Martin Walker

Do consumers forgive and forget?

My last post explored the Luis Suarez biting incident and the difficulties this posed for his sponsors. I concluded that the Adidas and Suarez tie up would continue, based on the fact that his last two biting incidents seem to have been brushed under the AstroTurf.

This got me thinking about other companies who have had to deal with negative PR stories. Starbucks, high street banks and energy companies spring to mind. The question is: do consumers change their buying habits as a result of these negative news stories? And what response tactics do companies use to try to repair the damage?

Starbucks’ tax affairs

In 2012, Reuters broke the story about Starbucks’ legal tax avoidance that provoked a backlash with UK Uncut protests targeting Starbucks coffee shops – and consumers hijacking the Starbucks’ #spreadthecheer social media campaign at the Natural History Museum. Clearly the brand suffered bad publicity in the short term, but are consumers still angry?

Starbucks have always maintained that their customers have remained loyal throughout the tax story. They say they have listened to their customers, and as a consequence have agreed to pay an additional £20 million in corporation tax. The company is also moving its headquarters from Amsterdam to London – a clear sign that it intends to commit long term to the UK. However, their 2013 accounts show that sales fell for the first time ever in the UK, so there’s clearly still work to do.

UK banking sector

We’re all too aware of the implications of the banks’ actions on the economy, but are there signs of consumer confidence returning to the sector? Research by Ernst and Young shows that trust levels amongst the banks decreased during 2011 and 2012 but began to stabilise in 2013. This upturn has been attributed to banks looking after us better, and prioritising customer loyalty in order to win back our trust. Interestingly, the survey showed the news stories were the key driver affecting peoples’ attitudes to banks – something that I’m sure applies to other sectors.

BP

The Gulf of Mexico oil spill was a devastating ecological disaster. It had a massively detrimental impact on the local economy and consequently led to BP’s image plummeting across the globe. With the company’s reputation on the ropes, the fight back started. They began with first admitting responsibility for the disaster and then putting huge amounts of money aside to clean up the Gulf of Mexico and compensate the local economy. From a consumer point of view, I can’t find any evidence of a negative impact on the sale of fuel in the UK at BP filling stations. But more importantly for BP, they have secured lucrative rights for exploratory drilling off the environmentally sensitive coast of Greenland – a sign that they have begun to rebuild their reputation.

Starbucks, BP and the UK banking sector have faced a massive backlash from the public and press that has damaged their reputations. Legal tax avoidance, and environmental and economic disasters certainly rank high on the list of how to damage your company’s brand reputation. But if the banks can rebuild their reputation with an honest and proactive response to issues, this proves that a clear marketing and PR strategy will enable a company to turn a negative issue around.

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