Volkswagen's Brand Reputation
Brand reputation are the ideas and emotions that customers associate with a brand. It is the result of everything that a brand does including branding, promotion, pricing, product development, public relations, customer service and operations. A favorable brand reputation means consumers trust your company, and feel good about purchasing your goods or services.
Volkswagen AG known internationally as the Volkswagen Group, is a German multinational automotive manufacturing company. In 2016, it was the world's largest automaker by sales, overtaking Toyota and keeping this title in 2017 and 2018, selling 10.8 million vehicles. It has maintained the largest market share in Europe for over two decades. It ranked seventh in the 2018 Fortune Global 500 list of the world's largest companies. Making it the first non-German marque of the company, and acquired control of Škoda in 1994, of Bentley, Lamborghini and Bugatti in 1998, Scania in 2008 and of Ducati, MAN and Porsche in 2012
Volkswagen’s reputation is very much driven by the company’s ability to deliver tangible results. The most important dimensions for Volkswagen’s reputation and what the general public cares about the most are the automaker’s corporate governance, products and citizenship. Statistically, these three dimensions have the strongest impact on Volkswagen’s overall reputation score. In fact, more than 50% of Volkswagen’s reputation is driven by its ability to be a responsibly-run company, have high quality products and be a good corporate citizen.
These three dimensions are even more important since they are the dimensions most affected by the Volkswagen’s diesel emissions scandal. One month after the Volkswagen emissions scandal broke out, the drop in reputation was drastic.
When an emotional bond is broken and a company fails to deliver on the rational dimensions of reputation, stakeholder support for the company drops as well. This, in turn, affects the business outcomes, in a negative way. With the drop in reputation, Volkswagen’s decline in support followed. It’s hard to imagine how a company this big and powerful didn’t see the risk in misleading the entire world about a key feature of their products.
As the dust settled and the full scale of the scandal emerged, Volkswagen drew up plans to repair the shattered trust in its ‘Made in Germany’ image. Before the crisis VW’s footprint was already more global than its rivals, allowing it to benefit faster when the market picked up. By delivering on the aforementioned actions, companies gain a control over the crisis and practice good stakeholder communication. The only way in which a company can deliver and apply best practices, is through an internally established crisis management framework
Patrick Busschau(Ipsos SA Automotive Business Director) said: "The consistency of good service that some brands deliver across their dealer network to so many customers over time is highly commendable as consistency is one of the most important factors in building a powerful brand reputation. Volkswagen and Audi brands continue to maintain particularly high levels of customer satisfaction in terms of both the buying and servicing of new passenger vehicles, year after year, despite facing very tough opposition in the local market."
If the Volkswagen scandal has taught big and small business owners around the world anything, is that having a strong reputation management and crisis communication strategy in place is vital. You need to monitor constantly for reputation risks and always prepare for the worst.
Steps Volkswagen took to Regain Consumer Trust
1. Acknowledge the issue
- It’s important to recognize the problem right away. Set up an independent investigation as well as a task force–of a maximum of four people–with a full mandate to act on behalf of the brand while the crisis unfolds
- The task force should be able to act without internal bureaucracy and, most importantly, quickly enough to keep up with the press and social media.
2. Identify your "friends"
- In Internet culture, the 1% rule is a rule of thumb pertaining to participation in an internet community, stating that only 1% of the users of a website actively create new content, while the other 99% of the participants only lurk. Variants include the 1–9–90 rule.
- For example, for every person who posts on a forum, generally about 99 other people view that forum but do not post.
- One person (the seeder) influences another nine individuals (the incubators), who in turn influence the next 90 individuals (the public). Your goal is to initiate a dialogue with the nine. Remember, there are always two sides to the same story.
3. Create empathy
- Forget about advertising–it’s a complete waste of money because no one will trust you anyway. Instead, overreact in favor of the consumer.
- Figure out what the brand should offer each and every consumer–as compensation so generous that even the brands rivals and detractors will be compelled to say, “Admittedly, The brand made an honest made a mistake,
4. Turn the tables 180 degrees
- At this stage, your industry rivals will be poised to acquire your customers. If you don’t act fast, that can completely undermine your future revenue. So start a second task force with the sole purpose of stopping the bleeding.
5. Rebuild your reputation
- While the short-term machine is in action to manage the outrage, go back to the drawing board and ask yourself what’s needed in order to recover your long-term reputation.
Bibliography:
Web Resource: https://www.prweek.com/article/1400483/4-crisis-communicators-volkswagen-next
Web Resource: https://www.thedrum.com/news/2017/02/02/volkswagens-crowning-worlds-top-car-maker-triumph-crisis-pr-strategy
Web Resource: https://www.wheels24.co.za/News/Guides_and_Lists/see-which-car-brands-are-tops-in-customer-service-20180803
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