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Is Samsung’s reputation in danger?

24.10.16 - by boxChilli

Is Samsung’s reputation in danger?

Samsung prides themselves on the fact they are one of the top technology innovators in the world. They are constantly working towards producing the best product in their market. They market themselves as a reliable source for top of the range tech; however, following the Galaxy Note7, we are not so sure anymore.

‘On October 10th we took the decision to stop sales and shipments of Galaxy Note7 devices as part of our commitment to customer safety’1 – Samsung’s official statement after they finally decided to call it a day on the product disaster – just 8 weeks after it went on sale. [1]

Where did it all go wrong?

So how could Samsung, the supposed front runner of phone technology, create a handset that self-combusts? Following the launch of the product and then the initial reports of phones catching fire, Samsung identified the cause of the problem as a battery cell fault. They issued the first product recall. Manufacturer Samsung SDI had created batteries that were bigger than intended which resulted in a pressure build-up when fitted into the handset. By using another manufacturer (ATL) to create the right size battery problem solved, right? Apparently not. Reports of devices catching fire continued to surface, and Samsung received at least 92 reports of Note7 batteries overheating in the US. This includes 26 reports of burns and 55 reports of property damage. [2] This left Samsung with no choice other than to call it quits. Since the battery is allegedly not the issue, do Samsung even know the cause of this billion-pound error? Will they be able to recover and return as the tech-savvy business that they were prior to the incident?

How much damage are we talking?

Before discussing how Samsung will plan its revival, it’s important to know how much damage has been done to the brand. It’s not often a company stops production and sales of a product. The last incident of this scale was Nokia’s 2007 battery debacle – a company that now has near dropped off the radar in the technology industry. In typical internet fashion, it was quick to mock, share and revel in the ashes of the Galaxy Note7’s credibility. And unlike the Note7, the memes did not disappoint.

The spectacle of the Note7 has descended into a joke as Samsung tries to deal with the short term impacts; starting by launching a return and refund scheme. This gives consumers the option to switch to one of their less flammable products, such as the Galaxy S7 or S7 edge. To add to the brand embarrassment, aeroplanes have placed bans on the device, which is understandable due to the phone being a fire hazard. Samsung swap sites are now set up in major airports globally. Samsung has damaged its brand identity and may have unintentionally driven customers to competitors. Considering that the Galaxy Note7 was Samsung’s alternative to Apple’s iPhone 7, it is not the desired effect.

It’s not just the brand image that has taken a hit. The trading shares to, which fell more than 8 per cent, its biggest drop since 2008, and knocking $17 billion off the company’s market value. [3] The short-lived timeline of the Note7 has become international news, ensuring that Samsung’s customers and competitors know exactly how much damage they’ve done. There is no simple matter of smoothing this over. It is going to require a strong long term strategy.

Bring on the brand contingency plan

The situation speaks for itself in terms of how much damage has been done. Samsung needs to manage this unexpected outcome in a seamless manner. A contingency plan is essentially a back-up plan, and it is exactly what Samsung needs. They must control the backlash, allowing them to prevent any further damage to the brand.

Samsung is already taking steps towards controlling the chaos. They are releasing official statements to the media so they can selectively choose the information they wish to share with the public. This can dispel false information and rumours from circulating. Furthermore, they will need to rely on the big picture to regain customer trust. It’s vital they turn to other flagship products to nudge them back into success, such as the upcoming Galaxy S8. One of the biggest assets Samsung has to help them is the fact that they are a trusted brand, and by deflecting away from the car crash that was the Note7 it will remind customers of why they trusted them initially.

The nature of the disaster means that safety concerns will be a new fear amongst customers. This means they will need to dive straight into addressing safety measures and showing the public in all possible ways that this will never happen again. There is speculation that Samsung will attempt to contain the concerns by sacrificing the entire Note series. By ending the production of present and future Note models, Samsung may be able to save other series from suffering as a consequence.

Will Samsung get a happily ever after?

There’s no need to feel sorry for them – Samsung is still a billion-dollar company that is going nowhere anytime soon. However, they aren’t going to shake off this blunder easily, and for the next few years will have the entire technology industry watching them closely to see how they recover.

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Sources:

1 http://www.samsung.com/uk/note7exchange/

2 https://www.cpsc.gov/Recalls/2016/Samsung-Recalls-Galaxy-Note7-Smartphones/

3 http://www.nytimes.com/2016/10/12/business/international/samsung-galaxy-note7-terminated.html