By Maria Gabriela Marin
There is nothing worse for a company than having a stained public image and/or experiencing a situation where the customer’s perception is that its products are substandard.
The reason is quite simple, public image is quite important because it can potentially affect your prospective customers. Those types of customers may prefer to do business with a reputable company with the highest levels of corporate, social, environmental & quality control standards. Furthermore, if existing or prospecting customers consider a company’s products as substandard, they will simply take their business someplace else.
Mattel, the biggest toymaker in the world, is a great example of the above strategic blunders. Mattel made headlines in 2007 for all the wrong reasons as it announced three toy recalls of Chinese-made toys, which not only raised questions about inadequate quality control standards but made parents consider its toys as substandard products.
Mattel's public image was battered last year when in early August, the company recalled 1.5 million Chinese-made toys (i.e. Big Bird, Elmo, Dora the Explorer and Diego) because of excessive levels of lead paint, which can cause brain damage if young children ingested it.
Later in the same month, Mattel recalled millions of more toys because of dangerous levels of lead paint or small magnets that could be swallowed by children. At the time, Robert Eckert, Mattel’s Chief Executive Officer, said that the “safety of children is our primary concern, and we are deeply apologetic to everyone affected." He added "we don't want to have recalls, but we don't hesitate to take quick and effective action to correct issues as soon as we've identified them to ensure the safety of our products and the safety of children." (link to youtube video of Mattel's CEO announcing one of the company's three toy recalls http://www.youtube.com/watch?v=xH9O8JlvOe4)
Making good on his word regarding safety of his company’s products, Eckert announced in September another recall of 848,000 Chinese-made toys (i.e. Barbie’s pet figurines and furniture sets) that contained excessive amounts of lead paint.
Damage was done. Mattel’s third quarter results were below analyst’s expectations and its stock price spiraled down to hit rock bottom in November. Since then, Mattel bounced back as parents regained confidence in the toymaker and forgot about these series of nightmarish recalls.
The reason is quite simple, public image is quite important because it can potentially affect your prospective customers. Those types of customers may prefer to do business with a reputable company with the highest levels of corporate, social, environmental & quality control standards. Furthermore, if existing or prospecting customers consider a company’s products as substandard, they will simply take their business someplace else.
Mattel, the biggest toymaker in the world, is a great example of the above strategic blunders. Mattel made headlines in 2007 for all the wrong reasons as it announced three toy recalls of Chinese-made toys, which not only raised questions about inadequate quality control standards but made parents consider its toys as substandard products.Mattel's public image was battered last year when in early August, the company recalled 1.5 million Chinese-made toys (i.e. Big Bird, Elmo, Dora the Explorer and Diego) because of excessive levels of lead paint, which can cause brain damage if young children ingested it.
Later in the same month, Mattel recalled millions of more toys because of dangerous levels of lead paint or small magnets that could be swallowed by children. At the time, Robert Eckert, Mattel’s Chief Executive Officer, said that the “safety of children is our primary concern, and we are deeply apologetic to everyone affected." He added "we don't want to have recalls, but we don't hesitate to take quick and effective action to correct issues as soon as we've identified them to ensure the safety of our products and the safety of children." (link to youtube video of Mattel's CEO announcing one of the company's three toy recalls http://www.youtube.com/watch?v=xH9O8JlvOe4)
Making good on his word regarding safety of his company’s products, Eckert announced in September another recall of 848,000 Chinese-made toys (i.e. Barbie’s pet figurines and furniture sets) that contained excessive amounts of lead paint.
Damage was done. Mattel’s third quarter results were below analyst’s expectations and its stock price spiraled down to hit rock bottom in November. Since then, Mattel bounced back as parents regained confidence in the toymaker and forgot about these series of nightmarish recalls.
5 comments:
I'm surprised that they are still around, I figure that after the whole lead issue, people would be really cautious when buying toys ever again. Although their initial situation was poor strategic management but the recall seem to be the right move to make, so Mattel can save a bit image or what's left of it.
I agree with you that public image is an important symptom that indicates a company's strategic problem. Once the company's image was damaged, it hard for it to recover. Even Mattel recalled all of the Chinese-made toys and the CEO had announced the company's awareness of the issue, customers may not trust the reliability of the company. Moreover, parents are now more aware of the lead paint issue, it is hard for them to build loyalty again with Mattel.
Well the problem with the Ionic Breeze was that it was emitting a bad type of chemical instead. This chemical was bad for people and the environment. So some people were suing them during the time of the recall. Since the Ionic Breezer was basically their top product, they lost a lot of sales. In addition, there are pending litigations.
Mattel is a great example of a company image being damaged due to defective products. For the company this will be a tough challenge to overcome; damage can very easily be done but recovering from it is a long process. Other than recalling the toys which were defective, what else is the company doing in order to improve its brand image? Mattel should not rely on the popularity of the toys and think that parent will quite easily forget the scandal. I believe that Mattel can be running a much more effective campaign to redeem itself. In your opinion do you feel the company is doing all it can in order to save itself?
It's interesting that parents regained confidence in Mattel even after all the recalls. I think the reason for this is because Mattel actually handled the situation very creatively. They twisted and said that they recalled the products because, as you stated in your blog, "[they] don't want to have recalls, but [they] don't hesitate to take quick and effective action to correct issues as soon as [they've] identified them to ensure the safety of [the] products and the safety of children." This caused parents to believe that the company cares and will do everything to maintain the safety of children. I actually think they had a strong strategy given the circumstances, which is why parents are regaining confidence in the company. I really think that with this management, Mattel will be back to normal in no time.
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