There are classic cases of companies which failed to live up to demands of disaster management during times of crisis. Truth is – they could have avoided both the embarrassment and the wrath of stakeholders easily

The Toyota and BP debacles have once again shown us the consequences of organisations failing to manage a crisis effectively. The tragedy is that it was all so avoidable. In cash terms these crises can be counted in billions of dollars but unfortunately the consequences will ripple on for many years – a high price to pay for failing to manage relatively simple crisis scenarios. It is amazing how much time and money is spent on developing and discussing strategy compared to developing the skills needed to implement it or manage it if things go horribly wrong. The rules of crisis management are really quite simple.

Prepare for the unexpected
It may be an unpleasant thought but if you run an airline (like in the case of the three largest number of passengers carrying airlines in the world: Delta Air Lines – which carried 162.6 million passengers in FY2010; United Airlines – which carried 145.6 million passengers in FY 2010; and Southwest Airlines – which carried 131 million passengers), the chances are that one of your planes might crash one day. You would have definitely heard of plane crashes and emergency landings by now, haven't you? If you make food, you might experience a health scare. If you run a car company like in the case of Toyota, ford, GM and many others, you might have to manage a recall. If you run an oil company, you might have to manage a spill (as was experienced in the case of Exxon Mobil and BP). It is vital to work out how your organisation would react if the worst were to happen and plan and train accordingly. Whilst risk registers and contingency plans are a good start, they can fool you into thinking that you have all bases covered. Planning and training must encourage creative flexible open behaviours. It is important to remember that it is usually the crisis that you never thought of that kills you.

Preselect, train and empower a crisis team
When crisis strikes, things develop at a devastating pace and companies need to react fast regardless of time zones, corporate procedures or internal politics. Individual leaders and teams should be preselected, trained and empowered to react instantly and calmly to the situation. The consensus culture at Toyota condemned them to losing the initiative and being butchered by the media over their recall crisis. Unless you are ahead or on the curve you will always be playing catch up and the crisis will spread systemically.

Put yourself in the customer’s shoes
Toyota customers were happy to pay premium prices for two key things - reliability and safety. When Toyota finally reacted, their crisis spokesmen tried to explain everything in engineering terms. What they should have done is consider what their customers may have been thinking (which is likely to have been whether their car was safe to drive). You have to build trust with your customers before their goodwill turns to anger, resentment and even personal hatred (as with BP).
 
Regret, reason, remedy
First you have to show that you are human by showing empathy for those people affected and express regret for what has happened. Many people fear legal consequences and are often told “never say you are sorry”; but showing that you understand the feelings of your customers is not the same as admitting liability. Secondly, try to explain in straightforward terms what has happened and the reason. “Unless you are ahead or on the curve you will always be playing catch up and the crisis will spread systemically.” If you don’t yet know, then say so and do not hide information that customers need to know. Lastly, get control of the situation by stating what you are going to do to remedy the situation.

Communicate, communicate and communicate
During times of crisis – no matter how big or small – organisations often feel that they are being attacked by a hostile press and the temptation is to close the doors, call a meeting and ignore the ringing phones. While it is important to establish your message, it is vital that you are seen to be openly communicating as soon as possible – speculation fills a vacuum. Communicate to your customers via the media but don’t forget the other key stakeholders including your own employees, suppliers and partners.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Globally, the MR Industry is undergoing a Transformation in Terms of Methodologies, Media & Client Engagements, while a majority of Indian MR Firms are still grappling with fairly old issues. For them, time is fast running out

One of my close friends was working on a senior position in a leading market research company for over five years (he has moved on now) and to my mind, he seemed to be having a whale of a time. That was till I actually asked him about his job, and he said, “In my profession, people who work for the length of time that I have worked in the same company are called fossils!” When I discussed this with a few other MR professionals, they did admit that the task of data collection and analysis, when done consistently on a day to day basis with more or less a similar set of clients, can get quite mundane and run of the mill. Employees can therefore develop a certain level of disregard and repulsion towards their work at an agency over time.

Indeed, manpower retention is often defined as one of the biggest challenges faced by Indian market research firms, which ultimately can raise questions on the credibility of the data and insights they provide. But as we went about our quantitative as well as qualitative research on the MR industry, we found out that the work that this industry needs to do is far more than that. During our fact finding quest, we talked to MR firms, clients as well as experts in the field of marketing, and realised that barring the top few players, the challenge for most of the industry is to ensure that clients don’t start giving up on them the way a lot of employees do.

That is because the Indian MR space is quickly getting divided into two segments; the first consists of companies that are part of the globally large networks and Indian firms who are rising to global standards. Globally, the MR industry registered a turnover of $31.2 billion in 2010 (ESOMAR). For comparison sake, the advertising industry was worth $390.89 billion in revenues for the same year (MagnaGlobal estimates). In India, the MR industry is currently valued at around Rs.7 billion and is approximately 8% the size of the advertising industry. MR companies are consistently striving to develop new ways in which to improve their relevance and share in client media spends. A majority of the firms belong to the second category, which is about doing just the traditional surveys like customer satisfaction, brand tracking, post-campaign analysis, et al. For this second category, the road map ahead can prove to be quite hazy or even non-existent if they are unable to come up to the mark. And as industry officials reveal, even the larger players have to be extremely wary of any kind of complacency. Noted author Arthur Conan Doyle once said, “It is a capital mistake to theorize before one has data. Insensibly, one begins to twist facts to suit theories, instead of theories to suit facts.” A similar crisis of confidence may be a real and present danger for the industry at large, where clients often feel that Doyle’s views prove quite relevant in the context of market research firms.

Client perspectives on the global MR industry prove this in no uncertain terms. The Greenbook Research Industry Trends report (GRIT) 2010 highlighted three very relevant concerns of the MR industry in today’s time – worrisome attitudes and beliefs about the marketing research profession, concern about the ability to keep up with the rapid pace of technological change, and a growing tension between desired quality of work and the need for speed. There is also a certain gap between how MR firms and clients view their MR budgets. In the GRIT 2011 report, 73% of research providers anticipated an increase in MR budgets this year as compared to 2010, while the figure for client firms was lower at 60%. Similarly, 58% of providers expect revenue growth, as compared to 38% for clients. It is being widely acknowledged that the MR industry is bracing for some fairly transformative changes, which will soon make their impact felt in India. The challenge for Indian firms is to adapt to these changes and radically rethink the way they still do business.
 
The first critical change is the manner in which market research is adapting to technology, and the use of increasingly innovative online survey methods. While even global companies are using these methodologies, the more interesting aspect is the pace of adoption that these methods are enjoying. In the GRIT 2011 report, online communities ranks as the most widely adopted new technology with 35% of clients surveyed using it (34% in 2010) having used it. Data mining comes second at 32% followed closely by social media analytics at 29%. More interestingly, 52% of clients are expected to deploy social media analytics and online communities in 2012. In fact, in markets like Japan, people are hardly using offline research for their ends.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Maruti’s position makes it vulnerable to attack from the new & existing players in the small car segment. Will it lose its leadership position anytime soon?

With a ‘Work hard party harder’ philosophy in mind, many companies go by the philosophy of sweating it out in the Indian market to launch the right set of offerings for the consumer. And if it delivers the desired results, the celebrations that follow are often grander and much more long lasting. However, Maruti Suzuki doesn’t seem to be leaving anything to chance ever since it saw its market share erode from highs of around 90%. Even after staying ahead of the curve in the premium hatchback segment by launching the Swift in 2005, its market research team was again out in the market asking consumers about how they could do better. Rather than organising gala celebrations boasting of its strong hold in the segment, Maruti Suzuki focused on making the product more sporty and stylish. Even as it became the fastest car model to reach the 3-lakh milestone in a period of just three years and eight months in February 2009, the market leader came up with the new generation Swift in August 2011. “The motive was to understand what the modern consumer was missing in the Swift and with the second generation of the product, we included all possible changes to make it more appealing to the TG,” says Shashank Srivastava, Chief General Manager – Marketing, Maruti Suzuki.

While many experts argued that there was no need to launch a new-generation Swift as the earlier model was still a category leader with a waiting period running in months, the company had different plans. Perhaps the rising competition in the small car segment forced Maruti Suzuki to go back to the drawing board and look at the bigger picture.

A lot has changed for the market leader over the past few years. Till early last year, Maruti Suzuki always boasted of 50%+ market share but rising labour problems and aggressive launches by the competition have put the company on the backfoot. As per a report from Prabhudas Liladhar, Maruti Suzuki will file an 11% decline in overall volumes for FY 2011-12 standing at 1.1 million units but will bounce back with a 14.8% growth by the end of FY 2012-13 to sell 1.3 million units. Car sales for the company in October were 55,595 units, down by around 53.2% yoy, thanks to the strike.

Needless to add, India has always been a small car market and is expected to tread the same path even in times to come. As per estimates from J.D. Power, India is expected to become the third largest automobile market by 2020 with light vehicle sales expected to touch 11 million units. From the late 1990s where the consumer only had options like Maruti 800, Zen, Santro and Matiz to choose from, the small car segment offers 26 options today in terms of models.
 
Undeniably, as the Indian market has grown in volumes, Maruti has expanded its portfolio to seven hatchbacks and continued its dream run on the perch. But the competition has been eying the huge pie that the market leader holds for long now. Going by the trend in the west, the market leader in the automotive segment holds 20-25% market share on an average. For instance, in the US, the market leader (General Motors) holds 20% market share. “In a scenario where competition is rising by the day, new entrants will corner market share from the biggies like Maruti Suzuki. That has been the way it has happened globally and India is no exception,” said an automobile veteran on conditions of anonymity. From a market share of 52.16% in 2008-09, 50.13% in 2009-10 and 48.74% in 2010-11 in the passenger car segment, Maruti’s market share has come down to 41.23% in FY 2011-12 (April-October). However, the alarming fact is that most of this market share has come from the small car segment, which has been its bread-and-butter for decades. For the uninitiated, Maruti Suzuki held a dominating 56.11% market share in the small car segment at the end of 2009-10, which fell marginally to 55.78% at the end 2010-11. Today, it stands at 45.9% for FY 2011-12. Clearly, competition is gaining, and they are looking to take share from the leader.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Would a car that seems to smile at you make you like it more? Perhaps, but only if a marketer succeeds in making you see the product as human.

It could be a face in the clouds or the side of a mountain, or a pair of ducks that seem to strut around like a happy middle-aged couple. Cars are given names by their owners because they are seen as loyal companions, but a malfunctioning computer is sometimes scolded as if it were deliberately annoying its user. Anthropomorphism – or the tendency to see the humans in non-human forms, animals, and objects – is something that people do all the time.

Marketers often encourage this tendency of consumers to anthropomorphise brands and products. Tyre maker Michelin’s century-old trademark, for instance, is the jolly and rotund Michelin Man that was designed to resemble a stack of tyres. Luxury car Cadillac presented its product with human-like traits in a television ad that shows a Cadillac “crashing” and enlivening a dull party of other luxury cars.

Imbuing products with distinct personalities can be a good strategy for long-term business success – provided that it is effective. Not all objects can be anthropomorphised with equal ease, so the challenge lies in convincing consumers to see the products as human.

When marketers present a product by “humanizing” it in some fashion, consumers call to mind their own idea of what the suggested person should look like. They then assess how well this “schema” matches the features they see on the product. If the consumer perceives a good fit, then that satisfying experience can carry over to the evaluation of the product. A poor fit, on the other hand, can lead to frustration. This is the hypothesis that I and Prof. Pankaj Aggarwal of the University of Toronto examined in our study “Is That Car Smiling at Me? Schema Congruity as a Basis for Evaluating Anthropomorphised Products.”

If people get what you’re doing and if the product seems human to them, it’s like a very satisfying snick in your head. That bumps up the evaluation of the product.

Smiling Cars and a Family of Bottles

In the study’s first experiment, participants were asked to evaluate a car’s newly redesigned look. The cars were presented to them in one of two ways: as a spokesperson speaking in the first person or as an object described in the third person. The participants were then shown a picture of a car that had been manipulated so that its front grill either pointed up in the shape of a smile, or pointed down to resemble a frown.

Participants who were presented the car as a spokesperson were more likely to rate the car as human and to evaluate it more favourably if the car had a smile rather than a frown. Interestingly, smiles were seen as more human than frowns, which is consistent with prior research. By contrast, those that were presented the car as an object were indifferent between the smiling and the frowning cars. We found that participants were more likely to give the car a good review if it seemed more human to them, which emphasises the importance of effectively anthropomorphising a product.

But what if a smiling car gets the thumbs up just because it makes the participant smile and feel good? To rule out the possibility that “behavioural mimicry” may have coloured participants’ evaluation of the car, we conducted another experiment without the smiles and frowns. Instead, participants were asked to evaluate a beverage that was depicted either as a “product family” or a “product line.” They were then shown a picture of four bottles that were either of the same size or of different sizes.
 
It was found that participants were indifferent between the two groups of bottles when the beverage was introduced as a product line, but favoured the different-sized bottles when the drink was presented as a product family. When we say, ‘Think of us as human,’ and we give them the picture that looks like a family, then they love it. But when we show them these same-sized bottles they don’t like it. It just doesn’t seem right. Just like in the earlier experiment, participants liked the product more when its features were congruent with the kind of person the marketer presented. In this case, different-sized bottles seemed to remind them of the members a family, which in turn led to the beverage’s higher evaluation.

We then conducted one final test. What if consumers are able to see the product as human, but it’s just not the type of person they like? For instance, not everyone gets along with his or her mother-in-law, so if a marketer tried to get that image across, people may understand it but they might not necessarily give the product a good evaluation. In this case, the negative feeling associated with that person could override the satisfying feeling from having made the right connection. If it’s a mildly negative schema, it can be sort of washed out. But a really negative schema is probably going to dominate.

To test this hypothesis, experiment participants were shown two beverage bottles of the same size and another two of different sizes. The bottles were presented either as the “good twins” or the “evil twins.” As expected, the results show that participants had no difficulty seeing the same-sized bottles as twins whether they were portrayed as good or bad. However, the beverage was evaluated less favourably when it was depicted as evil.

Still, not all negative representations may get a bad review as long as the marketer does a good job of presenting a product in a way that seems human. Products that are “killers,” for instance, may not always be seen in a bad light, especially when bad breath and bathroom germs are the targets.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned Links

IIPM ranked No 1 B-School in India
domain-b.com : IIPM ranked ahead of IIMs
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IIPM Proves Its Mettle Once Again....
Arindam Chaudhuri on Internet.....
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
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