What are the odds that Samsung surfs the scandal?

samsung-surf-blogThese days we hear all sorts of stories around what Samsung has done with its Galaxy Note 7 product – a product that has built great consumer feedback until we heard the serious problems it can bring. Problems serious to the point that airlines do not allow it to be turned on during flights. In the last few years we have seen Samsung outplay Apple and iPhones. Can Samsung really be squashed into a corner and relegated to a marginal role in business due to the crisis it is going through? Will this be a hard hit for Samsung and what are the steps they need to take to surf the crisis?

No doubt a product defect of this magnitude will hit the company’s reputation, but remember the stellar reputation that benefits Samsung. Reputation acts as a buffer in periods of crises, and this is what we predict will happen this time. A product recall erodes on average 13.4% of the current reputation capital a company can benefit from (source – National Tracker study, 150+ companies tracked monthly in 3 continents). This means that in Europe (UK, GER, ITA, FR, SP, POL) we can predict that Samsung will see its reputation drop from a stellar score of 80.7 to a score of 70.2. This leaves Samsung in the strong area (score between 70-80). If a good job is done, they can come out stronger than ever. We have seen similar situations in the past in the thousands of companies we track.

What are the steps they need to take to surf the crisis? Samsung’s reputation is sustained by excellent perceptions in all 7 reputation dimensions, a very strong position to “surf the scandal” and build the opportunity platform to come out stronger than ever. To do this they need to shift and become pro-active. They need to fill the perception gap that is growing these days – that feeling where consumers are challenging their thinking and wondering if Samsung is as good as once thought? Is this case an isolated case and will they show “care” for its customers?

20% is the key number that should be at the centre of Samsung’s strategy. 20% of consumers in Europe cannot evaluate Samsung’s performance in the 7 dimensions, ranging from their products/innovation to their social role to the financial performance. 26% don’t know if the company is responsibly run. This is the perception gap that needs to be filled. This is the risk they are running: not being capable of engaging that 1 consumer out of 4 who today is being influenced by the public agenda. This 26% can become a substantial negative force if a reactive approach is followed.

If proactivity is shown and actions are targeted to that 26%, taking care of its Galaxy Note 7 customers, informing consumers about the company culture and the values at the heart of how they run their business, then the opportunity is there to surf the scandal. Our research has shown on some key clients that a voluntary product recall can actually build your reputation! Some erosion to their reputation will remain but they will be strong enough to recover the loss. Remember they have grown their reputation double digits in Europe over the last 4 years, from a score of 72 to a score over 80. They have done it once and the case is there to do it again. Will Samsung ride the wave or be bowled over by it? Let’s wait and see the result…

Michele Tesoro Tess

by Michele Tesoro Tess
Managing Director – Italy, Switzerland & Middle East
Reputation Institute