Fixing Rep Of A Brand That's Too Big To Fail

Johnson & Johnson's handling of the cyanide-laced Tylenol crisis of 1982 is required reading for every business school marketing and public relations course. A bizarre and terrifying case of sabotage that ended up claiming the lives of seven Chicago residents, the Tylenol murders could have decimated the company. But an effective and compassionate public relations strategy saved J&J, and paved the way for its reputation as a reliable and respected brand. As recently as 2008, Johnson & Johnson topped Barron's list of most-respected companies. In PR circles, this is the stuff of legend.

Fast-forward to 2011, and the company's reputation has become anything but legendary. Over the past two years, Johnson & Johnson has recalled more than 200 million individual products, from over-the-counter meds to surgical sutures and syringes, costing more than $900 million in lost revenue. News that broke this week indicates that J&J has now agreed to pay $70 million to settle civil and criminal complaints of bribing doctors in Europe and paying kickbacks to the Iraqi government to illegally obtained business.

Most distressing is the company's PR response to these ongoing troubles. The same Johnson & Johnson that was so progressively out in front of the 1982 crisis is now paying consultants to buy questionable products from store shelves rather than institute a recall, and is positioning various product problems as isolated incidents related to conditions at the manufacturing plants, not corporate governance. Can consumers continue to trust a company that acts in these ways?

Too Big to Fail?

Yet, for all of its quality control problems and recent PR mishandling, Johnson & Johnson will likely weather this particular storm, and continue to be one of the foremost names in pharma and consumer products. In PR terms, it may be a brand that's simply too big to fail.

Proving itself as a company with its own crisis management creation myth (circa 1982) goes a long way toward explaining its resilience. Good, effective PR is in its DNA, and more importantly, lodged in the consciousness of its loyal consumers. Recent missteps aside, J&J will compose an appropriate response to its consumer-related challenges, and emerge from this string of recalls and product questionability as a company willing to dialogue with the public and address issues transparently. CEO William Weldon's response to the bribery settlement ("We ... have taken full responsibility for these actions") is a baby step in the right direction. The company's March announcement that the FDA will have expanded oversight of three of its subsidiary manufacturing plants is a bigger step.

We've Seen This Before

It's true that a brand that has staked so much on its reputation has much to lose in situations like the one J&J finds itself in. But it's also true that brands as large as J&J -- even ones without a similar PR aura -- are likely to survive such situations in today's public relations environment, particularly in relation to corporate corruption. Siemens, the global engineering conglomerate, paid record fines for bribery in 2008, and yet is still among the world's largest and most recognizable brands. Computer Associates underwent a similar corporate fraud investigation in 2004, and although that company's CEO pleaded guilty to federal charges, the brand itself is as strong as ever. And BP's 2010 Gulf of Mexico nightmare? It's almost as if it never happened.

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Why Baby Boomers Matter for Luxury Marketers

Today, I'm re-posting an article by Elizabeth Zelesny from Luxury Daily as it addresses a topic near to my heart - mobile! (And because in it, Ms. Zelesny most graciously chose to quote me.)

Luxury brands and retailers are preparing for the future by targeting young, affluent consumers with their marketing initiatives. But when it comes to luxury spending via mobile and online, what about the baby boomers?

Although the times are changing, and many in the young, affluent Generation Y consumers are spending as much as the baby boomer generation, it is still important for luxury brands to target the older market. Luxury marketers must understand the unique desires and differences between both the under 40-year-olds and over, especially in the mobile space and online.

“I think it’s incredibly important for luxury brands to target baby boomers via mobile because it’s such a perfect demographic,” said Lauren DeLisa Coleman, a New York-based socio-political digitalist and president of Punch Media Group.

“Here you have a population which turned 46- to 64-years-old in 2010, thus typically more affluent than their younger counterparts and in a better economic position, at least in theory, to actually purchase rather than aspire to luxury brands.

“Younger boomers are also making more and more smartphone purchases, so it’s a beautiful way to engage them on a platform that is always on,” she said.

Boomer consumers
Baby boomers were the first television generation and, later, the first PC generation. Now, they are mobile users.

This demographic uses technology differently than younger generations and luxury marketers need to understand their digital habits.

A new report by eMarketer titled “Digital lives of Boomers: Reaching them Online,” found that 78 percent of boomers are online, when is nearly 60 million adults.

Even as the baby boomer luxury consumers numbers decline, the eMarketer report said the penetration rate will remain high through 2015.

According to the report, the baby boomers control more than $2 trillion in annual spending.

Boomers spend more time and money online than any other demographic.

Young boomers, ages 47-55, spend about an average of 40 hours per month online, according to eMarketer.

Older boomers, ages 56-65, averaged only slightly less, at 36 hours per month online.

This is vital information for luxury brands and retailers because it is not just the tech-savvy, Generation Y consumers buying high-end products via mobile and online.

The baby boomer generation is tech-savvy, too. And they shop online.

Forrester Research reported that boomers spend an average of about $650 online over a three-month period in 2010, compared with $581 by Generation X Internet users ages 35-46 and $429 by Generation Y consumers, ages 18-34.

Baby bloomers
Boomers may be slower to embrace mobile applications than their early-adopter counterparts, but as the smartphone matures, the baby boomer generation has come around to the power of both mobile applications and the mobile Web.

“Media makes fun of boomers being slow adopters of tech, but that’s not generally true,” said Vanessa Horwell, chief visibility officer of ThinkInk, Miami Beach, FL.

“The generally accepted wisdom of effective apps applies to boomer appeal as well: ease of use, attractive, responsive and intuitive interface, relevance and utility and a low or free, download price point all resonate with boomers and users in general,” she said.

“An app that telegraphs its utility – particularly if it’s a branded app – will gain the most traction with this lucrative market.”

Many luxury brands have developed mobile applications in which a game is involved. These marketers, it would seem, are targeting the younger affluent consumers.

How should luxury brands target the older consumers with their mobile applications?

To continue reading Ms. Zelesny's article at Luxury Daily, click here.