Toyota recall, lessons for Lanka

Rohantha ATHUKORALA

"The golden rule in handling PR after a disaster is....be open, do not hide. Do not ignore.

Acknowledge, listen and provide a detailed next step on what a customer should do. People must feel that you are genuine to the apology on the mistake made"

Whenever I am invited to address a forum on marketing, the brand that comes to the top of the mind is Toyota.

The recall has damaged the ‘reliable’ preposition of the brand.

Not because the brand was valued last year at a whopping 31 billion dollars, but because it came as an underdog into the US market and understood the changing requirement of a new age American who had small families and small garages and the need to park in small parking areas that gave birth to this power brand Toyota, consisting of small cars but 100 percent reliable to that middle income American.

As at today, there are millions of Toyota cars or trucks on the road and it has become a household name not only in the US but in any part of the world. My favourite slogan for Toyota is 'When Toyota catches a cold and sneezes, everyone gets pneumonia.'

Meaning, it is a trend setter in the automobile industry. Even with regard to the current debacle that has hit the company, which some call the business blunder of the decade the lesson that it is teaching the world cannot be taught by any other brand.

The logic being at some point in our life we have driven a Toyota and it's close to our heart. Let me capture the essence.

Toyota built brand Japan

Toyota is Japan's largest company that hails from its medieval village Toyota city. The brand is the pride of the super power nation that has mirrored the country's post-war economic miracle.

It is fair to state that Toyota together with Sony helped build brand Japan in the world stage. I guess this is exactly what Sri Lanka requires post the 30 year war. We have so many treasures-Garments, Tea, Cinnamon to name a few but we must make these build brand Sri Lanka just like what Toyota and Sony did for Japan.

I guess the 6.8 percent GDP growth that we are targeting in 2010 is the start of a tiger in the making for South Asia.

The beauty about Toyota as a brand is that it has not been confined to Japan but also ventured out to almost every country in the world and can be termed the most multinational corporate entity of the world. In effect, Toyota has helped Japan touch the lives of people around the world which is the essence of nation branding that I guess a country like ours must somehow emulate.

However, the recent development where millions of cars are being recalled has damaged the 'reliable' proposition of the brand that it has earned through years of hard work.

It's a lesson for corporate Sri Lanka that today's success stories become tomorrow's case studies. Sri Lanka's mobile phone industry is a classic example of where yesterdays top runners have not even made it to the Business Today's Top Ten rankings. I guess with new entrants like Etisalat coming in my estimate is that within the next three years some companies will cease to exist specially since the industry P and L is in the red.

Crisis looms

Toyota that showcased a 26.2 trillion dollar global sale has slumped in January by 16 percent which is a performance that has not happened in the seventy five year history of the company.

The January sales in US declined by almost a 100,000 vehicles and 2010, looks a tough year ahead for this power brand.

The Brand Finance group has warned the company that due to the poor management of the PR issue by the company the brand can be downgraded from AAA rating to simple A rating that can cost the company almost $7 billion to 24 billion dollars this year.

(See Table 1)

The lesson for corporate Sri Lanka is that whilst we plan and develop multi media communication campaigns like what we saw last week of Etisalat, where even a blind man would have seen, we must have our PR plans in place in the eventuality of a crisis.

It can be just a prawn cocktail that goes bad that can result in hundreds of people having to enter hospital that actually happened to one of the top hotels in Colombo.

However, as this organization had a well orchestrated PR plan in the event of a disaster the story never hit the media and all credit must be given to the plan. I guess corporate Sri Lanka can teach a few lessons to Toyota.

What competitors do

It goes without saying that the business world of today is very ruthless. Whilst Toyota was battling the PR challenge, rival companies like Ford and Hyundai is tracking customers from the show rooms of Toyota with guerrilla tactics. Fords share in the US has picked up to reach 16 percent in January and Toyota's share has contracted by three percentage points to 14 percent which gives us an idea of the impact a business can have by a single error in the production line.

Some say the automobile industry is like a high speed road race where if you get caught up in the gravel you get passed so quickly that it's virtually impossible to catch up. I guess the best case is the product brand of the year last year in Sri Lanka, Diva washing powder.

The brand has got the momentum and started capturing consumers from its arch rivals and today it has crossed the thirty five percent market share point. For a competitor to reverse this trend will need a lot of marketing muscle which is why the Holy Grail is that, the competitor must be blocked at the start so that it does not become a Tsunami later on.

PR debacle

Lets accept it, organizations are managed by human beings and it is human to falter even though the paradigm in countries like Japan is zero defects.

The essence is that there must be a fallback plan in the event of a crisis. One of the best ways of re-assuring customers in the event of a major disaster, a CEO must get into the fray. This was the biggest drawback in the Toyota PR campaign post the news hitting the headlines on January 21. Some Japanese reporters tracked the Toyota CEO to Davos and demanded an interview in which a brief apology was given that had no impact on the troubled customers.

The golden rule in handling PR post a disaster is be open, do not hide. Do not ignore. Acknowledge, listen and provide a detailed next steps on what a customer should do.

The most important aspect is that the apology must be seen genuine to the mistake made. The best example that the world saw in the recent past was by the Ford Company. When it had to recall faulty Firestone/Bridgestone tyres the then CEO Jacques Nasser appeared on prime time US television to re-assure customers.

That can be a lesson for Sri Lanka. The only issue is that what was stated must be authenticated. If not the credibility rating further falters just like what happened in the case of the Golden Key fiasco in Sri Lanka.

Absence of a father

While the Toyota CEO for the USA Jim Lentz was on video stating "I want to sincerely apologize to all Toyota owners.." the only release from Toyota headquarters at that time was a press release relating to a tree planting project in Philippines that fuelled the uproar by the public at large.

This in fact was argued by some critiques as the cultural divide and that Japanese companies are not actually global as it claims.

This was justified by the press conference that was summoned later on, where only the Vice President addressed the media. Apparently, it is a custom in Japan that the CEO addresses at the last but being a global corporation where the impact will create a ripple all over the world, the standard norm of the CEO coming on stage first should have been practised.

Which actually did happen later on but, it was too late was the view of the expert PR specialists of the world. Hence the lesson for corporate Sri Lanka is that you get only one window in a PR exercise. The right impression must be made.

Get political support

Thereafter, a multi faceted PR campaign broke out with Toyota finally getting their act together. The best was the Twitter campaign where grievances were addressed on a personal basis that really worked for the brand Toyota.

The lesson for corporate Sri Lanka is that other than for the customary press releases that is usually issued in the event of a disaster, the new social mediums such as Twitter, YouTube and blogs can be used as penetration levels are better with stronger engagement.

Another important dimension that has been reveated in the papers is how Toyota has initiated a four million dollar campaign using lawyers lobbyists and PR experts to get support from the US Congress so that there will be a set of godfathers to support the company as it sails the troubled waters. It's a very strong lesson to corporate Sri Lanka that a balanced approach is required with customers and the policy makers so that the overall impact is greater.

At the end of the day the policy makers can become the opinion leaders in a situation like what Toyota is in.

Next steps

* The priority for Toyota is to ensure that every car owner has a safe vehicle. The best is if a town attack can be mounted where all the major cities of the world will be covered by a mobile inspection team and all cars certified within the next three months. The company must invest now, even if 2010 P and L comes out negative. This will be the only way to re build the brand.

* Simultaneously, the cause of the problem needs to be identified and rectified so that a simultaneous communication campaign can be rolled out in serious media so that the 'doctors' of motor cars once again begin to endorse the brands.

* The company must develop a new positioning in an aggressive manner. May be the Green marketing positioning can be taken into a high ground by a world wide initiative of where "Green Show Rooms" are opened across the world within the next one year on this Eco friendly platform. This can be Toyota's promise to the world that is getting battered by issues due to climate change.

* May be a separate brand will be built. The Prius can be built to have its own unique identity on the 'Hybrid Synergy Drive' system. This will be similar to the Lexus imagery that has been built.

What history has revealed is that great companies always make mistakes just like great people. The difference is that the brilliant learn from them and go on to achieve greater heights. What the world requires is not brilliant leadership but corporate athletes. It is the new thinking as you must get up every time you fall. Are you one?