Tag Archives: crisis communication

Peloton Recalls Treadmills

Peloton has been riding high for the past year as gyms closed and people took their fitness routines into their homes. Peloton stock and sales are at an all-time high. To be clear though, high sales volume has given the company problems with supply chain and manufacturing during this time period. It even has a recall due to problems with broken pedals on its bikes which caused injuries.

However, a more recent and critical problem for Peloton has been a number of cases of injury to adults, children, or pets being pulled underneath the rear of the treadmill. According to the U.S. Consumer Product Safety Commission (CPSC), there have been at least 72 reports of adults, children, and pets being pulled under the treadmill, including 29 reports of injuries to children and one death of a six-year-old child. Serious issues indeed.

The recall notice was issued by Peloton, but only after an urgent warning from the CPSC that forced the company to change its initial stance about the problems. Peloton is now offering a full refund for owners of the treadmill.

What should companies due about hazards to consumers?

Group Activities and Discussion Questions:

  1. Discuss the components of public relations and crisis communications.
  2. Show video about the problem: https://youtu.be/RiAjg4RXLMQ
  3. View Peloton’s statement on its website: https://www.onepeloton.com/press/articles/tread-and-tread-recall
  4. Show the U.S. Consumer Product Safety Commission recall notice for Peloton: https://www.cpsc.gov/Recalls/2021/peloton-recalls-tread-plus-treadmills-after-one-child-died-and-more-than-70-incidents
  5. Show additional recall notice for a separate Peloton recall: https://www.cpsc.gov/Recalls/2021/peloton-recalls-tread-treadmills-due-to-risk-of-injury
  6. What are the basic components and steps to handle crisis communications?
  7. How did Peloton initially handle the problems? What did they later do?
  8. Divide students into teams and have each team select a company/product. Then, have teams determine the steps to take during a crisis for that company.

Source: CBS; CNBC; New York Times; other news sources

Leave a comment

Filed under Classroom Activities

Naomi Osaka and Celebrity Endorsements

There is no doubt that celebrities make powerful brand ambassadors. In particular, professional athletes command a great deal of attention in the media and with consumers.  People tend to idolize these athletes and emulate them to the extent of buying products from the brands that they endorse (hey, if I thought Naomi Osaka’s brand of racquet would help my tennis game – I’d buy it!). The problem is that if an athlete fails to keep public goodwill, the brands might falter. Therefore, there are behavior contracts that guide and govern athletes with respect to brands.

One professional athlete recently in the news is Japanese tennis player Naomi Osaka. At the French Open, Osaka won her match but declined to take part in a mandatory post-match news conference, thereby incurring an automatic $15,000 fine. Fines for athletes are not uncommon. At most major sports events players are contractually obligated to face the press following play. Osaka declined to meet with press and stated that she was willing to pay any fines. She cited caring for her mental health and depression as her reasons for not holding press conferences, stating that she “often felt that people have no regard for athletes’ mental health.”

But, the Roland-Garros tournament officials took it a step further than a fine and threatened Osaka with increased penalties plus possible suspension from tennis if she failed to comply. Osaka subsequently withdrew from the tournament.

Osaka’s celebrity status has served her well in tennis. She has more than 2.2 million Twitter followers, and has earned more than $60 million in prize money and endorsements, including brands Nike, Nissan, GoDaddy, Levi’s, and more. She is a four-time Grand Slam singles champion and the highest-paid female athlete ever. Osaka is also an activist who has taken high-profile stands on BLM and other causes. All of these factors make her a valuable endorser to brands.

Among the questions following Osaka’s withdrawal are how to respect and support athletes’ mental wellness, and how should brands respond? (To date, all of Osaka’s sponsors are staying with her.)

Group Activities and Discussion Questions:

  1. Discuss the communication process: sender, encoding, message, media, decoding, and receiver.
  2. Discuss the importance of celebrities in brand endorsements.
  3. Poll students: How are purchases influenced by athletes and celebrities?
  4. What is their opinion of Naomi Osaka’s move at the French Open?
  5. What are brands responsibilities to endorsers? To consumers?
  6. Have students list all of the celebrities/brands pairings they can remember.
  7. What makes these pairings successful? Unsuccessful?
  8. Divide students into team. Have each team select a product or brand and then find a celebrity who could successfully endorse the brand.
  9. Debrief: Poll students about their opinions about the suggested pairings. Why were the celebrities selected?

Source: CNBC; New York Times; Wall Street Journal; other news sources

Leave a comment

Filed under Classroom Activities

Why Can’t Ketchup, well… Catchup?

It’s happened again – one minute consumers are buying in a predictable way, at the usual times, and in the usual patterns. Then, boom! Everything changes.

But this time, instead of earlier toilet paper shortages, the product causing big problems is ketchup! Especially those small packets that are loved by fast-food customers everywhere.

The culprit, once again, causing this supply chain saga is Covid-19. Yes, the pandemic appears to have influenced every facet of consumer behavior. The main shift was caused by closed restaurants that drove consumers to the fast-food drive-in restaurants and home cooking, rather than dine-in restaurant options. It also turned many former dine-in restaurants into takeout places, making ketchup a commodity included in more food orders.

Ketchup packet prices have risen 13% since last January and the market share of packets (sachets) has eclipsed that of tabletop bottles. Ketchup is the most consumed sauce at U.S. restaurants, and even more is eaten at home. The pandemic has increased overall retail ketchup sales in the U.S. by 15% to more than $1 billion. Kraft Heinz leads the market with nearly 70% of the total U.S. market.

Kraft is responding to the shortage and plans to open two new manufacturing lines and increase production by about 25%. It has also innovated a no-touch ketchup dispenser to use at restaurants to help meet safety concerns caused by Covid.

Pass the ketchup please.

Group Activities and Discussion Questions:

  1. Discuss the elements in the supply chain and marketing channel.
  2. Diagram the supply chain and marketing channel for toilet paper.
  3. Show a news video about the shortage: https://youtu.be/4A7ObtFfYrE
  4. Where are the stress points in the supply chain and marketing channel?
  5.  What can be done to better produce and manage products?
  6. Poll students: What are their predictions for the next shortage?

Source: New York Times; Reuters News; Wall Street Journal; other news sources

Leave a comment

Filed under Classroom Activities