How Not to Do a Product Recall

Recently, the South Korea ordered Hyundai and Kia to recall 240,000 vehicles due to concerns over safety defects.  The car manufacturers had recalled over one million cars last year in the U.S. due to problems with the engines stalling. Recalling vehicles happens all the time and all over the world for a variety of safety and quality issues.  An earlier post noted the recalls by GM and VW that were media sensations.  What makes this recall special is that the recall was not voluntary.  Hyundai and Kia had resisted request to recall the vehicle causing the government to force a recall.

 

Involuntary recalls create a much worse crisis for the organization. Marketing research has shown an involuntary recall does much more damage to reputations and purchase intention than voluntary recalls.  Involuntary recalls create the appearance that the organization about customers because the organization shows no regard for safety or quality of its products. ( I have include some references below for more information on the effects of involuntary recalls).

 

If the involuntary recall was bad enough, the way the product defect was reported makes it even worse.  A former employee acted as a whistleblower who reported the defects to the government.  The whistleblower had worked at Hyundai for 26 years.  A whistleblower suggests the organization knew about the defects and tried to cover-up the problem.  In fact, the government is investigating whether or not a cover-up had occurred.  Knowing there is a problem and not telling customers about it increases the negativity generated ty the crisis.  Stealing thunder is a much better option when an organization knows it has a problem.  As noted in an earlier post about the stealing thunder research, being the first source to report the problem results in less damage being inflicted on the organization by the crisis. 

 

Questions to Consider

 

1. Why might Hyundai have decided against stealing thunder in this case?

 

2.  Do you think whistleblowing really adds to the damage of the involuntary recall or is simply having an involuntary recall maximized the damage the crisis could inflict on the organization? 

 

3.  What are the communication options now for the crisis managers in this case?

 

 

References

 

Siomkos, G. J., & Malliaris, P. G. (2011). Consumer response to company communications during a product harm crisis. Journal of Applied Business Research (JABR), 8(4), 59-65. Siomkos, G., & Shrivastava, P. (1993). Responding to product liability crises. Long Range Planning, 26(5), 72-79.

Vassilikopoulou, A., Siomkos, G., Chatzipanagiotou, K., & Pantouvakis, A. (2009). Product-harm crisis management: Time heals all wounds?. Journal of Retailing and Consumer Services, 16(3), 174-180.

 

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