Integrated marketing communications: quality, scandals, public relations, and crisis management Bobo, Ice, Iris, Kin, Kitty, Sharon Shanxi Group
SK-Ⅱ为何总出问题 http: //news. cctv. com/society/20060923/100596. shtml CCTV. com消息(新闻 30分)： 宝洁公司昨天宣布暂停SK-II化妆品在中国内地的销售以后， 找谁退货成了悬而未决的问题。今天出版的新华每日电讯， 对SK-II为什么这两年频频出问题，做了深层次的分析。一起来了解一下。 为什么SK-II这两年频频出问题？今天出版的《新华每日电讯》认为， 原因一是执行双重标准。跨国公司在不同的国家， 通常会按照所在国的国家标准组织生产， 由于我国部分行业标准低于欧美国家，同样的产品，可能出现质量不同的 情况； 二是违法成本太低。去年，宝洁的SK-II因涉嫌虚假宣传被南昌 商罚了 20万元， 这点钱与其因为虚假广告所带来的产品知名度和利润相比，微不足道。 第三个原因是盲目信任洋品牌。有媒体报道，除了海关对进口化妆品的程 序检测外，SK-II产品除至今已有8年没有再进行过质量检验。
宝洁公司 22号宣布，暂停SK-II化妆 品在中国的产品销售 http: //vsearch. cctv. com/play. jsp? storyref=20060923_CCTVNEWS_New s_0600_2952. 940_3047. 970&ref=20060923_CCTVNEWS_News_060 0_2952. 940_3047. 970 • 中消协有关负责人指出，SK-Ⅱ产品退市后，仍应履行退赔责任。 • 在声明中，宝洁公司称暂停SK-II在中国的产品销售，并暂时停止 SK-II专柜的运作。同时暂停运作的还有SK-II在中国的退货服务中心， 改由 24小时服务热线来处理消费者的退款要求。但记者拨通服务热线 询问 9月21日以前没来得及办理的消费者该如何进行退货，对方表示 暂时不受理。 • SK-II服务热线：这个我们暂时不受理，因为还没接到上面的通知。 • 中国消费者协会秘书长武高汉：企业的责任不能因产品退出市场而 终止，企业仍应把过去的责任履行到底，无条件为消费者退赔。退赔 过程中不应设置任何条件，如果设置了一涉嫌违法，二肯定无效。 • 今年 9月14日广东出入境检验检疫局在从日本进口的9种SK-II系列 化妆品中检出禁用的金属元素铬和钕。21号上海市食品药品监管局宣 布，在市场上抽检的SK-II产品又有3种检出铬和钕，这样SK-II的问题 产品已经增加到 12种。
SK-II in Mainland China • SK-II is a registered trademark of Procter & Gamble • It entered the mainland market in 1999 • P&G has successfully shaped SK-II as one of the high-end brands • It has been in fierce competition with Christian Dior, L'Oreal's Lancome, and Estee Lauder. • SK-II attracts women aged between 25 and 40, particularly professionals with high purchasing ability. • In 2005, SK-II ranked No 13 in the skin care market.
Disgraceful News • Sept 23, 2006 • "Whitening Source Pan-cake" had 4. 2 ppm of chromium and 5. 2 ppm of neodymium - slightly more than the 4. 5 ppm of neodymium found by mainland officials • Chromium is known to cause eczema, while neodymium can irritate the eyes and harm the liver if inhaled.
Aftermath of SK-II • An online survey conducted by Sina. com showed that 87% of 220, 000 respondents believed P&G to be lying. • Practically all respondents said they would never purchase SK-II products again, and 69. 8% said most of the name-brand cosmetics products were not trustworthy.
Why Chinese consumers are increasingly more demanding about product quality and services from both domestic and multinational firms?
Increase in disposable income Per Capita Disposable Income of Urban Households and Its Growth, 2002 -2006
Higher education level New Entrants into Education, 2002 -2006
Getting more information about scandalous products and companies • August 15, 2006 • Dell battery recall: More fuel to the fire • Series of explosive incidents involving its laptops • Recall of more than 4 million batteries • "Dell laptop became a flamethrower"
• Jan 10, 2007 • Failed electrothermal Bags • The plastic materials used in parts of electothermal bags were found to be inadequate for resistance to heat or fire • Consumers were strongly urged to stop using it
Critical factors in choosing a brand • Trust in its quality (92%) • A positive impact on health (81%) • Its care for customers (76%) • Having a fair price ranked only fifth (73%)
In choosing a shopping destination • Quality (52%) • Service (39%) • Variety (36%) • Value ranked fifth (27%).
A high level of brand awareness and loyalty • 83% of consumers on average were able to identify products made by a variety of brand names • 78% said they buy toiletry brands they know, switching cost is high
Substitutes available • China market opens • Market players ⇧ competition ⇧ Choices ⇧ Price ⇩ Quality ⇧
One country, many consumer segments People in their fifties Middle class emerged Modern women Little emperors Elite rich & super rich
People in their fifties • Maoist battle vs. the bourgeoisie • Hardship • Deprivation They are keen savers, cautious spenders They look for : Domestic brands, good value for money, utility, educational qualities, durability
Middle class emerged • Cultivated by Deng Xiaoping • Radical modernization They Value enterprise, knowledge, commerce, self reliance They look for : Domestic & International brands, good value but occasionally indulge in luxuries, a place to meet & eat out
Modern women • Recognized talents & contributions They are highly educated, career oriented, cosmopolitan They look for : Beauty treatments, luxury items, travel
Little emperors • Born after 1977, being pampered by 2 parents, 4 grandparents They look for : Modernity, differentiation, style, status, personal space, high quality products, personal service
Elite rich & super rich • Enjoy material comforts They look for : Quality, status, power, visibility of wealth, prices are irrelevant
Is this a sign of overzealous consumer advocates, a conspiracy theory, double-standards, or abusive consumers? 1. 2. 3. 4. Overzealous consumer advocates? A conspiracy theory(陰謀論)? Double- standards? Abusive consumers?
Overzealous of customers • • Agree In SK-2 case Customers are too sensitive Since there are some harmful materials in the skin care and cosmetic products • There is no precedent case of customers have skin sensitive due to use SK-ll (Ming Po)
Overzealous of customers • Chinese & HK Government use the same standard of product quality • Since HK Customs (香港海關) proved that products contain little neodymium (釹 ) and chromium (鉻) • The risk of affect health is very low • HK Customs announced《消費品安全條例 》for SK-ll which can continue to sell in HK
Overzealous of customers • Some brands e. g. Clinique, Christian Dior • They have such harmful materials, too • But Chinese Government has no action to prove them • Chinese customers have overzealous in SK-ll’s case
Overzealous of customers • • • Other countries Origins of SK 2 - Japan Hong Kong, Korea etc. They are not too sensitive in SK-ll’s case Because according to their product quality standard, SK-ll or other brands have passed to sell in the market
A conspiracy theory(陰謀論)? • 29 May 2006, Japan imposed more strict criterions on Maximum Residue Limits on Chinese imported agricultural goods and food→ many such goods weren’t passed the inspection in Japan • After the implementing of the new criterions, ＞ 40 quarrels on agricultural good’s trades. E. g. preservative standard for Japanese teas and fish rolls • According to some Japanese newspaper e. g. 《富士產經 商報》, since many Chinese agricultural goods were failed during Japanese inspection, China restricted Japanese goods in order to take revenge. SK-II was one of the Japanese product • conspiracy theory?
A conspiracy theory(陰謀論)? • 31 Oct. 2005, S. Korea found there were lead and parasite’s(寄生蟲) eggs in the Chinese imported pickles( 泡菜) • 1 Nov. 2005, General Administration of Quality Supervision, Inspection and Quarantine of the PRC (中 國國家質量監督檢驗檢疫總局)informed 10 Korean pickles, Chile and烤肉調料醬 also contained parasite’s eggs. 南韓東元食品、斗山、大象、ＣＪ及Pulmuone等五 家企業生產的泡菜、辣椒醬及也發現寄生蟲卵 • 3 Nov. 2005, Korea admitted that the 10 were inspected of containing parasite’s eggs. • conspiracy theory?
A conspiracy theory(陰謀論)? • Mar. 2002, EU claimed there were banned antibiotics on the Chinese imported fish→ banned those kinds of fishes • EU also banned other imported Chinese goods e. g. honey, poultry • 17 Dec. 2002, EU agreed to cancel the prohibition for most of the imported fish • China condemned this was an unfair and unequal protectionism • China banned the European cosmetics → afraid of being affected by the BSE • conspiracy theory?
Double- standards? • According to an investigation on SK-II by Caijing Magazine 《财经》, there was just a brief description of the function and ingredients on the promotion booklets in China. • Deep and clear description on the promotion booklets in USA. • Discrimination? Double standard?
• Mar. 1999, Toshiba was sued for the problems of its Floppy device by 2 Americans. The company compensated US$10. 5 100 billions for the American consumers. • However, for the non American consumers, the company just provided new Floppy device instead of compensations. • May 2000, 4 Chinese sued Toshiba. Market share dropped from no. 1 to no. 3. → passed by Lenovo and IBM.
Double- standards? • 14 Mar. 2005 Greenpeace notified one of the biscuits from Kraft Foods Limited (卡夫食品有限公司) and one of the corn soup from Campbell Soup Company(金宝汤公 司) contained GM food. However, they didn’t not state in the package. • They promised not to use GM food in Europe as Europe bans to use GM food. • Military of Agriculture of PRC required that GM food must be stated in the package since 2002. • Double standard?
Abusive of customers • Whenever Chinese customers have lack of confidence of some products • They can not accept any explanations from that companies • Even the products have been proved to be pass the quality standard of Chinese Government
Abusive of customers • SK-2 Shanghai and Beijing • Strict conditions for customers to refund 1. Customers must have bought the 9 types of products 2. Customers must have the receipt 3. Customers must have at least 1/3 of the product that has not been used 4. Customers must go to the counter that they have bought the product to refund • Customers are difficult to abuse their power
What have we learned from this and other cases involving foreign brands? What is the right approach to understanding and addressing these issues?
Other crisis of foreign brands • • 肯德基部分產品發現含有蘇丹紅一號 強生嬰兒油被指責存在質量問題 卡夫被指在華銷售含有轉基因餅乾 金寶湯的轉基因成分
Lesson from the cases • Every complaint is crucial • Crisis is a challenge to business – One scandal leads to entire failure or reputation establishment • Political influence on economic aspect
Lesson from the cases Need to pay attention to • Various standards and regulations – Local vs international standards – Different regulations in certain industries • Political environment – Relationship between home and host country • Power of mass media – A tool to stop or accelerate the spread of negative information
Lesson from the cases Need to pay attention to • Customer expectation – On quality of product and service – On complaints handling • Social responsibility – Responsibility to the health of customers
Right approaches to the crisis 1) Effective crisis management • Identifying a crisis – Quick identification, withdrawal of products, prevent or counter the spread of the negative information • Planning a response to the crisis – Emergent internal meeting to unify external announcements – Launch investigation • Confronting and resolving the crisis – Clear explanation of the incident in sincere attitude – Apology for inconvenience caused – Remedial actions to the victim
Right approaches to the crisis 2) Better complaints handling • Set up clear and efficient complaint procedures – Accessible channel, simple procedure • Respond to the complainants readily – 3 stages of responds • Solicit suggestions from the complainants – Further improvement for the business • Document the information properly – confidential so as to protect the complainant's privacy
Right approaches to the crisis 3) Fulfillment of social responsibility – Show responsibility to the public and society 4) Building and maintaining good relationship with mass media – Make use of media to provide a counter argument or question the credibility of the original negative publicity and government bodies – Support from government through communications
Recommend IMC strategies to build up brand image and also shore up company image in China. Public Relations Advertising Sales Promotion Personal Selling Direct Marketing
Public Relations • Press Conference – Representative of SK-II and skin care professionals – Explain the reason of the incident and declare the reliability of their products – Questions and answer session • Press release – 宝洁SK-II通过新浪财经发表致网友的公开信 • Spokesperson – Support the brand insist on using the products – “琦琦聲言續用SKII面膜” (星島日報)
Advertising • Advertisements serious (廣告雜誌) – Production tour of SK-II – Comments by skin care professionals – Comments by spokesperson – Comments by users • Announcement on the website – “SK-II 產品是安全的” http: //www. sk 2. com/jp/info/china. html
Sales Promotion • Customers retention – 20% off discount to loyal customers who bring with the used vessel of SK-II
Personal Selling • Emphasize product’s ingredient and product safety at first
Direct Marketing • Send newsletter to SK-II club members – Declare product safety – Thank for their long-lasting support of SK-II products • Hotline – 24 hours enquiries hotline
Thank you
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