İSTANBUL BILGI UNIVERSITY
INSTITUTE OF GRADUATE PROGRAMS
MARKETING MASTER’S
Crisis Management in Brand Communities: Strategies for Addressing Negative
Feedback
Master Graduate Project
Emaan Atif
122687016
Advisor
Professor Neşenur Altıniğne Ekici
ISTANBUL
2023
ACKNOWLEDGMENT
I want to profess my gratitude towards my general advisor and project advisor, Professor
Neşenur Altıniğne Ekici. It was an honor and amazing experience to be able to learn something
from her.
I would also like to thank Bilgi University for allowing me to come and experience something
new. I learned a lot from my time in Turkey and have become a more polished version of
myself.
I will also like to thank them for providing me with all the eloquent resources required for this
project.
Emaan Atif
Istanbul, 2023.
ABSTRACT
In this paper, we will look at and examine the brand communities from the point of view of the
community managers and study how social media influences the brand’s perception,
management, attitude, and practices during the time of a crisis.
With the rise of social media, we can see that companies go through huge amounts of
complaints on social media daily. Some of these complaints escalate and go viral, bringing
major damage to the brands’ reputation. With the risks that come through the damage to the
brand’s reputation and its sales, companies appoint crisis response teams that implement crisis
response strategies to communicate with their audience. These strategies despite bringing a
positive outcome on the brands' image, are not yet studied in the literature.
The current study investigates how the attitude of a brand influences the response of the
audience in case of an online firestorm i.e., a crisis. In this study, we also evaluate how the
corrective action differs from an apology when brands deal with a complaint. An apology is a
strategy that is implemented most of the time by brands in response to a crisis. Most of the
time brands apologize first before providing their audience with another alternative. Results
have shown that a brand’s attitude during a crisis has a major effect on the e-WOM. If the
crisis response strategy fails to suffice, the brands’ reputation is often tarnished for a long time
due to negative e-WOM. Hence the apology is the first response strategy implemented.
However, when we analyze the complaints, we can see that corrective actions and apologies
work the same.
Keywords: Crisis Management, Crisis Response, Crisis Response Strategy, Negative
Feedback, Social Media
1
Table of Contents
ABSTRACT ............................................................................................................................... 1
INTRODUCTION ..................................................................................................................... 4
LITERATURE REVIEW ......................................................................................................... 5
1.
2.
Brand Communities .......................................................................................................... 5
1.1.
What are Brand Communities? ................................................................................. 5
1.2.
Importance of Brand Communities ........................................................................... 6
1.3.
Brand Communities in the age of social media......................................................... 7
Crisis Management ......................................................................................................... 8
2.1.
What is Crisis? .......................................................................................................... 8
2.2.
What is Crisis Management?..................................................................................... 9
2.3.
Business Recovery After Crisis............................................................................... 12
2.4.
Brand Communities During Crisis .......................................................................... 13
Examples of crisis ............................................................................................................. 14
3.
4.
5.
3.1.
Product Recall and Failures: Samsung Galaxy Note 7 Recall ................................ 14
3.2.
Marvel’s 1996 Financial Crisis ............................................................................... 15
3.3.
Great Japan Earthquake and Toyota........................................................................ 18
3.4.
Volkswagen and the carbon emission scandal ........................................................ 19
3.5.
Burger King says Women belong in the kitchen..................................................... 21
3.6.
Facebook and the privacy breach ............................................................................ 22
The Pitfalls of brands: What to avoid during crisis .................................................. 27
4.1.
Ignoring the problem ever occurred ........................................................................ 27
4.2.
Not Taking Responsibility ...................................................................................... 27
4.3.
Addressing the wrong audience .............................................................................. 28
Some examples of badly handled crises ...................................................................... 28
5.1.
United Airlines and the problem of overbooking.................................................... 28
5.2.
Made in Poland or Made in Fruit of the Loom ....................................................... 29
CONCLUSION ........................................................................................................................ 30
2
REFERENCES ........................................................................................................................ 33
3
INTRODUCTION
Brand communities are referred to as particular consumer–brand relationships that feature
shared consciousness, symbolic factors, and moral responsibility, all developing from
conversations among peers. Both academics and practitioners have taken an interest in these
communities.
The reciprocating relationship that is between fans and a brand makes us wonder whether the
fans from social media that labeled as “brand communities”, showcase an expected
communication with users. The opinions and views of the users can give helpful information
regarding this query.
However, when it comes to the brand communities of social media, the users are not the only
ones who determine the rules of engagement. For the official accounts of the brand, the role of
“administrator” is important. It may be questioned whether brand community managers on
social media adhere to the guidelines and recommendations for brand community management
as stated in the literature.
With the increase in social media, many brands have also shifted to the use of social media,
this has made brand community manager a separate role with a proper and different job
description compared to the social media managers and content managers (Chenn, 2020;
Talley, 2021). The role of brand community managers is to increase the metrics of the
platform. They promote communication between the brand and the user. They manage and
carry out the prescheduled contents, but they lack the ability and experience the handle the
environment of a community. To maintain control over the community, the managers tend to
rely on extrinsic rewards and antagonize users.
In the past few years, many companies have found themselves in hot waters with piles of
online complaints or as termed by Pfeffer, Zorbach, and Carley (2014) online firestorms
coming to them, these complaints have sparked controversies even leading to calls for the
boycott of some organizations (Petrescu et al., 2020). Due to the risks to brand reputation
(Petrescu et al., 2020; Kanso, Nelson, and Kitchen, 2020), profitability, and customer retention
(Kanso, Nelson, and Kitchen, 2020), studies before focused on addressing the phenomena
4
from the perspective of crisis communication management. However, there is still a significant
lack of understanding behind the reasons for these firestorms and how can organizations
meticulously mitigate these crises.
The social media and its millions of users have indeed allowed various organizations to hit
some virality and bring more attention to the brand, but this attention can also bring some
negative effects. Sometimes users get involved in content related to the negativity of the
brand, such as supporting other users with their complaints about the brand.
In this paper, we will research and evaluate the response some brands took in the time of crisis
and how they should have responded. The study will address the gaps in the literature and:
i)
compare the pre-and post-effects on brand perceptions caused by the
implementation of response strategies and assess the influence of the post-effects of
brand attitude on consumers' intentions to convey the complaint to others (e-WoM)
ii)
assess the relative effectiveness of corrective action and apology within victimcentered/accommodative strategies to prevent virality in the wake of a situation for
a possible crisis.
LITERATURE REVIEW
1. Brand Communities
1.1. What are Brand Communities?
A brand community is a group of individuals who are emotionally connected with a brand
demonstrating a strong essence of brand loyalty. These individuals are not only regular
customers of the brand but are also reliable advocates of the brand. They spread the word
about the brand to their family, friends, and other acquaintances. They invest wholeheartedly
in the brand and are big assets for the company. Brands need to retain these communities for
their profitability.
With the help of a brand community, your company can create an atmosphere that encourages
steadfast customer loyalty and rewards them.
5
People are desperate for a sense of connection in today's chaotic world, and businesses need
innovative ways to make the most of what they already have in these hard economic times.
Regretfully, not many businesses realize what it takes to attain the benefits of strong
communities—such as customer loyalty, marketing effectiveness, and brand authenticity—
even though many strive for them.
1.2. Importance of Brand Communities
In essence, a community is a strong and fundamental tool that allows a business to grow. The
communities are essentially the perfect audience for a business can test their fresh concepts
and ideas on, and support user-generated material that expands the brand's customer base.
Some of the major advantages of brand communities include:

Creating direct contact with your most devoted, enthusiastic clients.

Helping your customers get the most out of products and services provided by the
brand.

Creating your customers into brand ambassadors who increase the sales for your brand.

Giving up reliance on pricey channels like sponsored advertisements to raise brand
awareness.

High rates for customer retention.

Obtaining direct feedback, ideas, and information from your audience.

Increasing content generated by users in your marketing strategies.

Expanding the spectrum of PR opportunities that your brand has.

Letting you get a piece of better information regarding your customer’s wants and
needs.

Being able to make your customer’s buying journey a valuable experience.

Assisting people with the same interests find each other.
Brands create an environment for customers to interact with the brand, harboring a sense of
belonging, through these brand communities. We feel more valued when somebody listens to
us, to our complaints, similarly, customers feel more involved and valued by the brand when
companies provide them with a platform to talk about their criticism. These customers also
6
develop a type of emotional connection with the brand that helps in further developing and
improving brand loyalty.
These brand communities become a mean to spread positive word-of-mouth for the brand,
helping brands do more organic word-of-mouth marketing. Loyal customers share their
positive experience with the brand and recommend it. Having regular people as their
advocates, contribute in improving the brand’s credibility and bring new customers towards
the brand.
For Example: LEGO, despite looking like a toy company for building blocks have developed a
big fan community of AFOL or Adult Fan Of LEGO. These devoted fans not only interact
with the brand's products and campaigns but also build elaborate creations and attend LEGO
conventions. They also upload progression videos or pictures of their creation making other
viewers interested in their journey, gradually influencing those viewers as well.
These brand communities also provide a stage for collaborative creation for the customers
where they can participate in the development of a product by giving their feedback including
suggestions on how to further improve the product. This co-creation process also boosts the
bond between the customer and the brand.
Brands can learn firsthand from their most loyal consumers by participating in brand
communities. Through this input loop, brands can better understand their customers'
requirements, tastes, and issues, helping future products and strategies.
A robust brand community can serve as a safety net in times of need. Members who are
actively involved in the brand are more likely to support it, offer helpful criticism, and work to
temper unfavorable opinions, all of which add to the brand's endurance.
1.3. Brand Communities in the age of social media
In recent times, when social media platforms, like Instagram, Facebook, X (formerly known as
Twitter), etc., are at their all-time high, these platforms have become a hub for the brand
communities. Brands use these platforms to interact with their customers and develop
communities centered on common interests and brand values. Social media platforms allow
instant communication between users of both brands and customer accounts. Through the
social media algorithm, the brands regularly stay in contact with their customers, either
7
through frequent uploads or replying to customers’ comments. This way they can respond to
the feedback in real-time. Content created by consumers improves relationships with the
community and co-creates brand experiences through the use of reviews, testimonials, and
creative posts. Social media allows brands to create communities that reach a wide range of
consumers across the globe because it transcends borders. Brands can interact with a variety of
cultures, tastes, and viewpoints from their communities due to their worldwide reach.
2. Crisis Management
2.1. What is Crisis?
Any crucial or unforeseen situation, that can have a major setback to any brand or company’s
name, reputation, operations, or stakeholder’s well-being, is called a crisis. A crisis in a
business setting can occur due to a variety of reasons, the crisis then negatively affects the
business in their regular operations and reputation.
Some of the forms that a company can face crisis are:
1. Natural Disasters: Regular operations of a company are bound to be affected by the
occurrence of natural disasters such as earthquakes, hurricanes, etc. These events not
only damage the infrastructure of a company, slowing the operations but also pose
risks to the employees’ safety.
2. Product Recalls or Failures: As the name suggests, these crises happen when there is
a fault in the final product and the company has to callback their already sold products,
these crises put a major stain on a brand’s reputation as well as affect the financial
situation of the brand putting them at major risk of loss.
3. Cybersecurity Breaches: Another type of crisis is when the brands knowingly or
unknowingly put sensitive customer information at risk. These type of crisis negatively
affect the relationship between brands and customers and compromise the trust that
was previously built.
8
4. Financial Crisis: When the brands are going through a financial slump and can no
longer meet the break-end to continue operations, is called a financial crisis.
Sometimes brands negatively affect their quality to fulfil the financial slump.
5. Reputational Crisis: While all of the above-mentioned crises end up putting a stain on
a brand’s reputation, the reputational crisis is when an action of the company or an
employee, involves them in some controversy like a serious scandal, unethical
behavior, or negative publicity. These types of crises are very common in the current
times of social media where everything easily becomes public knowledge and the users
are not only from one background but different backgrounds.
A crisis is an unusual circumstance, or at best an idea of one, that falls outside the normal
course of business and poses a serious risk to the credibility, security, and good image of any
company. A time of crisis causes an organization's operations to be disrupted and draws a lot
of attention from the public as well as media. These crises typically can negatively impact a
business's operations in terms of finances, law, or politics, particularly if they fail to be
addressed quickly and effectively.
2.2. What is Crisis Management?
Crisis management is the process through which the highest level management of a company
manages a crisis as it develops. It can be described as involvement or cooperation by people or
teams either before, during, or following an incident to fix the crisis, reduce damages, or
otherwise safeguard the company as a whole. It is regarded as a procedure intended to stop, or
at least lessen, the harm a crisis can do to the operations of company businesses and their
stakeholders. There is little else to do when a crisis arises than to manage it appropriately in
order to minimize any harm it may do to the operations of the company.
Breaking down a crisis situation into phases will help you handle it better.
These phases are the following:
1) Pre-crisis phase
2) Crisis response phase
3) Post-crisis phase.
9
According to Goh, M. H. (2016), preventing crises and getting the company ready to respond
to one as best it can, are the main goals of the pre-crisis phase. The crisis response
phase pertains to the reaction of a company's management team to a crisis. In the aftermath of
a crisis or post-crisis phase, the company seeks to improve its capacity to prepare for
subsequent crises. During this stage, a company's top executives should keep all of their
assurances made during the crisis.
Figure 1. Stages of crisis management
2.2.1. Pre-Crisis Phase:
A business corporation is best prepared to respond to recuperate from a time of crisis that may
impact its operations in the future when it is in the pre-crisis phase of crisis management. This
phase is divided into two smaller phases: preparation and prevention. The goal of prevention
is to lessen any identified hazards that a company may encounter that could cause a crisis. This
is a component of the risk management strategy of a business corporation. In the preparation
phase, a crisis management plan must be created, a crisis management team must be chosen
and trained, and tests of the team and plan must be carried out. Before anything goes wrong,
there is plenty that can be done (Timothy Coombs, W., 2007).
10
Top corporate executives frequently think they can clean up a mess within the company
without having a strategy to do so, and in certain situations, that may be accurate. Nonetheless,
even significant crises can be handled with careful preparation beforehand.
It is crucial to cultivate reputation and positive relationships daily with the general population,
government regulatory bodies, corporate entities, and media before the crisis even arises. What
people think of an authority figure at the outset of a crisis situation will influence how the
public and media portray that manager and how a business corporation handles its crisis.
Writing in Public Relations Journal, Bill Patterson (n.d.) offered a similar assessment of the
importance of building a ― “reservoir of goodwill” in the community: ― “The most
important rule in defending, preserving, or enhancing a reputation is that you work at it all
year long, regardless of whether or not a crisis strikes.”
2.2.2. Crisis Response Phase:
The phase of crisis management known as "crisis response" is when quick decisions are made
to safeguard individuals and assets. In addition to taking immediate action to lessen the
adverse impacts of a crisis on an organization corporation's operations, cooperation is required
to apply resources, amenities, and efforts in addition to what is typically accessible to address
the everyday problems that a company faces during regular business operations. The phase of
crisis response encompasses not only the steps taken to mitigate the immediate effects of a
crisis but also those implemented to strengthen the business corporation's capacity to react to a
crisis efficiently while the crisis' build-up.
The initial step in crisis response is identification, which entails spotting possibilities for
early warning signs of emerging threats that can distinguish among a possible group of cases
and typical background variability, figuring out how to submit vital data, setting levels for
proactively gathering more information, and taking advantage of chances to streamline early
warning systems and monitoring as much as is technically possible. (Thompson, DF. & Louie,
RP., 2006)
11
The following phase is called Mitigation, during which steps are done to lessen, as much as
feasible, the adverse effects of the crisis on the regular operations of the company, its
employees, and its assets. Mitigation can be an operationally demanding process that takes a
long time and requires a great deal of scenario- and location-specific information.
The company should provide a preliminary answer right away during this process. With this
response, customers can be assured that the business is investigating the matter and will be in a
position to address their concerns once they have completed their due diligence. Following the
initial reply, information ought to be promptly gathered to ascertain the extent of the crisis or
emergency. Once sufficient information has been obtained, the company should alert other
corporations and government institutions, among other entities, that could potentially assist in
mitigating any additional harm or dissemination resulting from the crisis situation.
2.2.3. Post-Crisis Phase:
After a crisis has passed, the crisis management process continues.
The senior management of a company should thoroughly assess every crisis after it has
concluded. Examining the media attention, you've gotten, the public perception your company
has gained as a result, the short- and long-term initiatives you plan to implement to repair your
reputation, and the validity of your statements for applicability and required changes are all
crucial.
The post-crisis phase of crisis management consists of both short- and long-term actions meant
to first return the company to regular operations and, secondly restore the company's system to
its pre-crisis state.
Compared to the crisis-response phase, the post-crisis phase is rather slow and requires a lot of
managerial work. The majority of the work involved in putting this phase into practice is done
in offices, and the right resources and supplementary network capabilities are needed.
2.3. Business Recovery After Crisis
A business recovery plan is what is needed when companies want to turnaround a crisis
management. A business Recovery Plan is prepared and implemented, to efficiently bring the
business back to where it was before the crisis. According to Jorge Morales Pedraza (2010),
12
“among many other things, a business recovery plan needs information about these major
areas:
1)
Background of the business activities carried out by the corporation.
2)
Background of the crisis situation
3)
Cost of the cash flow
4)
Business equilibrium
5)
Reorganization
6)
Forecast”
The business company, advisers, board members, bankers, and some creditors and
stakeholders should be the main users of the business recovery plan in order to mitigate the
adverse effects that led to the crisis in the organization's operations. From the moment as
upper managers decide to carry out a turnaround, this plan must be created. The effectiveness
of a company's senior management's turnaround crisis management plan will be assessed
based on how effectively the Business Recovery Plan is developed (Jorge Morales Pedraza,
2010).
2.4. Brand Communities During Crisis
In moments of crisis, brand communities are extremely important because they can give
individuals information, support, and a sense of community. These social groups frequently
become even more vital and active during ambiguous or challenging times. Here are a few
crucial elements:
Information Sharing: Communities act as a central location for rapid and accurate
information sharing. These platforms provide brands with the opportunity to inform members
of their audience about operational changes, safety precautions, and crisis management
strategies.
13
Adaptability and Innovation: Brand communities frequently demonstrate their ability to
adapt during times of crisis by devising creative solutions. Members can work together, share
ideas, or suggest innovative methods to use goods or services to meet new needs.
Sustaining Relationships: Companies that take an active role in their communities through
times of crisis are more likely to have longer-lasting relationships with their clients. Through
empathetic communication, prompt action, and sincere care, brands can create enduring
relationships.
3. Examples of crisis
To understand how to overcome a crisis situation, it is important to understand how they can
happen and how much affect they can bring. We will be discussing and analyzing some
examples from real life brands and their crisis, and study how they overcome those crises.
3.1. Product Recall and Failures: Samsung Galaxy Note 7 Recall
Samsung is a well-known and widely recognized brand in the electronics industry. They offer
a wide range of goods, including washing machines and smartphones. To accommodate a
variety of consumer types, their smartphone series are divided into distinct categories. The
Samsung Note series was one of these series.
Samsung released the Note 7 in August 2016 (bypassing the Note 6). It came with the Android
OS, version 6.0.1 (Marshmallow), a 5.7-inch screen, an Octa-core (4x2.3 GHz Mongoose &
4x1.6 GHz Cortex-A53) processor, a phase detection autofocus camera with f/1.7 and a nonremovable Li-Ion 3500 mAh battery. When Samsung was forced to issue a recall for the
original Note 7 model in September because of defective batteries that overheated and
exploded, this launch swiftly took a bad turn. It was forced to stop selling the product and
recall more than 2 million devices by October. Samsung is estimated to have lost $5.3 billion
as a result of the recall. The first explosion on social media was documented during the final
week of August, when users in different markets started posting multiple images of blowing
up phones one after another (Payne, 2017).
14
With the promise that customers would receive new phones, Samsung first recalled nearly 2
million phones in September and October. It was assumed that the newer phones would not
explode.
Nonetheless, there were additional reports of Samsung Galaxy Note 7 phones blowing up
while they were being charged—one even happened in a car. The most problematic aspect of
this was that, despite being said to charge more slowly, car chargers don't have a lot of electric
charge or charge quickly.
The company first announced that the phone would be discontinued in early October; at that
time, no further action was taken until the announcement on October 17. In this instance, the
customer's patience was truly tested by the unclear approach and prolonged decision-making
process, since possessing Note 7 embarrassed the user due to its prohibition from utilizing
public transportation, airports, and public areas, among other places. The ultimate verdict was
declared in a subsequently issued press statement on October 17. It stated that Note 7
customers would be financially compensated for their purchase of the high-end phone by
getting their entire money back or receiving a S7 Edge along with cash or a cash equivalent
voucher (Mobile Nations, 2017).
Crisis faced: In 2016 Samsung faced issues with the Galaxy Note 7 exploding due to battery
defects, prompting a massive recall.
How did they handled it: They recalled back all the Note 7 phones and decided to
discontinue the set altogether to be on the safe side. The customers received payment for their
investment in the high-end phone; they could choose to receive cash back or a S7 Edge in
addition to cash or a voucher for the same amount of money.
3.2. Marvel’s 1996 Financial Crisis
Marvel's financial success peaked in the early 1990s. The company had gained prominence
throughout the 1960s, 1970s, and 1980s due to the frequently breathtaking art and narrative in
comics like Fantastic Four and The Amazing Spider-Man. However, Marvel's stock value
collapsed as a result of several financial bubble bursts and dubious business dealings; shares,
15
which had previously been valued at $35.75 apiece in 1993, had dropped to $2.375 three years
later. Sales experienced a 70% decline.
At this point, the battle for corporate control becomes muddled as different organizations fight
for control over different parts of the company. In 1997, after protracted legal disputes and
financial difficulties, the business was saved and amalgamated with Isaac Perlmutter's Toy
Biz.
The Occupied Palestine-born toy manufacturer, Avi Arad, was charged with helping Marvel
recover from its recent setbacks. According to a 2012 Slate piece on the studio's ascent, Arad
courted bankers and preached the virtues of Marvel's characters.
Additionally, Marvel put up for auction the movie rights to some of its most valuable
characters. Sony acquired the rights to Spider-Man, Paramount acquired the Hulk, and 21st
Century Fox acquired the rights to Daredevil, the X-Men, and the Fantastic Four.
table 1. Marvel’s financial statement from 2001 and 2002
Marvel had been having trouble bringing its properties to the big screen for years.
When Marvel started to gain momentum in the late 1990s, things started to shift: Blade
became popular, and the X-Men finally started to advance at Fox. But Marvel's chances of
16
winning were slim: Blade brought in $70 million at the box office, but Marvel only received a
paltry $25,000, as reported in a Slate article. Even though the X-Men and Spider-Man films
were box office successes, Marvel only received a small portion of the revenue. Arad
lamented, "We were giving away the best part of our business."
When Marvel was able to reach an agreement with Merrill Lynch in 2005, it marked a
significant breakthrough. The deal's specifics sounded dicey: Marvel was essentially using its
most valuable assets, characters like Captain America and Thor, as collateral. The superheroes
would suddenly be owned by the bank if the movies didn't bring in any money.
However, Marvel had access to a massive cash reserve thanks to Merrill Lynch: $525 million
spread over seven years, enough for ten films with budgets ranging from $45 million to $180
million. Marvel was able to regain ownership of characters it had sold over the years, such as
Iron Man, Black Widow, Thor, and Hulk, thanks to their increased influence.
Marvel announced shortly after the agreement with Merill Lynch was finalized that Iron Man
would be its first independent production. After being in development hell for the better part
of the 1990s (Universal first held the rights, which later passed to Fox and New Line), the
character was finally getting a chance to star on the big screen (Stevenson, 2021).
Disney noticed "Iron Man's" success and acquired Marvel for $4 billion in 2009. Marvel now
had the means and the platform to pursue the bold plans for multiple superhero films and
crossover properties thanks to the acquisition.
Marvel's future was all uphill after Iron Man. The Avengers, Guardians of the Galaxy Vol. 2,
Black Panther, Avengers Infinity War, and Avengers Endgame are just a few of the incredible
hits they went on to create (Stevenson, 2021).
Marvel has experienced a striking turnaround in its financial situation, considering that it was
in debt twenty years ago. Marvel, like a superhero, came back from its lowest point in 1996
and went on to win a multibillion-dollar prize.
Crisis faced: Several issues, such as oversaturation of the comic book market, dwindling
sales, and poor management, contributed to Marvel's dire financial problems in the mid-1990s.
17
The company's large debt load by year's end caused it to file for Chapter 11 bankruptcy in
December of that same year.
What actions did they take: Marvel went through a major reorganization process that
involved operational simplification and layoffs. Additionally, they pursued strategic alliances,
divested their non-core businesses and divisions, varied their revenue sources, and used their
well-known characters to benefit other businesses like Paramount and Sony
3.3. Great Japan Earthquake and Toyota
A vast geographic area was severely and extensively damaged by the 2011 Tohoku
Earthquake, which also severely disrupted Japan's industrial supply chains. The earthquake
had a magnitude of 9.0 (Mw). Ten sites spanning the prefectures of Miyagi, Ibaragi, Tochigi,
and Fukushima were used to measure the peak ground acceleration of more than 1305 gal
(NIED, 2011).
Large-scale inland and coastal areas, including half of the Tohoku region and the north and
east of the Kanto region, were severely damaged by this earthquake. Along with other lifelines
being destroyed, the transportation networks of roads, gas stations, railroads, and ports were
cut off. The Fukushima Daiichi meltdown made damage to fifteen nuclear reactors in the area
worse. The tsunami destroyed many coastal communities' residential areas and fishing
industries.
Following the 2011 earthquake, Toyota reexamined its supply chain in detail. The earthquake
in April 2011 caused a 78% YoY decline in Toyota's production, according to data cited in a
2015 paper by Kobe University researcher Hirofumi Matsuo.
Mr. Koda, the CEO of Toyata, identified all of their suppliers, the most significant of whom
was Company R. He then assembled an industry project team at the Japanese Automobile
Manufacturers Association (JAMA) and proceeded to the location. Despite having its
headquarters in Tokyo, Company R established a local recovery team in the region that was
impacted. From then on, more businesses joined the joint support team, until at the end there
were over 60 companies working together. The first step was to schedule and coordinate the
schedules of all the participating companies, and then determine which repairs needed to be
completed.
18
“After this, we identified those tasks that could be performed simultaneously, ascertained offline set up, and envisioned possible construction bottlenecks. The make-up of the recovery
team was constantly changing to best support its needs. We used Post-it notes to quickly and
flexibly update the organization chart. Members new to the group had their strengths assessed
and were given assignments.” According to Mr Koda, it is important to train the staff to be
able to make quick decisions as the force of nature is unpredictable (Iwao & Kato, 2019).
Crisis faced: An earthquake at a huge scale affected the infrastructures of the companies as
well as slowed down the operations in Toyota. Since it was a massive earthquake, aftershocks
as big as this one if not smaller were predicted that were also further safety hazards for the
employees of Toyota.
What did they do: Following the earthquake, Toyota Motor collected information from the
Earthquake Response Headquarters, developed a comprehensive knowledge of the entire
supply chain, and determined which auto parts were essential and could have a significant
impact on the assembler's output.
3.4. Volkswagen and the carbon emission scandal
Volkswagen, one of the biggest automakers in the world, was embroiled in a €30 billion
scandal in 2015. When it was discovered that 11 million of the company's vehicles globally
were fitted with unique devices that concealed the real amount of dangerous carbon emissions,
the company ended up paying this exact sum of money. Due to the growing public interest in
the topic of global warming, this circumstance seriously damaged the brand's reliability.
According to studies on crisis management, one of the things influencing stakeholders'
responses is the perceived harm an incident causes (Mena et al., 2016; Shrivastava, Mitroff,
Miller, & Miclani, 1988). The investors responded swiftly and forcefully, sending Volkswagen
shares plunging in value.
19
Figure 2. Investor’s reaction to VW’s emission scandal
The CEO and other staff members of the company initially admitted guilt and offered an
apology in a two-minute video that was recorded by the brand's representatives. But as the
graph above illustrates, the video statement was a total failure and made no difference at all.
Volkswagen had to start the largest electric motor switch-over program in history to rebuild its
brand reputation. By 2023, the company has committed to investing $20 billion in the
development of electric and hybrid car models.
The program yielded positive results, as the brand was able to regain its top spot as an
automobile manufacturer in 2018.
Volkswagen and emissions are still closely related, though. Even now, several years later,
social media users worldwide frequently discuss this issue, mostly in a negative light (Elena
Teselko, 2021)
20
Figure 2. geographical map and pie chart showing the negative sentiment distribution.
Crisis faced: Volkswagen was revealed to be scamming people by showing the wrong amount
of carbon emission produced by their cars. When the truth was revealed to the public, their
brand image and reputation were completely tarnished. And they faced huge financial loss as
the investors quickly backed out.
What did they do: While they initially released an apology in a two-minute-long video, it was
proven to be unfruitful. They then decided to do a complete electric motor switchover program
and developed hybrid motor cars. While it yielded positive results, their reputation is still
questioned on social media and people still discuss the harmful emission scandal.
3.5. Burger King says Women belong in the kitchen
Burger King is well-known for its daring advertising campaigns, which consumers usually
finds endearing.
But as a recent example has demonstrated, this kind of inventive thinking isn't always
advantageous. Social media users reacted violently against the company after its UK office
controversially congratulated women on International Women's Day.
The company tweeted in 2021, "Women belong in the kitchen." Even though the company
made an effort to clarify their intentions and reveal the Burger King Foundation's H.E.R.
Scholarship for female employees, it was already late. The damage had already been done.
21
The audience's acceptance of the brand's creative thinking was not appreciated, and this led to
an instant scandal on social media. Burger King was consequently mentioned over 140
thousand times on the internet in a single day, that too not positively.
Figure 3. Comparing the amount of times Burger King was mentioned
The company took responsibility for its error and deleted the contentious post, stating that its
intention was to highlight its recently launched female scholarship program. A week following
the release, the controversy was over. The public's and the media's attention span appear to be
limited, according to research on crisis management. Interest in corporate scandals typically
peaks in the initial weeks before waning as focus shifts to other events (Mena, Rintamäki,
Fleming, & Spicer, 2016; Zavyalova, Pfarrer, Reger, & Shapiro, 2012).
Crisis faced: To promote their scholarship, Burger King used a problematic and tone-deaf
tweet which resulted in a huge backlash.
What did they do: Unlike many other cases discuss, this one was mild enough to be over
quickly right after Burger KingUK took complete responsibility of their tweet and apologized.
3.6. Facebook and the privacy breach
Facebook was initially developed as a way to bring people together in a closed academic
setting, but it quickly grew to become the largest social media network in the world because to
22
its many useful features. Even with its impressive growth and performance, Facebook has had
better times. The multinational was embroiled in a massive data breach scandal in March
2018, wherein the British political consulting firm Cambridge Analytica obtained the personal
information of approximately 87 million users without their consent and exploited it for
political ends, primarily in the Brexit Vote Leave campaign and the 2016 U.S. Presidential
elections.
Facebook was forced to deal with the fury of both individuals directly impacted by the privacy
breach and others who were merely indirectly touched by it. The business later faced a number
of difficulties, including lawsuits for violating users' privacy rights. However, even though
Facebook implemented a number of safeguards to ensure that this kind of incident wouldn't
occur again, regaining stakeholders' trust and repairing the organization's reputation remained
the largest obstacle.
Facebook's crisis management tactics were deemed insufficient in providing comfort to its
users and other affected parties.
The Facebook data privacy controversy centers around the political consulting firm Cambridge
Analytica's acquisition of around 87 million users' personal data globally (figure 4).
The latter was able to collect data using the "thisisyourdigitallife" personality test app in
partnership with Aleksandr Kogan's Global Science Research. Millions of participants in a
paid personality test consented to have their information used solely for educational reasons.
The gathered data made it possible to create a psychographic profile for each user based on
their levels of neuroticism, agreeableness, extraversion, conscientiousness, and openness (the
OCEAN model). The developers of the app could have easily compiled profile information,
including age, likes, and, in certain situations, private messages, by simply attaching the app to
the Facebook account in order to complete the questionnaire. And all of their Facebook friends
also experienced this, in addition to the test takers. The idea was that the corporation might
better target political advertising to a particular person by learning more about their
personality from their Facebook likes. Approximately 270,000 downloads were made of the
programme.
23
Figure 4. The amount of users’ whose data was breached, by country
The successor of the Strategic Communication Laboratories organisation was Cambridge
Analytica. SCL was a UK-based firm that specialised in strategic communication and
behavioural research. CA was established in 2014 and had offices in Washington, New York,
and London. Three major players were involved: Alexander Nix, the CEO; Steve Bannon, the
vice president; and American billionaire Robert Mercer, an investor. According to Reuters
(2018), CA presented itself as a company that offers "consumer research, targeted advertising,
and other data-related services to both political and corporate clients."
Aleksander Kogan, a data scholar from Cambridge, approached the company shortly after it
was founded, bringing with it their most recent app, "thisisyourdigitallife." This programme
made it possible to gather Facebook users' data as well as the data of everyone in their friend
network considerably more quickly and cheaply. The information was subsequently utilised to
further a number of political campaigns. These included the Vote Leave campaign, which
24
supported Brexit, and the campaigns of Ted Cruz and Donald Trump for the 2016 presidential
elections (The Guardian, 2018).
After the scandal, the company closed on May 1st, 2018.
The Guardian revealed in 2015 that Kogan's app shared Facebook user data with Cambridge
Analytica (CA) with no users' knowledge. Zuckerberg first remained silent until the
controversy reappeared in 2018. After that, Wylie disclosed the scope of the data collection,
which infuriated the media. A number of authorities conducted investigations while Facebook
and CA made threats to sue The Guardian.
Facebook first upheld its policies in response, but then it admitted the breach and expressed
regret for failing to secure user data. The founder of Facebook indicated in a written address
that the firm will inform the people who were impacted by the data harvesting and that it
would also implement a number of measures to positively prevent similar situations from
occurring in the future (CNBC, 2018, March 21). An examination of all apps connected to
Facebook and in-depth audits of any app exhibiting questionable conduct were among the
actions that were pledged to be put into place. In addition, the business declared that it will
impose stringent limitations on developers' access to data in order to prevent invasions of
privacy. Additionally, Facebook would add a button at the top of the News Feed that would
allow users to modify privacy settings more quickly and simply, making it easier for users to
see which apps they have granted permission to collect their data and to easily withdraw those
permissions.
On March 22, the firm published another post on the Facebook Newsroom blog that included
further steps. In particular, the business announced that it intended to expand the bug bounty
programme, which would allow people to disclose security vulnerabilities—specifically,
developers abusing their data—and receive compensation for doing so.
A few media outlets also conducted interviews with Zuckerberg to provide the public his side
of the story. Among these was a live interview with CNN's Laurie Segall, during which he
expressed sorrow for the incident and said, "I'm really sorry that this happened." He also
acknowledged that it was a serious breach of trust. Additionally, he gave an explanation for
Facebook's lack of effort to get in touch with the worried people in December 2015. In fact,
25
the business had assumed the issue would be resolved and had placed its trust in the datamining company upon the latter's official certification of having erased all of the data. "It was
an error," Zuckerberg said. Declaring, "I'm serious about doing what it takes to protect our
community," he attempted to calm them down. (2018, CNN). He appeared willing to address
any questions about the case in similar talks with the New York Times, Wired magazine, and
the tech news website Recode. He also expressed agreement with some of the adjustments that
the company's rules currently needed to be made (The Guardian, 2018, March 22).
While blocking Facebook's own audit, British lawmakers started their own investigation and
pushed for Facebook to back down. Due to pressure from a number of sources, including the
public, Zuckerberg finally addressed the scandal when the affected individuals' identities were
made public through an online petition.
Figure 5. Chart showing facebook’s net income and revenue from 207-2018, statistica 2019
Crisis faced: In 2015, it was revealed that Facebook has not protected their users’ data and
breached their safety policies and shared their data to CA who used that data for political gain.
26
What did they do: Facebook first justified its policies in reply, but then it recognized the
breach and expressed regret for not safeguarding user data. In order to stop similar instances
from happening in the future, Zuckerberg committed to implement privacy settings, audits,
and a bug reward program. In talks with the media, Zuckerberg acknowledged his errors and
reaffirmed his dedication to community safety.
4. The Pitfalls of brands: What to avoid during crisis
Typical errors include a lack of empathy, poor crisis communications, and delayed responses.
These mistakes have the potential to worsen the situation and harm the reputation of the
company.
We will discuss some of these mistakes in detail below:
4.1. Ignoring the problem ever occurred
Recent studies have shown that approximately 77% of the US population own a smartphone,
social media blunders or offline mishaps are rarely hidden from the public in the highly
connected world of today. Errors on social media quickly become viral stories, and even if
they are removed, someone probably has a screenshot (Status Labs, n.d.).
Errors that occur offline are also not immune; with millions of people owning smartphones,
moments captured on camera turn into morning headlines, causing urgent crises.
It is not an option to ignore these situations. Taking action is necessary to survive the fallout,
regardless of whether the storm eventually passes. The specific actions you need to take,
however, depend on a number of variables. It is important to remember that the initial action
in every crisis is to admit that there is a crisis and stop the problem before it gets out of hand
(Status Labs, n.d.).
4.2. Not Taking Responsibility
Accepting personal responsibility means not only accepting accountability for your own deeds
but also for those who are under your direction. This holds CEOs liable for the actions of their
companies.
27
As an authority figure, regardless of whether you were not directly involved, your actions
inside the company have an impact on you. Ignoring responsibility complicates the situation
when crises strike. One such instance is the CEO of United Airlines, who at first refused to
extend a sincere apology following a passenger's forcible removal from a flight, which sparked
outrage from the public (We will go into further detail about this in heading 5.1).
It is essential to offer a direct, heartfelt apology and a promise to stop it from happening again.
United Airlines's pathetic and late apology has already caused more harm than good. An
effective apology that accepts full responsibility and lays out plans for follow-up actions can
be a company's savior (Status Labs, n.d.).
4.3. Addressing the wrong audience
It takes careful thought to craft a statement or apology that is effective in a crisis. Admitting
guilt is a good place to start, but it's also important to target the right people with your
message.
Social media is essential for consumer-focused businesses to effectively reach out to
customers and address their complaints. Users can feel heard and appreciated when they
interact on social media sites like Facebook, Twitter, and Instagram.
Brands that rely heavily on small investors need to customize their messaging to keep their
trust. Even one lost investor could have disastrous consequences (Status Labs, n.d.).
According to Talkwalker (2023),
To avoid these pitfalls, marketing teams should

Have a crisis management plan ready,

Give genuine response to their audience by listening attentively.

Keep communication clear and open.
5. Some examples of badly handled crises
5.1. United Airlines and the problem of overbooking
This is a prime example of how to completely ruin a PR social media crisis. In 2017, there was
an overbooking on United Airlines Flight 3411. In order to make room for four airline
employees, the airline chose to randomly select four passengers who would not be able to
28
travel and asked them to give up their seats. A pulmonologist was asked to give up his seat by
the crew, but he refused, stating he had to see a patient the next day (which made sense, since
he had already paid to reserve the seat).
The individual was then forcefully hauled off the aircraft with a bleeding face by security after
they suddenly appeared on board. A fellow traveler captured the entire incident on camera and
uploaded it online right away.
Social media users were incensed about the violent behavior after a footage of the event went
viral. In less than a day, one such video received 87,000 shares and 6.8 million views.
Numerous politicians voiced their worries and demanded an official inquiry. United Airlines
was chastised by Donald Trump, who called the airline's handling of the passenger "horrible."
Oscar Munoz, the CEO of United Airlines, made matters worse by releasing a statement that
appeared to support the passenger's removal after the incident. Following the release of the
official statement, Munoz's portrayal of the passenger in an internal email emerged as
"disruptive and belligerent," which incited even more outrage on the internet. The value of
United Airlines' stock fell precipitously during the worsening crisis (Edwards, 2021).
What they should have done: Initially, an honest and clear message should have been given.
The airline ought to have treated every single comment with the utmost decency. They had no
right to place the blame on a passenger whose security should have been the top priority. They
ought to have given a thorough explanation.
5.2.Made in Poland or Made in Fruit of the Loom
The founder of the company, Jessica Mercedes, claimed that all of the clothing produced by
Veclaim is made in Poland. Among the things she constantly emphasized was the excellent
quality of her clothing. Her brand's trademark was "Made in Poland."
Social media erupted in disapproval when it was revealed that a number of the apparel she
sold had been designed on Fruit of the Loom clothes, a t-shirt brand known for being
extremely inexpensive. It turned out that Veclaim labels had been used in their place, and the
original tags had just been torn off.
29
A wave of condemnation was directed towards the brand as a result of the indignant remarks
that enraged and deceived customers posted on the Internet and put the brand loyalty at
jeopardy.
However, instead of taking in the criticism and responding maturely, Jessica stopped any hate
to reach herself.
Many complaints were removed from the brand's Facebook page, and commenting on posts
was disabled on Jessica Mercedes' and the brand's Instagram profiles.
Furthermore, the Veclaim website no longer has the phrase "all our products are made in
Poland."
Things were made worse by the official statement, which did not offer an apology and
contained a badly written explanation that did not provide any clarification. (Edwards, 2021)
What they should have done: By reacting the moment there was any indications of trouble.
They chose to act as though nothing had happened, which is never a good idea (particularly on
the Internet, where your digital footprint remains), rather than reacting and releasing a
statement.
CONCLUSION
At the start of the literature review, we were standing with two gaps from the previous studies.
Now as we conclude our project we have come up with the answers for our two question:
i) Comparison of Pre-and Post-Effects on Brand Perceptions:
Response tactics used in the wake of a crisis or customer complaint can have a big influence
on how people view a brand. Pre-effects frequently include unfavorable attitudes, discontent,
or even rage among clients. Effective response tactics, however, have the power to change this
negativity into beneficial aftereffects that improve brand perceptions. By implementing
efficient measures like prompt remedial measures, sincere expressions of regret, and
compassionate correspondence, brands can lessen the initial harm inflicted by grievances.
The impact of brand attitude on consumers' intentions to use electronic word-of-mouth (eWoM) to voice complaints is significant. Customers who have a positive post-crisis
30
experience are more likely to share it with others, which promotes positive e-WoM. On the
other hand, unaddressed problems or insufficient reactions may intensify unfavorable
attitudes, encouraging clients to talk about their bad experiences and possibly increasing the
harm done to the company's reputation.
ii) Relative Effectiveness of Corrective Action and Apology in Preventing Virality:
Victim-centered or accommodative strategies are vital in the field of crisis management
because they stop negative incidents from going viral. Corrective actions show a brand's
dedication to making things right, dealing with the underlying issue, and making sure that
customers' complaints are actually addressed. In the meantime, a genuine apology seeks to win
back the trust and loyalty of clients by demonstrating empathy and acknowledging the
inconvenience caused.
In the end both are revealed to be important, A heartfelt apology has been proven in many
cases to retain clients and increase empathy for the brand. No apology is often seen as brands
not acknowledging the mistake and hoping for customers to move on. Research by Smith et al.
(2019) highlights the importance of genuine apology and compensation in restoring customer
confidence and preventing the spread of unfavorable opinion.
And corrective actions further allow customers to positively perceive the brand as it shows
that the company is apologetic of their mistake and actually want to make amends as they care
for their employees. Research such as that conducted by Fombelle et al. (2018) suggests that
timely and efficient corrective actions can drastically lower bad press and stop a crisis from
getting worse.
Victim-Centered Strategies: By putting the safety and well-being of their customers first,
victim-centered approaches have been shown to be effective in preventing virality. Case
studies of successful crisis management during the Tylenol crisis by businesses like Johnson &
Johnson demonstrate this.
31
In conclusion, the success of response strategies lies in their ability to transform negative preeffects into positive post-effects on brand perceptions. Effective resolution, through a
combination of corrective actions and genuine apologies within victim-centered strategies, not
only mitigates immediate damage but also prevents the virality of negative incidents,
safeguarding the brand's reputation and fostering positive consumer sentiments.
32
REFERENCES
Chenn, J. (2020). The evolving role of brand community managers in social media. Marketing
Insights, 32(2), 56–68.
Talley, S. (2021). The emergence of brand community managers: A new role in social media
marketing. Social Media Today, 14(3), 112–125.
Kanso, A., Nelson, K., & Kitchen, P. J. (2020). Social media crises and brand reputation:
Framework and strategies for prevention, response, and recovery. Journal of Marketing
Communications, 25(5), 432–448.
Goh, M. H. (2016). A Manager’s Guide to Implement Your Crisis Management Plan. Business
Continuity Management Specialist Series (1st ed., p. 192)
Thompson, DF. & Louie, RP. (2006). Cooperative Crisis Management and Avian Influenza. A
Risk Assessment Guide for International Contagious Disease Prevention and Risk Mitigation;
Center for Technology and National Security Policy
Timothy Coombs, W. (2007). Crisis Management and Communications; Institute for Public
Relations
Füller, J., Mühlbacher, H., Matzler, K., & Jawecki, G. (2009). "Consumer empowerment
through Internet-based co-creation." Journal of Management Information Systems, 26(3), 71102.
Muniz Jr, A. M., & O’Guinn, T. C. (2001). "Brand community." Journal of Consumer
Research, 27(4), 412-432.
Prahalad, C. K., & Ramaswamy, V. (2004). "Co-creation experiences: The next practice in
value creation." Journal of Interactive Marketing, 18(3), 5-14.
Schau, H. J., Muñiz Jr, A. M., & Arnould, E. J. (2009). "How brand community practices
create value." Journal of Marketing, 73(5), 30-51.
Fournier, S., & Lee, L. (2009). "Getting brand communities right." Harvard Business Review,
87(4), 105-111.
33
Stevenson, S. (2021). Marvel’s most superhuman feat was saving itself. Slate Magazine.
https://slate.com/business/2021/03/marvel-comics-history-bankruptcy-cinematic-universe.html
Iwao, Shumpei & Kato, Yumi. (2019). Why can Toyota's keiretsu recover from earthquakes
quickly?. Annals of Business Administrative Science. 18. 10.7880/abas.0191022a.
Muntinga, D. G., Moorman, M. and Smit, E. G. (2011). Introducing COBRAs. International
Journal of Advertising, 30(1), 13–46.
Mcalexander, James & Schouten, John & Koenig, Harold. (2002). Building Brand
Community. Journal of Marketing. 66. 10.1509/jmkg.66.1.38.18451.
Status Labs. (n.d.). Crisis Communications: Five Common Mistakes to Avoid.
https://statuslabs.com/blog
TalkWalker. (2023). 15 Social media crisis examples.
https://www.talkwalker.com/blog/social-media-crisis-examples
Edwards, K. (2021, June). 4 Examples of Social Media Crises that Could Have Been
Prevented .. Determ. https://www.determ.com/blog/social-media-crisis-examples/
Jung, J. C., & Sharon, E. (2019). The Volkswagen emissions scandal and its aftermath. Global
business and organizational excellence, 38(4), 6-15.
Duarte, R. P. G. M. (2020). Case Study: Facebook in face of crisis (Doctoral dissertation)
http://hdl.handle.net/10400.14/29693.
34