Pepsi Case Study

The case study analysis is based on the manufacture Pepsi Corporation regarding the

syringes that were found in the Diet Pepsi cans and bottles. In 1993, Pepsi Corporation was

celebrating their 95th anniversary and with their reputation and high integrity on the line, the

company had to result in crisis management techniques quickly and effectively to overturn the

syringe crisis.

The first complaint regarding a syringe was announced on June 10, 1993. The president, the

CEO, contractors, bottle handlers, line assemblers and the other 50,000 employees began

the investigation proceedings towards these alleged complaints.

Craig Weatherup the president and CEO of Pepsi Corporation and the crisis management

department evaluated the two initial cases and did not feel threaten enough to request a recall

on the Diet Pepsi product. The crisis management team felt it was impossible to tamper with

the product without a person noticing before purchasing the item. If the item was tamper with,

the item had to be tamper with in the bottling department and/or after the product has been

opened.

By June 13, 1993 Pepsi Corporation urged companies not to remove the product off of the

shelves that the products are tamper-proof. Craig Weatherup amongst his fellow

management team evaluated the first two cans that had the syringes and noticed that the two

cans were made months apart and from two different plants, the company then realized that

the syringe scare was a scam. Pepsi Corporation could not just tell the public this information

without having substantial amount of evidence to enforce their claim; the investigation had to

continue.

During the investigation a total of 55 complaints arose causing more stress on the company,

the investigation, the news media, and the general public. The public relations department

was working very hard in the investigation to save the company’s name. On June 15, 1993 a

man was finally arrested by alleging he had found a syringe in his Diet Pepsi. The public

relations department decided to use the offensive method to reach the publics eye. The

department released a video news release (VNR) footage regarding the Pepsi Corporations

plants with narration. The footage showed to the viewers that it is impossible to tamper with

these products. The video footage also showed viewers how the processing takes place, the

speed of the equipment, and the safety precautions to produce the product. The second VNR

was produced to prove witness that a gentleman was arrested for his falsifying actions

against Pepsi Corp., that the locations of the cities versus the production lines were unrelated,

the can and bottle package is the safest material, and the recalling of the product is

unnecessary.

A third VNR was aired by Mr. Weatherup shortly after the arrest which shows a surveillance

camera in a convince store showing how a lady purchased the product, opened the product

and then placed a syringe without anyone seeing her and then asking the clerk for a cup to

drink her soda. Pepsi Corporation end to the allegations were almost finalized by the June 17,

1993. The company had to continue to work with the FDA Criminal Investigation department.

On June 17, 1993 Commissioner Kessler from the FDA held a press release regarding the

hoax of all these allegations of the syringe; notifying the public that the scare was false.

The communications with the public relations department with the plants, consumers, media,

FDA, crisis management, and the CEO throughout the investigation was very effective. The

public relations department disclosed all information to everyone as needed. The consumer

advisers were contacted almost three times a day regarding new information. The public

relations department contacted the management department on how to communicate with the

employees regarding the crisis situation and how to answer questions from the public and the

employees. All 400 field locations were aware at all times of what was going on in the

company, what information is being reported, how the government was handling this matter,

and how the company is responding to this matter. The president was also contacting the

management department regarding updates from the investigation. Pepsi Corporation may

have lost sales for a week but the company was well praised for their hard work, integrity,

management team strategy and standards of productions which the company earned an

additional four percent increase in sales.

The publics involved in the case study were in the United States. The allegations from people

were arising from Pennsylvania, California, Washington, New York, amongst other states.

The allegations were based on a product that children, woman and men drink on a regular

basis. The internet, news stations, radio broadcast and new papers were some of the media

types used regarding the allegations. The effect on the allegations can be listed under the

business, consumer, financial, product and pictorial features on any of the media types in the

United States. The internal and external public communications had to be handled separately

and differently. Once the media heard of these allegations they sometimes tend to enhance

the crisis and can create more chaos.

The public relations department had to convince the external public of the investigation

proceeding on a daily basis to ensure to the public that the problem is under control. The

communication between the FDA was opened and the relationship had to be established

quickly. Part of communication with the external public is by cooperating with the investigation

and participating by instituting their own crisis management team for added assistants. The

internal public communications was very effective. By the president of the organization along

the management team explaining and updating the employees on everything that is

happening and by ensuring to the employees that the corporate office does not think that the

tampering is happening at the plants and by confiding and trusting in the employees abilities

increased the employee’s morale at a critical time during the crisis.

The intended public was also kept up to date on syringe crisis too. The public was just as

aware of the situation on a daily basis as the employees and the management team. The

important factor with the communication between the public relations department and the

general public was honesty and openness. The company only lost three percent of sales in

the crisis period. After the allegations were finalized the company had special campaigns

generated that expressed appreciation to the public along with the future plans of the Pepsi

Corporation with coupons for added compensations. The public relations department worked

very well with CEO, the management team, the media, the consumers, other business

associates, the FDA in handling the investigations and there is no other better way to handle

this situation except by the way the Pepsi Corporation handled the crisis

Q. Key learnings? What could have been handled better?

Q. What were the initiatives that Pepsi did right?

Crisis communication case study: Toyota

Toyota has long enjoyed a stellar reputation of reliability, quality and value. Until recently, its brand

had only been strengthened by the dilapidation of the U.S. car industry, and Interbrand ranked it

eighth on the list of the world's strongest brands of 2009.

Indeed, when I was having the inevitable conversation with my father about which car I should test

drive at the tender age of sixteen, I still remember him telling me that Toyota made the most

dependable vehicles.

How things have changed. Over 19 fatalities have been attributed to problems with Toyota vehicle

acceleration mechanisms, including a tragic crash involving an off-duty California police officer and his

family in late August 2009. Apparently reports of unreliable acceleration have been around for several

years, however the story has only recently become very public. The officer had been driving a loaned

Lexus while his wife's model was being repaired, and reported to emergency authorities that the car

was automatically accelerating out of control. Speeding at 120 mph, he and his family were killed in

the horrifying accident. In a press release of September 14, 2009 Toyota expressed its sympathies to

those involved and explained that it appear a floor mat had been incorrectly installed, causing the

accelerator to become jammed.

The company's worst nightmare has continued to intensify since then. A voluntary recall was

announced November 2, 2009 for owners of certain Toyota and Lexus models, with floor mats still

suspected as the cause for alarm. Come January 21, 2010 Toyota stated it would recall 2.3 million

cars to correct sticking accelerator pedals on certain Toyota models; this process was explicitly made

separate to the risk of "pedal entrapment by incorrect or out of place accessory floor mats." (link)

Several days later, it decided to suspend sales of eight models.

The influential Consumer Reports has removed its recommendation of the eight models suspended.

Toyota stock has dropped significantly. Car owners are understandably concerned.

So has Toyota handled this crisis well? Has it adhered to the fundamental principles of crisis

management theory?

In some ways, it has. Toyota has made good use of social media avenues to engage customers using

a frank, reassuring voice. Jim Lentz, president of U.S. sales, answered questions directly through

Twitter. ("We believe if we do this right, customers will come back," he Twittered.)

A massive campaign is in full effect, utilizing full page ads in newspapers, a dedicated web site,

television ads and executive interviews have been consistent in messaging and tone. These tools

have been well used to promote the company's actions to address the problem. The company's U.S.

blog, Our Point of View, offers a first-person discussion of the issues at hand. It also publishes

questions from the press along with Toyota's responses. 

But while Toyota has been swift to move on this particular series of incidents, perhaps it would have

already passed through this storm if it had paid greater attention to the complaints made prior to 2009.

Always assume the worst. With the unbelievable number of social media arenas used by consumers

these days, there's no excuse for brands not to have their fingers on the pulse of consumer sentiment.

Q. Key learnings? What could have been handled better?

Q. What were the initiatives that Toyota did right?

Dominos Case Study

Two Domino’s employees from a North Carolina store shot a video of themselves adding

contaminated ingredients to the food they were preparing for delivery and posted in on YouTube. How

gross was it?

The video was posted on YouTube and in two days was seen by more than 500,000 viewers

spreading fast on social networks and twitter

The employees claim it was just a prank and the food was never sent to the customers. Half a million

views later, the damage was already done

How did the company respond

Once the company learned about the video from readers of The Consumerist, it responded

quickly and targeted audiences that already viewed the video: readers of The Consumerist,

twitter users and YouTube users

Because Domino’s didn’t have a twitter account, it launched one: twitter.com/dpzinfo and

encouraged its employees to twitter (They should have had an account already)

The company showed its outrage through its president’s YouTube response:“It sickens me

that the actions of two individuals could impact our great system,” said Doyle. (This is clearly

scripted and it would be better if he was looking into the camera, but getting this out quickly is

more important than what it looks like)

Similar outrage was shared via quotes in the media. Domino’s spokesman Tim McIntyre told

USA Today: “Any two idiots with a video camera and a dumb idea can damage the reputation

of a 50-year-old brand.”

Domino’s got the videos removed from YouTube, lowering the number of people who will

come across it.

Domino’s tried to explain that this was an isolated incident and used numbers to do that,

saying that they have “125,000 hard-working men and women across the nation and in 60

countries around the world”. This was not used as an excuse but it does put things into

perspective.

The employees were fired and the company filed complaints for the arrest of them. Later both

were charged with distributing prohibited foods

The store was closed and sanitized.

The following days, Domino’s did not advertise sandwiches shown in the videos, it featured

other items instead

Q. Lessons learned?