Let the Response Fit the Scandal

A full-blown scandal can cause a company great turmoil, even if the organization isn't at fault. Crises easily extend beyond the original perpetrators, spilling over to other businesses along the value chain - and to those apart from the chain that resemble the guilty parties in some central way. For instance, the dairy, pet food, and toy-manufacturing scandals in China over the past few years have in many consumers' minds rendered all Chinese products suspect. Drawing on more than 10 years of research, marketing professors Tybout and Roehm have developed a framework for crafting just-right, just-in-time responses to scandals. They outline four important steps: assess the incident, acknowledge the problem, formulate a strategic response, and implement the response. The most effective approaches are carefully calibrated to the characteristics of the brand, the nature of the event, and the company's degree of seeming culpability. They can minimize brand damage and even, on occasion, provide firms with opportunities to deepen connections with customers. Antivirus-software maker Trend Micro, for example, reacted effectively after a flawed software update immobilized customers' computers. Within an hour and a half, the company removed the problematic file from its website and update servers, expanded its customer support staff, and held a press conference to apologize to customers and describe how the problem was being addressed. INSET: Mind the Gap.