With the GM ignition defect situation, GM passed on turning a crisis management situation into a PR opportunity the size of J&J’s Tylenol recall in 1982.
After poisoning and killing seven Tylenol consumers, J&J took the high road. They swiftly pulled all Tylenol product off retail shelves, costing the company a huge loss in the short term but ultimately creating such goodwill in the long term that J&J is held up as the Mother Theresa of crisis management in business schools. In the Tylenol case, the poisoning was a case of insufficient control and safety procedures for a kind of malicious terrorism not yet seen at that time.
GM’s situation is different. It is possible, and under investigation, that management decisions repeatedly put profit ahead of human safety. Deaths due to the defect have been quoted to number from 13 to 303. It is reported that the fix cost $0.57 per car. Many GM models and brands were affected: Chevrolet Cobalt, Saturn Ions, Pontiac G5s, Pontiac Solstices and Chevrolet HHRs.
The vehicle defect allows the ignition to be turned off and the power steering and the airbag system disengaged WHILE THE CAR IS BEING DRIVEN. GM initially responded with a series of incentives to get affected owners into another new GM vehicle or rental car for 30 to 45 days while repairs are made. The incentive to get affected consumers into a new GM car is $500.
I’m no car junkie, but doesn’t GM have a other auto brands? GMC, Buick and Cadillac, to name a few? Why wasn’t there a BIGger response immediately? They have tons of cars in inventory right? I’m not suggesting free cars to affected GM car owners…but maybe close. A big statement like 100% of your purchase price of your Cobalt towards another GM car? Not a popcorn fart like a $500 incentive.
Or learn from J&J: Put consumer safety first, and if we screw that up, then act fast with a BIG fix. There have since been a number of GM recalls since the story broke, one the eve of Mary Barra’s testimony to Congress on this defect looks extremely reactionary. In total, GM has recalled 6 million vehicles. I don’t need to elaborate on the impact to GM stock:
In the realm of risk management, there are less sure bets out there. J&J has already set the example with their swift recall – their share of the $1.2 billion analgesic market was recaptured only one year after the poisonings. The positive brand halo effect after J&J’s response to the Tylenol poisoning debacle has carried on for decades.
GM could’ve turned lemons into lemonade. They could have bumped J&J from their exalted position in the crisis management Hall of Fame by immediately responding in a BIG way to this BIG problem.
A quick, appropriately BIG response, a little marketing and who knows…? It all could have been made so much sweeter for GM, their investors and their consumers.
the marketing lunch 