformation
              (credibility & reputation damaged)
             > no centralized approach


             Surprise effect & Panic
             > Irrational behavior > loss of control
Università    Master          Issues                  Managing Communications in a Crisis

                                                      Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                      Three exemplificative cases of crisis:
                                                      Perrier, Johnson & Johnson, Mercedes “A Class”.




             Perrier & Benzene – Analysis 2/3
             Rely on media for communications 2C

             > Media controlled the information
             > Defensive behavior (rather than offensive)
             > Lack of proactive and clear communication towards customers


             Scandal became a big media event

             > Rapid widespread of the news > global level
             > Emotional component
               (People scared > betrayed > bad reputation)
Università    Master          Issues       Managing Communications in a Crisis

                                           Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                           Three exemplificative cases of crisis:
                                           Perrier, Johnson & Johnson, Mercedes “A Class”.




             Perrier & Benzene – Analysis 3/3

             - Inability in gathering information
              without loosing control


             - Bad relationship management
              with stakeholders


             - Lack of a Crisis communication plan
Università    Master          Issues          Managing Communications in a Crisis

                                              Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                              Three exemplificative cases of crisis:
                                              Perrier, Johnson & Johnson, Mercedes “A Class”.




             Johnson & Johnson - Facts

             - Multinational of health care


             1982 – Deaths caused by Tylenol capsules
             > Seven people died in Chicago




             1986 – Second case of death
             > A New Yorker died
Università    Master          Issues             Managing Communications in a Crisis

                                                 Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                 Three exemplificative cases of crisis:
                                                 Perrier, Johnson & Johnson, Mercedes “A Class”.




             Johnson & Johnson - Actions

             - 31 mio bottles ca. of Tylenol recalled
             (a retail value of more than USD 100 mio)


             - Offered to exchange
              all Tylenol capsules with Tylenol tablets
              (other million dollars..)


             - Production Suspended
              (until the company could innovate its tamper-resistant bottle)
Università    Master          Issues           Managing Communications in a Crisis

                                               Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                               Three exemplificative cases of crisis:
                                               Perrier, Johnson & Johnson, Mercedes “A Class”.




             Johnson & Johnson - Actions

             - Toll-free telephone hotline

             - Cancel all Tylenol ads

             - Immediate Nationwide warning
              not to use Tylenol
              (Transparency and honesty towards customers)
Università    Master          Issues             Managing Communications in a Crisis

                                                 Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                 Three exemplificative cases of crisis:
                                                 Perrier, Johnson & Johnson, Mercedes “A Class”.




             Johnson & Johnson – Analysis

             - Proactive approach
              (Opportunity to consolidate the relationship with Stakeholders)


             - Timely PR campaign based on honesty
              (Ads, videos to newspapers and TV Networks)
              > Keep the public informed


             - “Customer-oriented” > Customer safety first
              (than company profit and other financial concerns)
Università    Master          Issues          Managing Communications in a Crisis

                                              Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                              Three exemplificative cases of crisis:
                                              Perrier, Johnson & Johnson, Mercedes “A Class”.




             Johnson & Johnson – Conclusions

             - How handled J&J the crisis situation?

                 Offensive - Proactive – recalling the product
                 Saving the brand
                 Responsability – care for its consumers
Università   Master          Issues                      Managing Communications in a Crisis

                                                         Expect the Unexpected
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006
                                                         Three exemplificative cases of crisis:
                                                         Perrier, Johnson & Johnson, Mercedes “A Class”.




                                          Johnson & Johnson

                                          Take care not only the crisis,
                                          but also the EMOTIONS.




                                          quot;We believe our first responsibility
                                          is to doctors, nurses and patients,
                                          to mothers and fathers and all others
                                          who use our products and services.quot;
Università    Master          Issues       Managing Communications in a Crisis

                                           Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                           Three exemplificative cases of crisis:
                                           Perrier, Johnson & Johnson, Mercedes “A Class”.




             Mercedes Benz – “A-Class” case
Università     Master          Issues             Managing Communications in a Crisis

                                                  Expect the Unexpected
della          of Science in   & Crisis
Svizzera       Communication   Management
Italiana       and Economics   SE 2006
                                                  Three exemplificative cases of crisis:
                                                  Perrier, Johnson & Johnson, Mercedes “A Class”.




              Daimler Benz AG - facts

1997 - Mercedes Benz subdivison of Daimler Benz AG
             (now DaimlerChrysler)
             > annual turnover 124 billion DM - 180 000 employees

             > Market share 24,4% - on the European luxury car market
              (BMW 20,7% and Audi 20,5%)


             - High reputation
              technological innovations, safety and high prices
Università    Master          Issues                   Managing Communications in a Crisis

                                                       Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                       Three exemplificative cases of crisis:
                                                       Perrier, Johnson & Johnson, Mercedes “A Class”.




             Baby Benz - facts
             > First-ever Mercedes for middle market segment
             > Goal: reaching new customer groups (young, women)
             > Risk: weaken Mercedes-brand
             > Central values: Quality, Technology & Safety !!!
             > Mercedes strategic and technological bet
               - Extention of the luxury brand into a lower segment
               - Implemention of new development process and production plant
                (2.5 billion DM and 47 month of realization)



 18.10.1997 - Launch after an 18 month-marketing campaign ‘A-Motion’
              (200 mio DM) and 100 000 pre-booked sales
Università    Master          Issues       Managing Communications in a Crisis

                                           Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                           Three exemplificative cases of crisis:
                                           Perrier, Johnson & Johnson, Mercedes “A Class”.




             “This is what our future customers want.
              We are working on it.”
Università    Master          Issues       Managing Communications in a Crisis

                                           Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                           Three exemplificative cases of crisis:
                                           Perrier, Johnson & Johnson, Mercedes “A Class”.




             The moose-test - facts
Università    Master          Issues       Managing Communications in a Crisis

                                           Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                           Three exemplificative cases of crisis:
                                           Perrier, Johnson & Johnson, Mercedes “A Class”.




             ‘How to create Crisis out of an Issue?’

             a. Detection
             b. Prevention/ Preparation
             c. Containment
Università    Master          Issues       Managing Communications in a Crisis

                                           Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                           Three exemplificative cases of crisis:
                                           Perrier, Johnson & Johnson, Mercedes “A Class”.




             From Issues to Crisis
Università    Master          Issues         Managing Communications in a Crisis

                                             Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                             Three exemplificative cases of crisis:
                                             Perrier, Johnson & Johnson, Mercedes “A Class”.



             a. ‘Mis’- Detection
             1. PRODOME:
             Date: 23.09.1997
             Location: Tannishus/ Denmark, selection ‘Car of the year’
                During the test two wheels of the Baby-Mercedes, a
                clear favourite, lost contact with the road at the
                average speed

                 Mercedes sent engineers and The PR Manager to the crime
                 scene!!! Some eyewitnesses claimed the vehicles
                 disappeared overnight and returned back in the morning.



             Statements that came from PR manager:
             “These are claims that cannot be proven!”
Università    Master          Issues         Managing Communications in a Crisis

                                             Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                             Three exemplificative cases of crisis:
                                             Perrier, Johnson & Johnson, Mercedes “A Class”.



             a. ‘Mis’- Detection
             2. PRODOME:
             Date: 21.10.1997
             Location: Sweden,Test Drive for “Teknikens Vaaerd” magazine

                The A-class failed the moose-test,more than failing
                it was topped over at 60 km/h. Journalist Robert Collins
                and three collegues suffered from minor injuries.

                The Mercedes Headquarters were in Tokyo Motor Show
                and only statement from Mercedes was:


             “…it is not necessary to provide an official
               statement, simply because somewhere a car
               has topped over.”
Università    Master          Issues               Managing Communications in a Crisis

                                                   Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                   Three exemplificative cases of crisis:
                                                   Perrier, Johnson & Johnson, Mercedes “A Class”.



             b. Preparation - Prevention
             Mercedes:
             > Failed to see all the prodomes .
             > Missed out all the opportunities for prevention.
             > No plan of preparation at hand.


              Journalists (left in the dark) started to conduct moose-tests:

              Baby-Mercedes lifted two tires and topped over once gain in
              Auto Bild’s test.

              FOR JOURNALISTS IT WAS A TOO GOOD
              OPPORTUNITY NOT TO MISS.
Università   Master          Issues         Managing Communications in a Crisis

                                            Expect the Unexpected
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006
                                            Three exemplificative cases of crisis:
                                            Perrier, Johnson & Johnson, Mercedes “A Class”.


             Humor break :-)




             “Honestly, we haven’t        “Super, the A-class is
             done anything!”              passing the moose test!”
Università    Master          Issues                     Managing Communications in a Crisis

                                                         Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                         Three exemplificative cases of crisis:
                                                         Perrier, Johnson & Johnson, Mercedes “A Class”.



             ‘How to Prepare in Advance a Crisis’
             > Brainstorm Ideas (Include the Senior Managers into BS process)
             > Assess Your Risk
             > Set Communication Objectives for Potential Crisis:
                         (Flow of Communication at all the times!)

             > Consider Your Constituencies:
                         (Find out constituencies effected by the crisis)

             > Analyze Your Channel Choice:
                         (It’s important to find the right channel)

             > Assign Different Teams to Each Crisis:
                         (Different problems require different kinds of expertise)
Università    Master           Issues                     Managing Communications in a Crisis

                                                          Expect the Unexpected
della         of Science in    & Crisis
Svizzera      Communication    Management
Italiana      and Economics    SE 2006
                                                          Three exemplificative cases of crisis:
                                                          Perrier, Johnson & Johnson, Mercedes “A Class”.




             c. Containment - Actions
             > Jürgen Hubbert (board member – resp. Private Cars)
                        Legal action against “harebrained” journalist > image damaging

                        - Negation of the problem

             > 29.10.1997 (First press conference and first admitance)

                         - “We have a weakness!”
                              (Goodyear tires – not appropriate test condition in Sweden)

                              A-class would carry on with
                              changed tires and instalation of ESP

              Auto Zeitung replicate the test with new tires
              but results were the same…
Università    Master          Issues                      Managing Communications in a Crisis

                                                          Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                          Three exemplificative cases of crisis:
                                                          Perrier, Johnson & Johnson, Mercedes “A Class”.




             c. Containment - Actions
             > 09.11.1997 (Welt am Sonntag pondered A-Class production
                              stop by CEO Jürgen Schremmp) > Mercedes denied again

                              - “No comment on speculations.”

             > 11.11.1997 (Press conference by Jürgen Schremmp)

                              - “A-Class stopped for three months.”
                              (He admitted mistakes and the process would be reviewed)


                              Evasive and dishonest
                              communication tactics abondened.
                              (no communication tactic)


                              Admission of the problem      >   Coming up with the solution
Università    Master          Issues                    Managing Communications in a Crisis

                                                        Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                        Three exemplificative cases of crisis:
                                                        Perrier, Johnson & Johnson, Mercedes “A Class”.



             ‘How to Communicate during a Crisis’
             > Define the Problem
                 (reliable info and S.M.A.R.T. communication objectives)
             > Gather the Relevant Information
                 (Managing many sources of information)
             > Centralize Communications (The need of a crisis center)
             > Communicate Early and Often:
                 (Say whatever you can as soon as possible)
             > Get Inside the Media’s Head
                 (Media looks for a good story with villains, victims and visuals.
             > Communicate Directly with Affected Constituencies
                 (Internal and external)
             > Keep the Business Running (The show must go on!)
             > Make Plans Immediately to Avoid Another Crisis (To be prepared)
Università    Master          Issues       Managing Communications in a Crisis

                                           Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                           Three exemplificative cases of crisis:
                                           Perrier, Johnson & Johnson, Mercedes “A Class”.




             ‘How to get out of a Crisis?’

             d. Recovery
             e. Learning
Università    Master          Issues                    Managing Communications in a Crisis

                                                        Expect the Unexpected
della         of Science in   & Crisis
Svizzera      Communication   Management
Italiana      and Economics   SE 2006
                                                        Three exemplificative cases of crisis:
                                                        Perrier, Johnson & Johnson, Mercedes “A Class”.




             d. Recovery
             > Delivery stop of A-Class
                        strong corporate image > positive impact on media
                        (technical problems of the Baby Benz immediately solved)


             > 19.01.1998 (workshop with journalists on driving dynamics)

                              - Now I really like this car! ”
                                                     (R. Collin, Berliner Zeitung)
             > 28.02.1998
                        Relaunch of the A-class
                        (Extensive marketing campaign including humor and celebrities)
Università   Master          Issues       Managing Communications in a Crisis

                                          Expect the Unexpected
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006
                                          Three exemplificative cases of crisis:
                                          Perrier, Johnson & Johnson, Mercedes “A Class”.


             Humor break :-)




             “We have reinvented safety. The new A-Class”
Università   Master          Issues                      Managing Communications in a Crisis

                                                         Expect the Unexpected
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006
                                                         Three exemplificative cases of crisis:
                                                         Perrier, Johnson & Johnson, Mercedes “A Class”.



                                          e. Learning

                                          A more timely, open, honest
                                          and coherent approach to communication
                                          saves both face and money.




                                          “The A-class has passed the moose test.
                                          We have learned from it.”
Università      Master          Issues                   Managing Communications in a Crisis

                                                         Expect the Unexpected
della           of Science in   & Crisis
Svizzera        Communication   Management
Italiana        and Economics   SE 2006
                                                         Three exemplificative cases of crisis:
                                                         Perrier, Johnson & Johnson, Mercedes “A Class”.


              ADV Campaign




              “Strong is the one
                   who does not
                 make mistake.
             Stronger is the one
                who learns from              “I have learned more out
                  his mistakes.”             of my throwbacks than my triumphs.”
Università   Master          Issues                        Managing Communications in a Crisis

                                                           Expect the Unexpected
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006
                                                           Three exemplificative cases of crisis:
                                                           Perrier, Johnson & Johnson, Mercedes “A Class”.




             “What happened after”

             The Crisis cost for Mercedes

             - 300 mio DM                 (ca. €154 mio)



             A-class best selling new car in 1998.
             (16th overall, best selling Mercedes)
Università   Master          Issues
della        of Science in   & Crisis
Svizzera     Communication   Management
Italiana     and Economics   SE 2006




                             Managing Communications in a Crisis

                             Expect the Unexpected
                             Three exemplificative cases of crisis:
                             Perrier, Johnson & Johnson, Mercedes “A-Class”


                             Thank you for your attention

                             by
                             Cammarata Vincenzo, Kurucz Veronika, Maj Valentina,
                             Salgirli Seda, Schulte Jan

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Expect the Unexpected - Issue and Crisis Management

  • 1. Università Master Issues della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Managing Communications in a Crisis Expect the Unexpected Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A-Class” by Cammarata Vincenzo, Kurucz Veronika, Maj Valentina, Salgirli Seda, Schulte Jan
  • 2. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. What is a Crisis? ‘A crisis is a major occurrence with a potentially negative outcome affecting an organization as well as its publics, services, products, and/or good name.’ Two different views of Crisis: > Traditional view: ‘An event that can destroy or affect en entire organization.’ (Mitroff et al.1996) > Strategic view: ‘A decisive moment, a turning point for a better or worse.’
  • 3. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Crisis are not unusual… 1982 Deaths caused by Tylenol 1990 Benzene in water 1993 Syringe hoax 1996 Suspect for poisoned candies 1997 Woman discrimination 1997 The A-Class failed the moose-test 2000 Privacy & Security on the web 2000 Deaths caused by Baycol/Lipobay
  • 4. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Common elements to all crisis > A rude awakening > The rapid speed an escalation of an event > The presence of panic > The tendency to act irrationally and preciptiously when feeling intense emotions > Chaos in internal commnications (even if they have a crisis communication plan) > The omnipresent press > A threat to the company’s reputation
  • 5. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Crisis Management - Strategic planning to prevent and respond during a crisis or negative occurrence - A process that removes some of the risk and uncertainty and allows the organization to be in greater control of its destiny - Dynamic and enduring process.
  • 6. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Three exemplificative cases in Managing Communications in a Crisis: 1990 Negative approach 1982 Positive approach 1997 A well-known case
  • 7. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene - Facts 1989 – Leader in the sparkling water market > High reputation – 13% of the Market share – 1mio bottle sold ’80s High Health Consciousness (Hot spot among consumers) 1990 – Benzene scandal > Presence of the chemical Benzene at levels above standards
  • 8. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene - Actions - 7mio bottles recalled from North America > Ronald Davis’ (Perrier America President) declarations problem limited to North America Cleaning Fluid on a production line machine mistakenly used Declaration done before identifying the source of contamination. Three days later… discovery: - 6 months’ worth of production affected - Not only North America but also Global Market
  • 9. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene - Actions > Frederik Zimmer (Perrier’s International Division President) “Perrier water naturally contains several gases, Including Benzene.”… “The Benzene entered the water because of a dirty pipe filter at an underground spring at Vergeze in southern France.” It means that “Natural” Perrier was in reality processed.
  • 10. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene – Effects on the market > Financial effects - Perrier’s stock price declined - Market share declined (13%>9%) - Price to consumers declined > Plans to restructure - Management structure and bottom line Firing of Gustave Leven (CEO & Founder)
  • 11. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene – Analysis 1/3 Lack of internal communication and coordination > contradictory explanations > convey misinformation (credibility & reputation damaged) > no centralized approach Surprise effect & Panic > Irrational behavior > loss of control
  • 12. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene – Analysis 2/3 Rely on media for communications 2C > Media controlled the information > Defensive behavior (rather than offensive) > Lack of proactive and clear communication towards customers Scandal became a big media event > Rapid widespread of the news > global level > Emotional component (People scared > betrayed > bad reputation)
  • 13. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Perrier & Benzene – Analysis 3/3 - Inability in gathering information without loosing control - Bad relationship management with stakeholders - Lack of a Crisis communication plan
  • 14. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson - Facts - Multinational of health care 1982 – Deaths caused by Tylenol capsules > Seven people died in Chicago 1986 – Second case of death > A New Yorker died
  • 15. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson - Actions - 31 mio bottles ca. of Tylenol recalled (a retail value of more than USD 100 mio) - Offered to exchange all Tylenol capsules with Tylenol tablets (other million dollars..) - Production Suspended (until the company could innovate its tamper-resistant bottle)
  • 16. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson - Actions - Toll-free telephone hotline - Cancel all Tylenol ads - Immediate Nationwide warning not to use Tylenol (Transparency and honesty towards customers)
  • 17. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson – Analysis - Proactive approach (Opportunity to consolidate the relationship with Stakeholders) - Timely PR campaign based on honesty (Ads, videos to newspapers and TV Networks) > Keep the public informed - “Customer-oriented” > Customer safety first (than company profit and other financial concerns)
  • 18. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson – Conclusions - How handled J&J the crisis situation? Offensive - Proactive – recalling the product Saving the brand Responsability – care for its consumers
  • 19. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Johnson & Johnson Take care not only the crisis, but also the EMOTIONS. quot;We believe our first responsibility is to doctors, nurses and patients, to mothers and fathers and all others who use our products and services.quot;
  • 20. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Mercedes Benz – “A-Class” case
  • 21. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Daimler Benz AG - facts 1997 - Mercedes Benz subdivison of Daimler Benz AG (now DaimlerChrysler) > annual turnover 124 billion DM - 180 000 employees > Market share 24,4% - on the European luxury car market (BMW 20,7% and Audi 20,5%) - High reputation technological innovations, safety and high prices
  • 22. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Baby Benz - facts > First-ever Mercedes for middle market segment > Goal: reaching new customer groups (young, women) > Risk: weaken Mercedes-brand > Central values: Quality, Technology & Safety !!! > Mercedes strategic and technological bet - Extention of the luxury brand into a lower segment - Implemention of new development process and production plant (2.5 billion DM and 47 month of realization) 18.10.1997 - Launch after an 18 month-marketing campaign ‘A-Motion’ (200 mio DM) and 100 000 pre-booked sales
  • 23. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. “This is what our future customers want. We are working on it.”
  • 24. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. The moose-test - facts
  • 25. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ‘How to create Crisis out of an Issue?’ a. Detection b. Prevention/ Preparation c. Containment
  • 26. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. From Issues to Crisis
  • 27. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. a. ‘Mis’- Detection 1. PRODOME: Date: 23.09.1997 Location: Tannishus/ Denmark, selection ‘Car of the year’ During the test two wheels of the Baby-Mercedes, a clear favourite, lost contact with the road at the average speed Mercedes sent engineers and The PR Manager to the crime scene!!! Some eyewitnesses claimed the vehicles disappeared overnight and returned back in the morning. Statements that came from PR manager: “These are claims that cannot be proven!”
  • 28. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. a. ‘Mis’- Detection 2. PRODOME: Date: 21.10.1997 Location: Sweden,Test Drive for “Teknikens Vaaerd” magazine The A-class failed the moose-test,more than failing it was topped over at 60 km/h. Journalist Robert Collins and three collegues suffered from minor injuries. The Mercedes Headquarters were in Tokyo Motor Show and only statement from Mercedes was: “…it is not necessary to provide an official statement, simply because somewhere a car has topped over.”
  • 29. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. b. Preparation - Prevention Mercedes: > Failed to see all the prodomes . > Missed out all the opportunities for prevention. > No plan of preparation at hand. Journalists (left in the dark) started to conduct moose-tests: Baby-Mercedes lifted two tires and topped over once gain in Auto Bild’s test. FOR JOURNALISTS IT WAS A TOO GOOD OPPORTUNITY NOT TO MISS.
  • 30. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Humor break :-) “Honestly, we haven’t “Super, the A-class is done anything!” passing the moose test!”
  • 31. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ‘How to Prepare in Advance a Crisis’ > Brainstorm Ideas (Include the Senior Managers into BS process) > Assess Your Risk > Set Communication Objectives for Potential Crisis: (Flow of Communication at all the times!) > Consider Your Constituencies: (Find out constituencies effected by the crisis) > Analyze Your Channel Choice: (It’s important to find the right channel) > Assign Different Teams to Each Crisis: (Different problems require different kinds of expertise)
  • 32. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. c. Containment - Actions > Jürgen Hubbert (board member – resp. Private Cars) Legal action against “harebrained” journalist > image damaging - Negation of the problem > 29.10.1997 (First press conference and first admitance) - “We have a weakness!” (Goodyear tires – not appropriate test condition in Sweden) A-class would carry on with changed tires and instalation of ESP Auto Zeitung replicate the test with new tires but results were the same…
  • 33. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. c. Containment - Actions > 09.11.1997 (Welt am Sonntag pondered A-Class production stop by CEO Jürgen Schremmp) > Mercedes denied again - “No comment on speculations.” > 11.11.1997 (Press conference by Jürgen Schremmp) - “A-Class stopped for three months.” (He admitted mistakes and the process would be reviewed) Evasive and dishonest communication tactics abondened. (no communication tactic) Admission of the problem > Coming up with the solution
  • 34. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ‘How to Communicate during a Crisis’ > Define the Problem (reliable info and S.M.A.R.T. communication objectives) > Gather the Relevant Information (Managing many sources of information) > Centralize Communications (The need of a crisis center) > Communicate Early and Often: (Say whatever you can as soon as possible) > Get Inside the Media’s Head (Media looks for a good story with villains, victims and visuals. > Communicate Directly with Affected Constituencies (Internal and external) > Keep the Business Running (The show must go on!) > Make Plans Immediately to Avoid Another Crisis (To be prepared)
  • 35. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ‘How to get out of a Crisis?’ d. Recovery e. Learning
  • 36. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. d. Recovery > Delivery stop of A-Class strong corporate image > positive impact on media (technical problems of the Baby Benz immediately solved) > 19.01.1998 (workshop with journalists on driving dynamics) - Now I really like this car! ” (R. Collin, Berliner Zeitung) > 28.02.1998 Relaunch of the A-class (Extensive marketing campaign including humor and celebrities)
  • 37. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. Humor break :-) “We have reinvented safety. The new A-Class”
  • 38. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. e. Learning A more timely, open, honest and coherent approach to communication saves both face and money. “The A-class has passed the moose test. We have learned from it.”
  • 39. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. ADV Campaign “Strong is the one who does not make mistake. Stronger is the one who learns from “I have learned more out his mistakes.” of my throwbacks than my triumphs.”
  • 40. Università Master Issues Managing Communications in a Crisis Expect the Unexpected della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A Class”. “What happened after” The Crisis cost for Mercedes - 300 mio DM (ca. €154 mio) A-class best selling new car in 1998. (16th overall, best selling Mercedes)
  • 41. Università Master Issues della of Science in & Crisis Svizzera Communication Management Italiana and Economics SE 2006 Managing Communications in a Crisis Expect the Unexpected Three exemplificative cases of crisis: Perrier, Johnson & Johnson, Mercedes “A-Class” Thank you for your attention by Cammarata Vincenzo, Kurucz Veronika, Maj Valentina, Salgirli Seda, Schulte Jan