The true test of a company’s marketing strength often comes to the front when a company is faced with crisis communication regarding its products or services. And this month, it’s Samsung’s turn in the spotlight for problems with its high-end smartphone, the Galaxy Note 7. The issue is that some customers have reported that their phones have caught fire due to the lithium-ion batteries. According to the Consumer Product Safety Division, in the U.S. there have been 92 reports of batteries overheating, 26 reports of burns, and 55 reports of property damage.
Samsung reacted quickly to the issue, but it has been a far from smooth process so far. No wonder – there are more than 2.5 million units of the Galaxy Note 7 in circulation, making it the largest recall of smartphones. Statements from Samsung and the Consumer Product Safety Division have not been totally in sync either, causing confusion among the smartphone owners as to the correct process to use.
Airlines are making multiple warnings that caution owners not to turn on the phones while on airplane. (Note: I was one several planes last week and heard multiple announcements about not using the phones on the planes – thanks, airlines!) This issue will undoubtedly hurt Samsung sales and stocks, particularly in conjunction with the recent announcements of new iPhone models. Replacement phones are due to be available in the U.S. by the end of September.
Group Activities and Discussion Questions:
- Poll students: How many have a Galaxy Note 7? How does the recall impact the students’ perceptions of Samsung?
- Discuss crisis communications and the importance of companies having a plan in place BEFORE a crisis occurs.
- View Samsung’s statement: http://news.samsung.com/us/2016/09/09/samsung-confirms-engagement-with-cpsc-consumer-product-safety-commission-in-response-to-note7-battery-issue/
- Have students review the statement and recall instructions. They might also use laptops to research the various instructions.
- View the Consumer Product Safety Commission Web site information: http://www.cpsc.gov/
- What other products have safety issues? How will these impact a company’s sales and brand?
- Divide students into teams. Have each team put together a crisis communication plan for a company. (Examples: food recalls, automotive recalls, etc.) Include press release, news outlets, and recall/replacement process.
Source: New York Times, Wall Street Journal, CNN, other news sources