When innovation is taken too far and brands (like VW) get busted

It won't have escaped anyone in Germany, (nor indeed in Europe and the world at large!) that Volkswagen has badly let down its faithful and loyal customer base. Its admission of deception i.e. tampering with the emissions systems on 11 million diesel vehicles worldwide resulted in an axed CEO, a severe loss in market value and legal proceedings and criminal prosecutions inevitable.

Volkswagen's diesel line for car buyers intent on a balance between performance and clean energy turned out to be too good to be true. This is a sad chapter, maybe even the final one in the story, for a brand voted in the world’s top 100 in 2014, and a coveted winner of many Green and Energy related awards.

Brand values and brand promise implosion aside, Volkswagen's "Das Auto" international strap line (as a recent move away from "the people's car"), might just turn out to be the key phrase that earns it its place as the number one example of a Public Relations disaster in marketing text books of the future. Or will it?

Our research into "Brand Stereotypes" at LRW has shown us time and time again that brands are the culmination of years of interactions and are thus naturally resistant to short-term change. In other words, even a negative interaction/touch point with a brand, such as VW’s Dieselgate, means that it could still take some time for general opinion, including the opinions of brand advocates and loyalists to turn sour. For many, the years of positive brand experiences will still outweigh the recent negative ones for some time to come.

Furthermore, there is a wider question mark (once the media hype has died down and political classes have tired of the story), as to whether future VW sales will actually be dented in any significant way. In the social media age, brand outcry can fast dissipate into faint whimper rather like a deflating balloon, as consumers either quickly forget the bad things associated with the brand or move on to lambasting the next corporate giant about to take a tumble. Others stick with the same brand through inertia or concerted forgiveness and staunch loyalty due to those hard-wired heuristics that enable them to retain favourable brand impressions or attributes. For many people, their car is a brand extension of themselves. It defines who they are, it's part of an emotional purchase and overall relationship, hence deflecting brand criticism and/or denial of brand wrong-doing can easily take precedence over rational acknowledgement that a brand has misbehaved.

That said, violating consumer trust can rapidly change brand perceptions and change our brand stereotypes by encouraging our system 2 "slow thinking" to reappraise the Brand Stereotype. Put differently, our "system 1", gut, visceral reaction to VW may still tell us "reliable", "efficient", "clean", "for the people",  but our "system 2" rational thinking may over-ride the speedy reactions and start to question "how do I really know that?"

Many brands have survived global scandals, corporate failures, malpractice, poor judgment, weak leadership and corporate governance etc. Tesco's staff have recently been promised turn-around bonuses if its sales and profits rise and positive investor sentiment about the brand is fast regaining momentum. The  2010 Galapagos oil spill and media criticism of BP's PR handling of the aftermath has all but been forgotten, and the Amazon's, Google's and Starbucks of the world still have their loyal customer bases, despite consumer awareness of alleged long-standing corporate  tax evasion.

The interesting thing for us marketers and researchers therefore, is why do some brands emerge from a scandal smelling of roses, whilst others dissipate into oblivion? Being too big to fail is certainly one aspect, but better understanding the role of the non-conscious in consumer decision making, better leveraging neuroscience and behavioural economics to understand consumer choices, thought processes and cognitive hierarchies can help to give us some of the answers.

About:

Adele Gritten, LRW (Bild: LRW)

Further releases on marktforschung.de:

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• The Inexorable Intertwining of Two Disciplines
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• Über Innovationen in der "so what?" Company
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