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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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The first section of this essay provides the background of Samsung and its current crisis. My recommendations in the memorandum are based on concepts in social psychology. Therefore, I will use this section to elaborate on those theories. My first recommendation is substantiated by Hon and Grunig's (1999) Trust model, followed by the second recommendation being backed by the ‘Image Repair Theory,' which has been posited by Benoit (1997). Goffman's (1974) ‘Framing Theory,' throws light on my last recommendation.

Communicate by making a public statement to portray transparency and rebuild public trust

Public trust is highly important and is necessary for a company to be more efficient and successful (Rawlins, 2007). As per Mishra (1996), trust can be defined as, “one party\'s willingness to be vulnerable to another party based on the belief that the latter party is 1) competent, 2) open, 3) concerned, and 4) reliable.” Hon and Grunig's (1999) trust model suggests that trust is multidimensional, consisting of three dimensions. They are integrity, dependability and competence. Integrity demonstrates an organisation's fairness, dependability is the belief that an organization will fulfil its promises and lastly, competence is the belief that an organization is capable of fulfilling its promises (Hon & Grunig, 1999).

With regards to Samsung, it has had a good reputation and has been trusted by the public in the past. Delving into the three dimensions, Samsung had integrity because it had always been customer oriented and produced stellar products for its customers. It has been a dependable company as it had made promises and delivered on its promises consistently. Lastly, Samsung has been competent because it kept inventing new products with improved technology and lived up to the expectations of its consumers.

The occurrence of the crisis has resulted in damage of Samung's reputation and loss of people's trust in the company. Since trust is linked to organizational reputation (Burke, Martin & Cooper, 2011), it is essential to be vigilant and work on repairing both because reputation eventually affects sales and market value. According to Kramer and Tyler (1996), the vulnerable aspect of trust increases during times of crisis and the violation of trust could be perceived as betrayal by the stakeholders (Kramer & Tyler, 1996). This is why, crisis communications are essential and Samsung should immediately take a step to reach out to its shareholders. As per Laroche, Habibi & Richard (2012), consistent sharing of information leads to lessening of uncertainty, which results in trust enhancement. This is why Samsung needs to remove uncertainty and cynicism from people's minds and disseminate official information via the press conference and social media. This will reduce the impact of the feelings of betrayal amongst the audience because of Samsung's instant response and openness. According to Cappella and Jamieson (1997), the way in which news is communicated directly affects public mistrust of companies. A press conference will give a personalized feeling because of the voice of the spokesperson, but merely this will not suffice. Since it is the age of the internet and social media is dominating the outreach of spreading news, it will be a good platform for Samsung to use in order for mass communication. The idea of letting people leave comments will give Samsung feedback, as well as seek what the grievances of its customers are.

Mallon (2013), makes a few suggestions on what a company should not do while building customer goodwill. A few of Mallon's (2013) suggestions include being honest and transparent to increase credibility of the brand, being consistent with one's actions and strategies to be a solid brand and responding promptly to customers to portray customer orientation. Samsung can focus on these points while delivering its statement at the press conference and going viral on social media. Being open and accepting its mistake of selling a faulty product will make Samsung seem reliable. This step will also provide clarity to the public and will help avoiding false rumours from spreading. Actively responding to customers via social media platforms and at the press conference will exhibit Samsung's empathy and care for its customers.  

Crisis Management – Offering a compensation scheme to maintain the company's reputation and maintain public trust

Since Samsung's reputation is at stake after this crisis, I have recommended that a compensation scheme should be offered by the company to all the victims. This proposal can be explained using Benoit's (1997) image repair theory. Benoit and Pang (2008, as cited in Kessadayurat, 2011), defined image as “a subjective impression of an organization formed through one's experience with that organization and interpretation is based on other past experiences” (p. 245). As this very definition suggests, due to its past, Samsung has constantly delivered good products and services, giving it a good reputation.

The need for image repair comes in when an undesirable event occurs, which is likely to be uncharacteristic of the organization if it has a good status. In today's society, image is of prime importance, which is why any threat to reputation should be recovered immediately. According to Berger and Luckmann (as cited in Kessadayurat, 2011), image restoration is the creation of a “new reality,” which can be created by the information communicated from the organization to others. The organisation's use of communication is crucial to restore an organisation's image as it helps the public understand and form experiences which it then associates the organization with (Kessadayurat, 2011). Samsung has to act quickly and compensate its victims and create a new reality of compensation rather than people still thinking about the incidents of combustion. This can be done by offering the compensation schemes which will be directly communicated by the customer service executives to all the victims. Samsung will then be associated with a company that shows care and loyalty towards its customers.

Repairing a corporation's image could be done using the strategies proposed by Benoit (1995, as cited in Kessadayurat, 2011). These strategies include evasion of responsibility, reducing the offensiveness of the act and mortification. (Benoit, 1995, as cited in Kessadayurat, 2011). Applying these propositions to Samsung, evasion of responsibility can be used by Samsung by claiming that the combustion of the Galaxy Note 7 was merely an accident and that it was a one off product failure which will not happen again. Reducing offensiveness of the act is a strategy that is being used by Samsung by offering a compensation and reaching out to the victims, which provides them with reassurance from the organization. Lastly, by apologizing and seeking another chance, Samsung has used the strategy of mortification which exhibits transparency, rebuilds trust and results in the eventual restoration of Samsung's reputation.

Coomb (1998, as cited in Holtzhausen & Roberts, 2009), suggests that the response to crisis situations also depends on the degree of control of the organization over the crisis. Since in the case of Samung, this is an accident, the audience will perceive Samung to have a high level of personal control over the situation. This is why, using the strategies of mortification and reducing offensiveness of the act can act in Samsung's reputation's favour eventually. Being honest with the public and taking remedial measures will help improve Samsung's reputation and maintain its customer base. This is because the coupling of various image restoration strategies indicates the usage of separation, which aims at isolation from the crisis responsibility (Holtzhausen & Roberts, 2009). By Samsung's public apology and its compensation scheme, the occurrence of isolation from the crisis responsibility is taking place automatically.

While this theory is extremely relevant, it does make very extreme assumptions. Benoit (1997, as cited in Muralidharan, Dillistone & Shin, 2011), assumes that individuals as well as organizations that have stake in a corporation tend to care excessively about image and its positive projection in the public eye.  Despite the fact that these assumptions are relevant, this may not always be the case. It could be possible that people without a stake in a company are also focused on image. This is why this theory cannot be considered and applied in all crisis situations. Kessadayurat (2011), also states that most studies on image restoration have been based on western theory. This is why adapting this theory to other cultures and contexts may not always be feasible.

Phasing out the Galaxy Note 7 and marketing an upcoming model

Goffman's (1974) ‘Framing Theory,' provides a coherent understanding for my third recommendation. Entman (1993), describes the concept of framing as, “to select some aspects of a perceived reality and make them more salient in a communicating text, in such a way as to promote a particular problem definition, causal interpretation, moral evaluation, and/or treatment recommendation.” Samsung will have to use this theory and focus mainly on the “treatment recommendation.” This is why I have suggested that Samsung should phase out the Galaxy Note 7 and promote its upcoming model. As the marketing team promotes the new phone model by the means of a video, the media's attention will be focused on it.

As seen in Entman's (1993) defintion, frames tend to possess four functions which deal with the issue at hand. They are - defining the issue at hand, diagnosing the reasons behind it, evaluating the issue and lastly, offering remedies. Applying this to Samsung, the issue at hand is that the Galaxy Note 7 is a flopped product and has caused unrest amongst the public due to incidents of combustion. In order to diagnose the problem, Samsung has to investigate into the matter and find the cause of the problem for two main reasons. The first one being accountability towards its shareholders and the victims and also so that the same technical error is not made again. Evaluating this situation would involve knowing the effects of this incident, which happen to be a loss of public trust and a drop in the company's reputation. Hence, as a remedial measure to save the company and regain a positive response from the public, marketing a new phone would be ideal so that everyone is focused on perceived reality of the new phone. A crucial point to be noted by Samsung is that the audience's perception is based on the frame provided to them, which means that information that is included and removed is essential while framing (Entman, 1993).

People generally organize their thinking in two ways - cognitively and culturally (Reese, Gandy & Grant, 2001). Cognitive thinking is linked to psychological biases and fosters one's mind to think of a situation in a certain way. This is why, the media's influence on the audience to focus on the importance of the new phone will result in a divergence of their thoughts from the old phone. Phasing out the old phone and revealing the cause of the fault, gives the audience a clear view that they would accept as reality. As per the theory, the audience will process this information and be influenced to buy this new product because of the ‘frame' in which the media will present it in.

Although the skill of framing has three components (Fairhurst, 2005), the language component is the most applicable to the Samsung case. Language is simple to gauge and it helps the audience perceive information which is vague, with clarity and to remember information. (Fairhurst, 2005). Fairhurst (2005), has highlighted various language tools, one of which is catchphrases. If Samsung uses a catchphrase to market its new product, it will emphasize the reality of the new product and the audience will be accepting about it.

Although framing is widely used concept, it could be unsuccessful if the perceived credibility of the scource is not high (Druckman, 2009). Despite several attempts at framing, if the source is perceived to be manipulative, the attempt will be unsuccessful. Keeping this in mind, Samsung will have to use its social media handles very carefully and make sure that the video and the catchphrase are trademarked to increase credibility and legitimacy.

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