Monday, September 24, 2007

Mattel and the PR War over Product Safety

It’s a complicated and often confusing story. Mattel, the toy manufacturing giant, announces massive recalls of nearly 20 million products manufactured in China, apologizes to its customers in the U.S. and Europe and then to officials in China. Now the latter apology is at the center of a storm of controversy.

Mattel says it was simply repeating in Beijing what the company had already said in Europe and the U.S. — that it was sorry for the recall and the company was doing everything it could to prevent further problems. (While the bulk of Mattel’s recalls resulted from its own design flaws — small magnets that were a choking hazard — another 2 million or so toys were recalled because they were coated with lead paint.) The Chinese press reported it as an apology for the design flaws that led to recall and for harming the reputation of Chinese firms. The U.S. translation of the Chinese translation of the apology sounded as if Mattel were apologizing for any blame placed on China, but the toy company said in a statement that those reports were “mischaracterized”.

Ouch! Mattel apologizes to the Chinese? Inexplicable! Haven’t we all heard the stories about tainted pet food, poisoned toothpaste, contaminated seafood and defective tires? As Senator Charles Schumer of New York said, “It's like a bank robber apologizing to his accomplice instead of to the person who was robbed!”

But wait a minute. The issue of the safety of their children is uppermost in all parents’ minds. Where was Mattel’s much-vaunted commitment to safety in the design and manufacturing process?

“For all of our import-bashing, it's worth keeping in mind that we are capable of screwing up here, too,” says U.S. News & World Report’s Rick Newman.

Michigan Representative John Dingell agrees. “It would be far too easy to attribute this summer's recalls to China's poorly regulated export manufacturers,” he said recently. “Regulatory deficiencies, shoddy business practices, and the forces of globalization all play a substantial role in this catastrophe. There is enough blame to go around.”

If there were ever a public relations problem, this one certainly qualifies … with customers, the U.S. government, U.S. consumers, suppliers, investors, politicians and the list goes on.

Mattel Chairman & CEO Robert A. Eckert has written, “When I was a young man growing up in suburban Chicago, my father encouraged me to earn his trust through my actions rather than just talk about what I was going to do. Today, I tell my children ‘deeds, not words.’”

As a communicator, I would agree that words are not enough. Mattel must earn back the trust of its customers with deeds. Every company has an obligation to its customers, employees and shareholders to ensure that all of its products — wherever they are manufactured — reflect the reputation and standards of the company whose name they wear.

Technorati Tags: Mattel, apology, product safety, product recall, design flaws, China, child safety, Charles Schumer, Rick Newman, John Dingell, Robert A. Eckert, business, communications, public relations

Monday, September 17, 2007

High Touch, High Tech

We all seem to have love-hate relationships with the electronic devices in our lives. We love ‘em when they work; we hate ‘em when they crash. It’s great to have instant communication worldwide. It’s awful when you’re settling back to enjoy a movie and the guy in the row behind you is chatting on his cell phone. We want our kids to be technologically fluent, but we worry when they spend hour after hour glued to the computer screen.

We are all aware of the physical problems that come with the use of electronic devices: stiff necks and sore shoulders, bleary eyes, repetitive motion injuries, big butts and flaccid muscles. So I confess I was heartened by a handful of photos that accompanied a recent article by Andrew Parker in The Sun Online.

It shows a number of seniors, some as old as 103, who have traded knitting and bridge for Wii, the Nintendo gaming console with a remote control device that is used three-dimensionally in space, so that gamers can play tennis or baseball, golf, bowl, even box in the comfort of their own living rooms. It’s a virtual sport that gives your arm a real workout … as the residents of the Sunrise Home in Birmingham have discovered to their delight.

It’s nice to read about a new technology that reaches across the generations with something good for everyone.

Technorati Tags: electronic devices, instant communication, Andrew Parker, The Sun Online, Wii, Nintendo, virtual sport, senior citizens, business, communications, public relations

Monday, September 10, 2007

Big Business Beaten by the little Guy?

It’s another case of David vs. Goliath … and it’s looking like another victory for David.

Tiny Trenton, NJ-based TerraCycle, the manufacturer of all-natural, all-organic liquid plant food made from waste (worm poop) and packaged in waste (recycled soda bottles), is being sued by Scotts Miracle-Gro , the $2.7 billion giant that currently dominates the market. According to the Wall Street Journal, the four-year-old TerraCycle had revenue of $1.5 million in 2006 and it's not yet profitable.

Scotts claims that the two companies' products look similar and will confuse customers and, further, objects to TerraCycle’s claims that its plant food is as good as or better than “a leading synthetic plant food.” Denying the allegation, TerraCycle says that the market is flooded with plant food products, which are, predominantly, packaged in green and yellow.

But TerraCycle is not just relying on legal counsel. The company — dubbed the “Coolest Little Start-Up in America,” by Inc. magazine — is harnessing the power of the Internet to generate public support, boost sales and raise legal funds through a blog called “Sued by Scotts”.

During the four weeks following the launch of TerraCycle’s online campaign, company sales surged 122% from the previous four weeks. (Last year, the company's sales increased 31% in the same period.)

The publicity surrounding this case has helped TerraCycle to create massive awareness about its products, which they could never afford if they were to advertise. The next challenge for TerraCycle will surely be finding ways to sustain their new-found awareness, perhaps through an ongoing visibility campaign.

And what about Scotts?

Goliath definitely needs a more effective strategy than standing on a hill and shouting at the enemy.

I believe that an out of court settlement is in the interest of Scotts Miracle-Gro. Even for a company with deep pockets like Scotts, the legal fees could be considerable and it might be easier and less costly for Scotts to settle this matter and move on; a protracted court fight and its attendant publicity can only help TerraCycle.

For TerraCycle there is limited downside here, even if it settles the suit and has to change its packaging. TerraCycle can say that it had to settle because the company couldn't afford to continue to fight. TerraCycle will still have won because of all the publicity which has boosted its sales and generated lots of awareness about the firm's products. And my bet is that TerraCycle will win more customer loyalty as a result of all this.

But for Scotts, there might be more competitive challenges down the road as more companies get a sense that there is a business with products like TerraCycle’s; some of these may be well-heeled competitors who can afford to spend marketing dollars on developing the category beyond a niche market. Scotts may also want to examine the strategy of going increasingly “green.”

Technorati Tags: TerraCycle, Scotts Miracle-Gro, Wall Street Journal, plant food, Inc. Magazine, Sued by Scotts, publicity, going green, business, communications, public relations

Tuesday, September 04, 2007

Murdoch and the Wall Street Journal:
An Unholy Union? I Don’t Think So!

Rupert Murdoch’s bid for the venerable Wall Street Journal seems to have polarized the blogosphere, the mainstream media and a number of my friends and colleagues.

In “Murdoch: Bad for Journalism, Bad for Democracy,” for example, blogger Josh Silver asserts that “those concerned about the journalistic independence and editorial integrity at the Journal have good reason to be worried.” On the other hand, former Knight Ridder executive Ken Bridges writes in his blog, ContentBridges , that “Murdoch's Dow Jones vision is right-on. It's the idea of a global business news and data business delivered to the laptops, desktops, phones, PDAs and TV monitors of everyone who wants in on capitalism around the globe.”

The New York Post — a Murdoch property — proclaims that the Bancrofts’ decision to sell to the media mogul “drew cheers from Wall Street analysts and other public shareholders who said Dow Jones desperately needed News Corp.’s capital and its international multimedia platform to stay competitive in Europe, Asia and across the United States.” But the Post’s arch-rival, the Daily News, has issued dire warnings that “the financial broadsheet [Murdoch] has long coveted is poised to sit alongside the factually challenged Post, Homer Simpson and Bill O’Reilly in the Murdoch trophy case.”

Where do I stand on the issue?

I contend that Murdoch bought the Journal precisely because it is one of the preeminent newspapers in the world and a standard-bearer for business reporting. It’s also a great fit for his new financial channel. I believe his promises to invest in Dow Jones — particularly its digital properties — and to expand its editorial presence overseas.

In an open letter to readers on August 1, WSJ Publisher L. Gordon Crovitz asserts that his paper’s readers “must be able to trust that our facts are right. Livelihoods depend on it, and capital is deployed because of it.” Crovitz further pledges that “the same standards of accuracy, fairness and authority will apply to this publication, regardless of ownership.”

It is the Journal’s objective, high-quality reporting and strong editorial independence that have given the newspaper its prominence and credibility. The newspaper’s 118-year track record is at the heart of the value that Mr. Murdoch is willing to pay $5 billion for. As an op-ed in the Journal states, “No sane businessman pays a premium of 67% over the market price for an asset he intends to ruin.”

If there’s anything the last few years have taught us, it’s that change is endemic in the media today. But change is not necessarily the same thing as disaster.

Technorati Tags: Wall Street Journal, Rupert Murdoch, Josh Silver, Ken Bridges, New York Post, News Crop., Dow Jones, Wall Street, Daily News, L. Gordon Crovitz, business, communications, public relations