Communication Crisis - Case Study Example

Communication Crisis: Student Name: Name of institution: Lecture; Date: Introduction Five years ago, Toyota was faced by a product recall crisis that required them to recall millions of cars. Some of their cars were found to have unintentional acceleration problems. However, the problem was not serious but the media blew it out of proportion and fueled the notion that all Toyota automobiles are unsafe. Unfortunately, Toyota’s crisis communication strategy failed to assure the public about the safety of the automobiles manufactured by the Japanese car maker. This essay presents the Toyota product recall crisis of 2009-2010 and describes how the firm’s crisis communication strategy failed. The essay starts by describing the communication crisis and its scope. It then proceeds to describe Toyotas communication during the crisis with particular focus on its successes and failures. Finally, it uses crisis communication theories to recommend a communication approach that would have enabled Toyota to maintain its positive brand image and avoid costly lawsuits that followed the recall. The recall crisis In 2009-2010, Toyota was forced to recall 4.2 million vehicles owing to an acceleration defect. The Toyota vehicles had an unintentional acceleration problem that put the lives of users at risk The (Associated Press, 2010). The defect was found on many Toyota models including its top selling brands like the RAV4, Camry and Corolla cars. Toyota was praised for making the recall before any major accidents arose as a consequence of the defects. Thomaselli (2010) notes that Toyota made the recall even before fatalities and injuries were recorded. Toyota’s reaction is appropriate as University of Canberra (n.d) advises to a proactive approach in managing product crisis. However, Toyota also had to deal with an aggressive attempt by its rivals to steal their customers. General Motors immediately started a campaign targeting Toyota lessees and potential buyers. It was therefore imperative for Toyota to communicate effectively to ensure they retained their reputation and customers (Seeger, 2002). Product recall crisis are a serious setback and cause huge losses to corporation. However, the biggest loss for marketers is the poor image that is associated with the company (Associated Press, 2010). The recall starting in late 2009 was a great setback to Toyota who had been trying to restore their reputation for quality. Positive feeling towards Toyota automobile dropped 59%; a 19 points drop, while negative consumer feeling rose to 41%; another 19 point rise (Thomaselli, 2010). Toyota had come under scrutiny when it emerged that it had known about flaws in its ignition system since 2001 (Thomaselli, 2010). Toyota’s loss of reputation was shown by how an analyst at the Advanced Research Cente in Tokyo reacted (Bowen and Zheng, 2015). The analyst said that it was time that Toyota reviewed their production system to catch the defects that had led to the product crisis (Kalb, 2012). On the other hand, financial losses for Toyota run to millions of dollars with some estimates putting it as $589 million (Thomaselli, 2010). As result of the crisis, the value of the Toyota share in Tokyo slid 3.1 per cent while slide in share prices were also noted in New York (Bowen and Zheng, 2015). The communication process in a recall crisis is long and sensitive. An automaker caught in a marketing crisis has to communicate effectively to retain customers trust in their products (Ulmer, Sellnow and Seeger, 2014). Toyota first communiqué was to inform customers about the unintended acceleration flaw it was recalling cars for. Toyota noted that some of the defects came to the attention of Toyota in 2009. In 2013, Toyota admitted to wrongdoing and also agreed to have independent monitor’s asses the safety of its vehicles (Bowen and Zheng, 2015). Toyota also agreed to pay$1.2 billion in settlement for the flawed acceleration system in its cars. Lerbinger (2012) argues that organization facing communication crisis should accept wrongdoing as a first step to regaining public confidence. In the statement Toyota also pledged that it would enhance its recall process so that cars can be recalled faster. Toyota’s unintended acceleration crisis also dented the company’s safety reputation greatly. Press reports show that most people felt that the safety of Toyota’s automobiles could no longer be trusted. Kalb (2012) argues that Toyota’s poor handling of the crisis was the reason for the resulting loss of reputation. He notes that GM recovered their image better although they had been faced with a similar crisis. Some analysts note that Toyota automobiles have retained their quality but their reputation in the market has suffered greatly (Bowen and Zheng, 2015). Some analysts say that Toyota abandoned quality as it growth trend accelerated. However, many industry analysts maintain that Toyota cars are of higher quality than those of competitors. According to The Associated Press (2010), Toyota sent a weak email statement apologizing for the inconvenience and concerns their recall brought to customers. It also pledged to strengthen their commitment to quality and safety. Unfortunately, Toyota failed to impress upon the audience that Toyota cars were still one of the safest on the roads and they had no reason to fear in buying Toyota automobiles. Toyota’s response to the unintended acceleration crisis only worsened the crisis and further dented the company’s image. The top management at Toyota appeared confused on how to react to the crisis when it was first reported. The most appropriate response for an organization facing a product crisis whose cause is unknown is to say investigations are undergoing and a complete report would be issued later. Instead, Toyota fueled speculation as to the cause of the self acceleration problem. According to Bowen and Zheng (2015), Toyota’s response confused observers and left Toyota customer concerned about the safety of their cars. Toyota representatives speculated about the cause of the problem and ended up linking the problem to different causes in rapid succession. Instead, Bowen and Zheng (2015) advised that organizations facing a marketing crisis must deliver a consistent message. The first Toyota communiqué said the cause of the problem was operator error; the most frequent cause of automobile self-acceleration problems. Another Toyota communiqué speculated that floor mats that were trapping the gas pedal were the cause of the problem (Whoriskey, 2010). A third communiqué said that some faulty electronic components were the cause of the acceleration problems (Kalb, 2012). Contrary to expectations, Toyota’s inconsistent added to the uncertainty over the safety of their cars. Organizations facing marketing crises have to communicate in a way that reassures customers and the public. Instead, Toyota’s reaction caused fear about the safety of Toyota cars among car owners and many prospective buyers turned to Toyota’s competitors. Toyota received criticism from many quarters due to the confusing way they communicated during the crisis. According to the Age, Toyota attempt to deal with the crisis was the right thing, but the confusing message was letting them down (Bowen and Zheng, 2015). A full-page ad in all major US newspapers said the unintended acceleration problem was caused by an accelerator-pedal-sticking problem (Whoriskey, 2010). On the other hand, another group of Toyota representatives were talking about mechanical problems while yet another group linked it to an electrical problem. The reports also placed the blame on either Toyota or suppliers, causing further confusion among customers. According to Bowen and Zheng (2015), the confusing statements dampened the reassurance Toyota hoped to give customers in the wake of the crisis. The Toyota COO was also accused of lying as he claimed that Toyota got to know of the acceleration problem in 2009. This is contrary to consumer’s expectation of honesty from organizations that are faced by product crisis. Many online respondents to the Lentz interview were disappointed that the COO was being dishonest about the problem. Toyota failed to communicate to their customers that the quality issues were not as serious as many had been made to believe. Toyota should have taken their time to put together a message that convinced their customers that the problem were not serious (Taylor and Kent, 2007). All automobile makes and models face problems from time to time. Toyota should have made this known to consumers instead of leaving them to rely on the media fueled stories of how unsafe Toyota cars are. Studies by the National Highway Safety Administration and NASA found no evidence to support the notion Toyota cars are unsafe (Kalb, 2012). Toyota cars should have also presented survey results from the Insurance Institute of Highway Safety whose annual list if the safest car is dominated by Toyota models (Bowen and Zheng, 2015). Toyota should have also made it known to consumers that it is not unusual for individual cars to have flaws. However independent safety data still show Toyota models are still the safest globally. Toyota’s response was wrong from the start as they broke some of the most basic rules of crisis communication. Toyota should not have publicized rumors about the cause of the problems. Instead Toyota should have informed the public that investigation were underway about the cause of the problem. Toyota Public Relations department should have communicated that they were listening and were still in control of the situation (Kalb, 2012). Public crisis communication requires that the affected organization provide information that dispels rumors about their products. In the face of rumors about safety issues, Toyota should have used evidence National Highway Safety Administration, Insurance Institute of Highway Safety and NASA to show that Toyota cars were very safe. According to Ulmer and Sellnow (2000), the fact procedure helps organization guilty of wrong doing to recover from the crisis. In this case, Toyota should have admitted its wrongdoing and apologized for the acceleration problem. Secondly, they should have also made steps to limit the scope of wrongdoing by pointing out that they have the most vehicles on the road and many do not have any safety defects (Kalb, 2012). Thirdly, they should have proposed a solution that would prevent the flaws from recurring. Failure by Toyota to communicate effectively to the crisis led to a loss of billions of dollars through lawsuits, repairs and settlements. According to Lerbinger (2012), effective communication in times of crisis is important for companys that deal with consumer products. Instead of approaching the media as adversaries, it is important to co-operate with them in offering the public reliable and reassuring information. Toyota executives should also have accepted responsibility for the problem facing their cars instead of offering confusing explanations (Kurhajcová2010). Toyota also failed to satisfy the information needs of their customers on time and their customers had to wait for over a week to get information update about the recall crisis. Toyota inconsistent communication also showed that their effort to handle the crisis was disjointed. Instead, good crisis communication tells the public the affected organization is doing their best to resolve the crisis. Toyota also failed to act with candor, openness and honesty which are considered essential in an effective crisis communication strategy (Seeger, 2006) Bucher (2002) recommends some of the steps Toyota should have taken to preserve their public image. He argues that Toyota should have come up with a bold ad that asserted that it was the best time to purchase a Toyota. The ad would then be backed with historic safety and quality data from credible sources (Austin, Fisher Liu and Jin, 2012). Toyota would have also extended the warranty on new purchases to show they were confident in their products. It is felt that Toyota would have avoided the billions lost to the crisis and preventing the subsequent tarnishing of their image. Conclusion Toyota’s failure to communicate effectively in the face of 2009-2010 crisis resulted in massive financial and brand image losses. However, the acceleration problem was not as serious as the media made it look. Unfortunately, Toyota failed to deliver a consistent message in response to the crisis. Toyota’s confusing communication could not satisfy the information needs of their customers and potential buyers. Many ended up believing the rumors about the safety of Toyota automobiles leading to a massive slip in consumer confidence in the Toyota brand. One must hope that Toyota learnt that effective communication is essential in saving a company’s reputation and image in the midst of a communication and marketing crisis. 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