Responding to the consumer: When and how firms should react to criticism

Smart corporations don't just launch new products, they even tweak entrenched ones when need arises

When Hindustan Unilever de­cided to drop the word “Fair” from the well-en­trenched Fair & Lovely, it explained its decision using the terms “inclusive” and “diverse”. That it was facing sustained criticism for promoting “fairness” as a virtue was known, but whether the Black Lives Matter movement provided a strong final nudge to take such a drastic step remained unaddressed in its communication.

Either way, here was a company that responded to criticism taking a major step as did Nestle by taking off its instant noo­dles Maggi — when it faced both regula­tory pressures and public outcry — in 2015 or Facebook, when it had to drop its Free Basics plan for India despite the same having worked in other markets because the strong backlash it met here.

At what point should corporations take the call to respond to criticism and what does it take to react quickly? Author and corporate advisor R Gopala­kri­shnan, who is also a former director of Tata Sons and ex-vice-cha­irman of Hindustan Unilever (HUL), gi­ves the larger perspective: “Crisis develops exponentially, but management responses develop linearly, so there is a widening gap as you go along the graph and therefore the crisis spins out. But there are certain ex­amples where crisis and response both developed exponentially. For example, Johnson & Johnson had the Tylenol crisis that they handled well.”

A company gets signals from market research teams, public comments, shareholders, activists and when all of it goes to the leadership team, they have to come to a view, adds Gopalakrishnan. It is the leadership team’s ability to process the signal and develop it into something that can be acted upon that makes all the difference. In Gopalakrishnan’s opinion, “HUL didn’t respond to Black Lives Ma­tter, but that they had been mu­lling their responses to various signals over time.”

What does that process of sensing and processing feedback involve? An Indian executive of an FMCG major weighs in. The process is broadly divided into three parts, he says: How to determine whether the backlash is material to the business, the decision-making process that follows, and finally, the steps taken to react quickly.

“Brands activate social listening tools to analyse and assess whether something is just one news cycle or a trend that can result in shaping consumer sentiment. This data is the foundation for decision makers/brand leaders to decide how to act. The action could be to respond in the public domain, take action like re­ca­ll/change product or brand assets (logo, name, jingle, etc.) or not to take any action. Not taking action in this scenario is also a very strategic action if data supports it,” he says.  

 

Once there is substantial evidence that the backlash is crucial or will have a material impact on the business, the leader decides the course of action along with the relevant members of their leadership te­am. The key is to avoid attacking the low-hanging fruit — say, a product recall, given that most businesses in today’s scenario are battling to meet their short-term targets (mon­thly, quarterly, yearly).

Smart leaders in global companies that have stood the test of time (and hence are sitting on a wealth of experience) prioritise the long-term health of the business. It is the right thing to do for consumers, shareholders, trade partners and even employees. These business leaders are comfortable taking a short-term hit on sales and maintain the consumer’s trust in the long term. This is even more critical today, whe­re more and more millennial consumers have become aware about what’s happening arou­nd them and prefer brands that have shared values and beliefs.

And from there, it comes down to fast decision-making by the leadership team and the agility to execute the decision qui­ckly. Note that leanness (number of pe­o­ple) is not a determinant here, but it boils down to the corporation’s culture. A sizeable multinational boardroom can be as fast and agile as a start-up if the culture is amenable. Faster decision-making and agi­lity are cultural traits independent of the size of the organisation, the executive adds.

But a question then emerges is, why would such criticisms arise in the first place if business leaders are following the a-b-c of strategic planning? Sometimes it could be because the company failed to read how the consumer herself had cha­nged. A 2016 article in The Guardian that dissected how the Free Basics idea failed in India, quoted an unnamed Facebook executive saying that in essence, the company made the mistake of thinking that a third-world country was a banana republic and institutions such as the public, the press could be bypassed.

Siddharth Shekhar Singh, associate de­an (digital learning) and marketing/PR strategy, Indian School of Business (ISB), explains how the pitch can go wrong de­spite good intentions. “In Tata Nano’s case, the company had originally planned to po­sition this product as an aspirational brand that people would want to buy. But before the company could operate the steering mechanism to drive people to buy, Ratan Tata went all over the world and won awards calling it the poor man’s car. Once something of that kind enters the consumers’ mind, they will have a certain view irrespective of what comes later.”

Singh says repositioning is possible, but becomes extremely tough in such circumstances. Pranesh Misra, chairman & managing director, Brandscapes Worldwide, has some handy tips for the exercise that he opines can prevent an extreme situation such as withdrawal or a major rebranding.

“The first step," he says, "is ‘refresh’. Traditional marketing teaches the power of consistency, but if that results in no action, then the brand starts looking dated and old-fashioned. Then there is ‘relaunch’. The objective here is to get lapsed users (or non-users) to reconsider the brand and try it again; so the brand needs to signal a significant change in areas such as formulation, brand proposition and packaging. Finally, ‘restage’. Usually, when a brand sales are stagnating or declining over a period of time, restaging is required. Brand sales stagnate when the core consumers actively explore alternatives and the brand is not able to attract enough new consumers to keep growing. The brand’s message is ‘Try me again, I have changed’,” says Misra.

A good example of a restage that comes to mind is that of Lifebuoy, which went through this transformation in the early 2000s. Lifebuoy metamorphosed from a red, carbolic, chunky soap to a toilet soap range offering a variety of sensations to a wide range of consumers. Apart from the name Lifebuoy almost everything else changed.

ISB’s Singh says HUL’s recent move would not hurt anyone. “Changing the name here doesn’t hurt anybody and the company can continue to make profits while ensuring it has done something to address consumer concerns. It has to be mindful about the demands of its loyal customers also because whether fairness creams ought to be sold by a company is something that falls into the notion of choice for the consumer. And as long as one is not discriminating against people of a particular skin tone it’s okay,” he says.