Teaching Note BBP Prerequisite Conceptual Understanding. Synopsis of the Case Study BBP0113-1

Transcription

1 Teaching Note Prerequisite Conceptual Understanding To understand the ways to react during crisis times to break the fear and to communicate the company s plans so as to rebuild confidence among stakeholders Murphy Sean K., Crisis Communications and Your Corporate Reputation: Maintaining Reputation In These Turbulent Times, the presentation given at The Conference Board, Chicago Illinois, October 21 st 2008 To understand the method of communicating the viewpoint of the company to the mass media during crisis period Zerman David, Crisis communication: managing the mass media, Information Management & Computer Security, Vol. 3, No. 5, MCB University Press, 1995, pages To understand how to maintain public relations during the troubled times Ashcroft Linda S., Crisis management public relations, Journal of Managerial Psychology, Vol. 12, No. 5, MCB University Press 1997, pages Synopsis of the Case Study Set in late 2009 and intended to teach a course on Brand Management, this case study attempts to delve into the one of the factors that could destruct the brand equity of a celebrity brand ambassador. Examining the Tiger Woods scandal, it raises an interesting debate on the immediate steps to be taken by both company and the brand ambassador to protect and rejuvenate the dying image of the brand. Tiger Woods heroics on the golf course made him a sporting icon and an ideal brand ambassador. As a brand ambassador, he made more than one billion dollars in career earnings after turning pro in But in November 2009, a sex scandal broke out and seems to have affected his position as a celebrity brand ambassador. Several companies, brands or products that he sponsors decided to rethink their relationship with him and investors in companies that he sponsored also seemed to have lost money. But Tiger Woods was quick to implement specific measures to redeem his position as an ideal brand ambassador. If his off-the-golf-course behaviour in the coming days is good, his performances on-the-golf-course will decide whether he regains his position as a leading brand ambassador. At the end, the case study presents two dilemmas: (i) what is the fate of brand equity when the brand ambassador comes under close scrutiny of media for the wrong This teaching note was written by Manoj Sadasivan and Prashanth Vidya Sagar Thalluri under the guidance of Dr. Nagendra V Chowdary, IBSCDC. It is only an illustrative orchestration of the case study. It is never meant to limit the learning outcomes. 2010, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner. 1

2 reasons? and how should the company and the brand ambassador respond to protect the dying brand image? Pedagogical Objectives To understand the making of a celebrity brand ambassador with a special reference to Tiger Woods To examine the impact on the equity of a brand ambassador and the companies, products or brands he or she endorses, particularly when the brand ambassador hits the media for the wrong reasons To discuss and delve into the crisis management strategies to be adopted by the companies to protect, rebuild, revitalise and rejuvenate the lost prestige of the brand in the face of dying image of brand ambassador Teaching Plan The Teaching Note and Structured Assignment of the case study follow a specific Teaching Plan mentioned in Annexure (TN)-I. Assignment Questions I II III IV V How did Tiger Woods become an ideal brand ambassador? Why did the car accident receive widespread press coverage and blow the lid off a full-fledged sex scandal? Why did the sex scandal that broke out in November 2009 affect Tiger Woods position as a brand ambassador? When the brand is engulfed in the turmoil, what steps are to be taken to protect it? What is the reaction of investors and the general public to the Tiger Woods scandal and how the brand protection strategies are adopted by Tiger Woods and the sponsoring companies during this turmoil? Case Analysis The case analysis can be started with the following discussion: I. How did Tiger Woods become an ideal brand ambassador? Tiger Woods has had an outstanding career as a professional golfer. After turning pro in 1996, not only did he win many tournaments, he also broke many long standing golf records. 2

3 His breathtaking performances on the golf course propelled him onto the status of a golfing God. He had also taken care to maintain his brand image off the field early in his career. His marriage to a glamorous model added to his celebrity status. He also set up the Tiger Woods foundation for social work. Breathtaking performances on the golf course and good image management off the golf course ensured his emergence as an ideal brand ambassador. II. Why did the car accident receive widespread press coverage and blow the lid off a full-fledged sex scandal? The accident received widespread press coverage because it was no ordinary accident. News reports claimed that Tiger Woods and his wife fought over his many extra-marital affairs and as he tried to flee in his car, his wife chased him with a golf club and smashed the car windows. The car hit a fire hydrant and a tree outside their home and Woods suffered minor injuries. Some reports suggest that two drugs, Vicodin and Ambien, might have had an influence on the car accident. Soon after the accident, Tiger Woods, one of the most well known sportsmen in the world, vanished from public view. III. Why did the sex scandal that broke out in Nov 2009 affect Tiger Woods position as a brand ambassador? Two weeks after the scandal broke out, one of his sponsors Accenture Plc. announced that it was ending its 6-year sponsorship arrangement with the golfer. "Given the circumstances of the last two weeks, after careful consideration and analysis, the company has determined that he is no longer the right representative for its advertising," Many other sponsors also felt that people will not want to be identified with a company or brand or product that a sportsman with a shameful record of off-the-field behaviour sponsors. Most of his sponsors either terminated their endorsement contracts with him or decided to rethink their contracts. After presenting the details of the Tiger Woods scandal, the faculty are suggested to discuss the key steps that are to be taken into consideration while preparing a strategy to protect the brand image during the crisis times, for which the following details may help. IV. When the brand is engulfed in the turmoil what steps are to be taken to protect it? When a brand is engulfed in turmoil, it needs to be protected by calming the storm. The resiliency model 1 of crisis management provides the basic guidelines to be adapted 1 Murphy K. Sean, Crisis Communications and Your Corporate Reputation: Maintaining Reputation in these Turbulent Times, the presentation given at The Conference Board, Chicago Illinois, October 21 st

4 immediately as First Aid to revitalise the brand. The resiliency model insists on the following steps: 1. Objectively assess the threats and strengths of the brand so as to help in shoring up weak points and playing to strengths 2. Keep talking without stopping. Effective communication can succeed only if expectations are better managed. If you do not talk and manage expectations, other will speak for you and rumours will gain credence 3. Maximize visibility and relay a sense of confidence 4. Focus on staff and supporters. It is important to maintain high morale by keeping supporters well informed 5. Ensure consistency while communicating with multiple audiences 6. Adopt campaign tactics such as rapid response, risk communications, message grids, war rooms and online crisis management tools 7. Make communications work smarter. The resiliency model gives simple yet powerful psychology of crisis management. However, it is to be noted that when a big brand hit the media for wrong reasons, the media starts cashing on that by publishing exaggerated stories on the turmoil engulfing the brand. So it is very important to effectively manage the media in a crisis situation. A crisis communication program should ideally include ten fundamental procedural elements: 1. Assign an authorized spokesperson and one back-up person who both have media credibility and can be contacted anytime 2. When disaster strikes, do not delay and act promptly 3. Permit safe access to the disaster area to have the media on your side 4. Do not deny a crisis that actually exists and remember that silence implies guilt 5. Do not speak, or, disclose, or provide any such information that may hurt stakeholders and the community 6. Do your bit to console the affected and reassure the community 7. If possible, set up a suitably equipped media cell 8. Have a definite plan for monitoring the media during the crisis 9. Keep all stakeholders well informed 10. Don t forget to thank those who helped. 4

5 Thus, to sum up, when a brand is engulfed in turmoil, it should be protected by adopting the below mentioned basic measures to protect, reinvent, rejuvenate and to revitalise the brand image. 1. Keep communication channels open and all stakeholders well informed 2. Formulate a clear cut strategy to tackle the crisis 3. Act with confidence and implement the strategy effectively 4. Keep the media on your side throughout the crisis. Once the basic steps that are to be adopted immediately after the onset of crisis times are understood by the students, then the faculty has to compare, contrast and analyse the steps taken by Tiger Woods and the sponsoring companies in the face of Tiger Woods scandal. The following discussion helps in analysing the case with respect to these strategies. V. What is the reaction of investors and the general public to the Tiger Woods scandal and how the brand protection strategies are adopted by Tiger Woods and the sponsoring companies during this turmoil? Investor Response The researchers figure the scandal reduced shareholder value in the sponsor companies by 2.3%, or about $12 billion. (This) pattern of losses is unlikely to stem from ordinary day-today variation in their stock prices (page 8 para 2 of the case study). This argument was even supported by a study conducted by two economics professors at University of California, Davis, (UC Davis) which claimed that sponsors seem to have lost anything from $5 to $12 billion since reports of his extramarital affairs broke out (page 8 para 2 of the case study). However, some investors opine that it is the personal and private matter of Tiger Woods and that there is no need for the media or the companies to involve into his personal life and blaming him for the beleaguered brand image. However, some people disagree with the extent to which celebrities are entitled to privacy. So there is no question in arguing that the companies are blaming him for the declining shareholder value. Since stock prices frequently vary by 2% 4% even without any scandal or fortune on many trading days, it is impossible to attribute these declines specifically to the scandal. It can be argued that the companies will not be affected if they abandon Woods and find a new brand ambassador. 5

6 Public Response Tiger Woods supporters and the community seemed to be outraged by the media exposes. They watched in disbelief as the superstar vanished from public view and his private life fell apart. However, the public reaction made media quickly turn sympathetic to the fallen idol and it started keeping the public well informed of the progress Tiger Woods was making in rebuilding his career. By end January 2010 Woods seemed to be on course to rebuilding his career and life. He has opened his communication channels with the public and the media is strongly backing him. He has succeeded in calming the storm according to the resiliency model. In the face of such mixed reaction from investors and general public, it would be difficult to formulate and execute a clear cut strategy, keeping communication channels open and all stakeholders well informed, acting with confidence and keeping the media on your side throughout the crisis. But in the case of Tiger Woods scandal both Tiger Woods as well as the sponsoring companies have implemented the strategy in their own way. Strategy of Tiger Woods Tiger Woods did not keep his communication channels open. Soon after the car accident he simply vanished from the scene after issuing a statement on his website saying that the car accident was his fault and admitting to cheating on his wife. Since he did not speak out, others spoke for him giving credence to rumours. All stakeholders were kept well informed by a hostile press. He failed to keep the media on his side during the crisis. But he did formulate a clear cut strategy to tackle the crisis and acted with confidence to implement the strategy effectively. He decided to take a temporary break from golf and checked into rehab. This act of his sent a positive message that he is genuinely interested in rebuilding his life and career. At the same time he also chalked out a definite plan to start playing again in April His brand was built on the golf course it will be the golf course that decides whether going into rehab has indeed changed his image and life. Strategy of Companies When the Tiger Woods scandal broke out, companies adopted a wait and watch approach. Nevertheless, most companies suspended their advertising campaigns featuring the beleaguered star. After two weeks, some sponsors decided to sever their ties with Woods while others decided to wait and watch for a few months. This wait-and-watch strategy is likely to continue till mid 2010 when Woods makes his comeback. By mid 2010 companies will be in a position to decide firmly on the future of their relationship with Woods. 6

7 It is mentioned, Accenture tag-line is worth emphasizing. It calls Tiger Woods a symbol of high performance, not a symbol of personal rectitude, or marital excellence. 2 The technology outsourcing and consulting firm Accenture Plc., said that it was ending its 6-year sponsorship arrangement with the golfer by stating, Given the circumstances of the last 2 weeks, after careful consideration and analysis, the company has determined that he is no longer the right representative for its advertising" (page 7 para 2 of the case study). This decision by Accenture even attracted criticism from market analysts who opine that it is a bad decision on part of Accenture to drop him for the allegations. It is obvious that Accenture had failed in managing the turmoil according to the resilience model and even failed to comply with the fact that one should not deny a crisis that actually exists and remember that silence implies guilt and Do not speak, or, disclose, or provide any such information that may hurt stakeholders and the community. However, it was not the case with other endorsing companies. Investors in the three sportsrelated companies (including) Tiger Woods PGA Tour Golf, Gatorade, and Nike fared the worst (page 8 para 2 of the case study). Despite this, Nike, PepsiCo's Gatorade and Electronic Arts stated that they would continue to support and unite with their commercial icon during this turbulent time (page 7 para 2 of the case study). One thing is to be considered crucial in the crisis times. Companies, brands or products endorsed by the fallen hero should not rush to tear up their contracts. They should probably temporarily suspend their advertising and promotional campaigns featuring Tiger Woods and wait for the storm to die down to get a clear picture of the scenario emerging. If Tiger Woods succeeds in rebuilding his image and career, the companies should reconsider their decision to suspend their promotional campaigns featuring him. If Tiger Woods does not succeed in regaining his lost reputation, the companies should consider shifting to some other celebrity endorser. After this discussion, the faculty can ask the student to draw out various strategies to be followed by Tiger Woods to redeem his position as a leading brand ambassador. The Specific Measures that Tiger Woods Should Undertake are: Tiger Woods should chalk out a definite strategy for redeeming his position as a leading brand ambassador. He should enter rehabilitation, do social work, manage his PR and then start playing better than ever before. If Woods enters rehab, it will be seen as a positive step in rebuilding his brand image. He should also try to participate in leading talk shows and make demonstrations of public remorse. Social work through the Tiger Woods Foundation should be highlighted through events, press releases and news conferences. The brand s reputation was earned on the golf course and that is a major source for strength of the brand 2 Why Tiger Woods Should Be Left Alone, November 30 th

8 in the future. Breaking golf records will place the Tiger Woods brand into an untouchable pantheon. Redemption should be won on the fairway and green! While concluding this discussion, the faculty may ask the students to summarise the classroom discussion, which should coincide with the Big Picture. Big Picture What happens to the value of a brand, product or company when its brand ambassador s value and reputation falls due to his or her coming under close scrutiny by the media for the wrong reasons? How the brands can respond to such a situation? Final Thoughts The Tiger Woods sex scandal of 2009 provides a classic framework for analysing the impact of adverse publicity on the equity of a brand ambassador and the effectives of various brand ambassador management measures in crisis times. Before his marriage, Tiger Woods could exceedingly well manage his equity and attractiveness as an ideal brand ambassador. However, in the face of breaking out of the scandal and separation from his wife, how should he go about managing his image as a brand ambassador? Additional Readings Rawlinson Richard, Beyond Brand Management, strategy+business, Issue 43, Booz & Company, May 30 th 2006 Joachimsthaler Erich, and Aaker A. David, Harvard Business Review On Brand Management, Ideas with impact, Volume 4, (ISBN , ), Harvard Business Press, 1999 Understanding the issues in branding Aaker A. David and Joachimsthaler Erich, Brand Leadership, Free Press, 2000 To understand the importance of brand ambassadors McEwen J. William, Don't Neglect Your Brand Ambassadors, Gallup Management Journal, Gallup Press, August 9 th 2007 To understand the ways to build an effective brand Neumeier Marty, The Brand Gap: Expanded Edition, Peachpit Press, 2 nd edition, (ISBN-10: ; ISBN-13: ), August 14 th

9 Annexure (TN)-I Teaching Plan Case Structure Teaching Note Flow What I want to analyse? 1. Overview 2. Rise of Tiger Woods as a Brand Ambassador 3. The Tiger Woods Scandal 4. Fall of Tiger Woods as a Brand Ambassador 5. Lessons in Brand Management in Crisis Times Course: Marketing Concept: Brands & Branding Key Focus: Brand Management in Troubled Times Prerequisite Conceptual Understanding To understand the ways to react during crisis times to break the fear and to communicate the company s plans so as to rebuild confidence among stakeholders Murphy Sean K., Crisis Communications and Your Corporate Reputation: Maintaining Reputation In These Turbulent Times, the presentation given at The Conference Board, Chicago Illinois, October 21 st 2008 To understand the method of communicating the viewpoint of the company to the mass media during crisis period Zerman David, Crisis communication: managing the mass media, Information Management & Computer Security, Vol. 3, No. 5, MCB University Press, 1995, pages To understand how to maintain public relations during the troubled times Ashcroft Linda S., Crisis management public relations, Journal of Managerial Psychology, Vol. 12, No. 5, MCB University Press 1997, pages Big Picture What happens to the value of a brand, product or company when its brand ambassador s value and reputation falls due to his or her coming under close scrutiny by the media for the wrong reasons? How the brands can respond to such a situation? Rise of Tiger Woods as a Brand Ambassador 1. Who is Tiger Woods and what is he famous for? 2. How successful has been his career path? 3. How did Tiger Woods become a celebrity brand ambassador? The Tiger Woods Scandal 4. What was the problem that Tiger Woods underwent? 5. What are the details of the so-called scandal? 6. What are the personal relationship affairs that came to be dubbed by media as a scandal? Fall of Tiger Woods 7. What are the repercussions of the Tiger Woods scandal? 8. How can inacceptable social conduct affect a person s celebrity status? 9. Why the fall of a celebrity does usually leads to a loss of personal endorsement income? 10.How can the fall of a celebrity possibly result in losses to investors in companies, products or brands that he/she sponsors? 9 9

10 Strategic Alternatives for Tiger Woods to Revive the Brand Image 11. What are the immediate steps to be taken by the company to protect the dying brand equity? 12. What measures can a disgraced celebrity adopt to regain his/her status as a brand ambassador? 13. How should companies react to the situation created by a scandal involving their celebrity endorser? 10 10

11 Pedagogical Objective To understand the making of a celebrity brand ambassador with a special reference to Tiger Woods To examine the impact on the equity of a brand ambassador and the companies, products or brands he/she endorses, particularly when the celebrity brand ambassador hits the media for the wrong reasons To discuss and delve into the crisis management strategies to be adopted by the companies and brand ambassadors to protect, rebuild, revitalise and rejuvenate the lost prestige of the brand in the face of dying image of brand ambassador Prepared by the author Classroom Deliverables Discussing the concept of brand ambassador Analysing the factors contributing to the making of a celebrity endorser Debating the importance to the brand equity of individual brand ambassador Understanding the making up of Tiger Woods as a celebrity brand ambassador. Presenting the facts on the so-called Tiger Woods scandal Analysing the impact of adverse publicity that a brand ambassador receives on the equity of the brand ambassador Analysing the impact of adverse publicity that a brand ambassador receives on the valuation of companies, products or brands that he or she sponsors. Understanding the concept of crisis management Debating the strategies that can be adopted by companies to face the situation in which its celebrity endorser get adverse media coverage Discussing the strategies that can be adopted by a celebrity brand ambassador to redeem his or her brand image. 11