Crisis communication: the Samsung case

8 November 2018
Crisis communication the Samsung case

Crisis communication: the Samsung case

We all know the Korean electronics giant Samsung. We have all seen at least one of its products, whether it is a mobile phone, a television, a connected device, or all the other products manufactured by a company that has become one of the largest in the world. We also heard rumors about the multiple lawsuits between Samsung and Apple, about the alleged copying of each other’s designs and patents. In short, we know the Samsung company, for whatever reason, it would even be difficult to miss it.

But since the release of the Galaxy Note 7, its latest smartphone model, which aims to be the most advanced of its entire range, the Korean giant has never had to face such a turmoil. Since this release last August, Samsung has been going through a real ordeal that is being woven between several communication failures, major technical problems and many other problems that are hurting a company for which, until now, everything has worked perfectly. In the following, we summarize the Samsung corporate scandal, a scandal that is proving to be a true textbook case in which we all, business leaders and senior executives, have lessons to learn.

A successful exit, the beginning of a well-managed crisis

As soon as it was released, the latest Samsung smartphone was presented as a real revolution both by the brand and by analysts and specialists in the sector: “the best Android phone ever designed,” said even an American journalist from the highly respected American newspaper in the world of new technologies, The Verge. Apple must have even trembled in front of this new device which had no other purpose than to dethrone the Apple device. The order books were full, extremely well filled, in all four corners of the globe. Except that the launch of Samsung’s latest product did not go as planned at all.

Only a few days before the unveiling of the device and its release on markets around the world, we could already see photos of the device burnt, charred, faded, faded, photos widely relayed on the Web and more precisely on social networks. It was on China’s best-known social network, Baidu, that the pictures made their first appearance, which helped to panic the web in just a few hours. Just imagine: the launch of the device had not yet taken place, it was still impossible to acquire the phone that already, the rumor was spreading that this device was dangerous. A catastrophic situation for the Korean giant!

Samsung’s reaction was not long in coming: as of 1 September, the company admitted to being aware of 35 proven cases of an explosion of its Galaxy Note 7. It also announces that many other tests will be carried out on the model to try to find out more about the reasons and causes of these explosions. The company is still trying to calm the situation: only 0.1% of the devices in circulation would be affected by this risk of explosion, which is a tiny fraction of all the devices on sale. And to further reassure, the Korean giant even offers first-time buyers a replacement of their equipment. In short, the company reacted quickly, perhaps in the best possible way, to put out a fire that had started very quickly.

A willingness to persist despite the scandal avoided

But despite the company’s unbeaten start to crisis management, the rest of the events are far from being as brilliant. Indeed, after the announcement effect of these explosions, everyone thought that Samsung would ease off on the grandiose communication initially planned around the Galaxy Note 7. Indeed, despite a scandal that was quickly avoided, it was wiser for the brand, and according to all analysts and specialists in the sector, to break on communication to avoid rekindling the flames of the scandal. But Samsung does the opposite: giant ads in every major city in the world, a dedicated homepage on its website, advertisements in every existing media… The Galaxy Note 7 is displayed everywhere and in every format! One would almost think that nothing has happened to this model, announced with great fanfare.

But, if we look more closely, it must be said that Samsung had no choice, in its crisis communication, but to continue to appear despite a scandal that was narrowly avoided: indeed, competition with Apple is such that lowering its communication means losing ground over the Apple competitor. A loss of ground that can be synonymous with a loss of leadership. Something truly unthinkable for the Korean company.

Problematic consequences for the brand

The consequences of this scandal, which had just been avoided, and of the brand’s desire to persist in its communication policy were not long in coming: as of September 10, just a few days after the launch of the device on markets around the world, Samsung was obliged to ask all owners of the Galaxy Note 7 to turn off their device and no longer charge it, to avoid the risk of explosion. Two days later, it is no longer only users who are suspicious, but also stock prices: Samsung’s share price is losing 7% of its value, which is causing nearly €14 billion of capitalization to disappear in a single session.

Samsung’s apparent mistake in this situation and in setting up its crisis communication is to have made users think that Samsung itself did not know how many phones were affected by the failure when, at first, the figure was given, a sum of only 0.1% of the devices sold that were subject to an explosion risk. This error is central, perhaps even the one that has put Samsung in a more than perilous situation: faced with a geek community eager for information and gossip about brands, Samsung takes a fragile position, without stating things, without saying what it really is and subjecting all consumers to concern and fear about their Galaxy Note 7 mobile phone. This error will not stop harming the company: according to AFP, the loss of profit for the Korean company could be as high as €800,000,000, considerable damage, the largest in this sector since the fall of Nokia. The big winner, in this case, is Samsung’s direct competitor, Apple. Without doing anything, she sees Samsung being caught up in a global scandal that is still in the headlines.

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