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Volume 16, Number 10: Faculty Focus
October 2010

Listen to a 4-minute interview with Niraj Dawar  to discuss what factors help brands survive distress   Listen (3.6MB)   Subscribe

Why was Maple Leaf Foods praised for its management of a listeria crisis, while BP has been harshly criticized for its recent oil spill? A company’s ability to rebound from a brand crisis is hinged on brand management. Dawn Milne recently sat down with Niraj Dawar, R.A. Barford Professor in Marketing Communications at the Richard Ivey School of Business, to discuss what factors help brands survive distress. Dawn started by asking him what are brand crises?

A.  Brand crises, in contrast to, say, product-harm crises – product-harm crises are events that are well-publicized of a product that has to be recalled because it’s either defective or dangerous. A brand crisis, in contrast to a product-harm crisis, is a crisis that affects the core positioning of a brand, for example, where a brand has been positioned on the idea of being environmentally friendly and that core positioning – it gets questioned. It gets undermined in some way – that there’s credible evidence that it is untrue and so that becomes a brand crisis to the extent that the core foundation of the brand’s positioning is now undermined.

Q.  How should brand crises be managed?

A.  Brand crises should be managed before they begin. They should be managed by building positive reputations. They should be managed by creating positions that are not vulnerable. They should be managed by making sure that the claims that are made for the brand, particularly the core claims, are substantiated and well-founded and they should, once they occur, be managed by demonstrating that the firm understands the consumers’ concerns or the challengers’ concerns about the brand’s positioning and that it is doing everything possible to restore the credibility of its own positioning.

Q.  Are some types of brand crises potentially more damaging than others?

A.  Yes, I think brand crises that really go to the heart of the brand’s positioning – that undermine the core claims that the brand is making – are more damaging than brand crises that do not go to the core of the positioning. For example, if Gatorade were to be lacking on its rehydration abilities, the core of its position is that it rehydrates. If that claim were undermined in some way, that would go to the heart of the brand and that would undermine the claims of the brand and that would be more damaging to the brand than, say, undermining the freshness attribute. Gatorade has never made any claims about being fresh. And if it were found that there were bottles of Gatorade being sold by retailers past their sell/buy date, you would not have the same impact on the brand as you would if the core positioning of rehydration were to be undermined.

Q.  How can companies build brands to be less likely to be hit by a crisis and more likely to withstand a crisis should one occur?

A.  It goes back to creating positions prior to the crisis and it’s the work of crisis management that occurs long before the crisis. In a sense, one way to think about it is that positive reputations prior to the crisis act as an insurance policy. They act to buffer the negative impact of a crisis on the brand – of the reputation of the brand. And so firms are likely to be able to withstand crises if they have created a positive impression prior to the crisis.

That was Niraj Dawar, R.A. Barford Professor in Marketing Communications at the Richard Ivey School of Business.