Global brands battle fall from grace

Global brands battle fall from grace

Author | Source: The Economic Times | Tuesday, Aug 29,2006 8:09 AM

Global brands battle fall from grace

A branding nightmare of sorts has come to haunt Dell and Apple with the recall of their laptops, recently. But they are not the only ones faced with massive product recalls. Others too have been in the line of fire and received a blow to the trust built over years.

Global biggies such as Bridgestone, Duracell, Coca-Cola and closer home, brands such as the Tatas and Maruti have all treaded a similar path and grappled with strategies to maintain their brand image in the aftermath of a product recall.

From Bridgestone/Firestone's voluntary recall of Radial ATX and Radial ATX II tyres in '00, Coca-Cola's recall of its Dasani water in the UK in '04, to the recent Hewlett Packard rollback of its R707 series of digital cameras, which used Duracell batteries - commercial history is fraught with examples of manufacturing flaws resulting in product recalls.

Globally, this phenomenon has been around for more than 60 years. But now with self-regulated marketers in the fray - admitting to product defects and recalling their affected items - the phenomenon of product recall has become more of a norm in mature markets of the US and Europe. In many instances, admitting to a product defect can actually have a positive rub-off on the brand, say marketing experts.

On the flip-side, this is also an opportune time for competitors to take advantage of the situation if brands don't publicise their withdrawals to their consumers effectively. “Consumers are generally forgiving unless a product defect harms them personally. Replacing a product puts the marketer at a higher ground and makes him look responsible to the consumers,” says Harish Bijoor, a marketing consultant.

In India, consumer activists are pitching for amendments in the Consumer Protection Law. This is aimed at ensuring an increased awareness around product-related issues and nail erring marketers. Says consumer activist Pushpa Girimaji: “Unfortunately, consumer laws are not very stringent in India.

Besides, there is an absence of any strong consumer movement.” Another reason cited for a not-so-proactive strategy from marketers is that compensation offered to consumers by companies in the event of a damaged or defective product is extremely meagre and marketers take advantage of the same.

In fact, legal experts feel the time is right to introduce a class-action provision under the Indian law specially at a time when India is becoming a part of the global market place.

“Compared to an individual suit or a PIL, a class action allows people to fight collectively and is relatively less expensive,” says Pawan Duggal, a leading lawyer. Moreover, a group of people filing the suit carries greater legitimacy and burden of public wrong.

Indian distributors maintain it's too early to gauge any shift in buying patterns post Dell and Apple's recall of 4.1m units and 1.8m units, respectively. “With Dell and Apple coming forward and admitting their product defects, it reflects well on the company's practices.

However, as Dell sells more in the corporate space and as corporate orders have a longer closing cycle the actual impact, if any, would be visible in September,” says a leading Indian PC distributor.

The worldwide battery recall from Dell comes at a time when the brand is trying to rejig its image with a marketing campaign. An attempt at demonstrating improvements in customer service after the company was hit with complaints of inferior after-sales service.

Dell is investing about $100m this year and hiring 2,000 people in the improvement efforts. The company has also taken a drubbing on Wall Street, with its stock falling 47% over the past 12 months.

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