Friday, February 5, 2010

Toyota Totaled?

Despite the tragic implications for a few very dead individuals, watching the national drama unfold around Toyota's deadly brake pedal flaw has been fascinating. The National Post has an interesting op-ed by  Terence Corcoran covering the details of what is happening to Toyota from a skeptic's perspective. He downplays Toyota's culpability, and focuses on the domestic reaction from both a governmental and business perspective. There is no questioning that the Obama administration and certain congressional democrats have behaved like buffoons, that Detroit is giddy with joy, and that Toyota itself has tripped pretty severely on the public relations front. Given the multiple forces at work, this business drama has the makings of great business school case study.

First things first, Toyota screwed the pooch. One of the hallmarks of Toyota's brand image was quality. That association is a core component of what distinguishes Toyota from it's American rivals in the minds of consumers. Every large scale auto-manufacturer will have a recall at some-point or a design flaw, especially if they are volume players. Managing these moments is what determines a company's brand image in the minds of consumers. Remember the famous Tylenol Recall of 1982 that did wonders for Johnson & Johnson. Getting ahead of the issue, preempting any fears from consumers by letting them know that they are a priority, and exceeding crisis management expectations are essential from a brand image preservation perspective. The werewolf is dismayed that Toyota didn't have some massive contingency drawn-up just in case a disaster like this occurred.  It's risk management 101 for a company like Toyota.  Toyota's management clearly seemed a little slow to respond, was skeptical of consumer fears, and allowed the issue to explode into a North American market drama that the werewolf thinks has adversely  impacted their brand for the short and potentially medium term. Given Toyota's discipline as a company, their weak response and poor brand management is the most shocking element of this tale at work.

Granted, Toyota has long been the arch-rival of GM and Ford ever since their arrival on these shores four decades ago started eroding Detroit's dominance in it's home market. Toyota built better cars leveraging more operational efficiencies, their cars lasted longer and developed a perception of quality, and they avoided detrimental union obligations. Most importantly Toyota offered the consumers what they wanted instead of boring automotive bureaucratic abominations pushed by Detroit. Detroit's resentment of Toyota is not unlike the blood-feud between the Hatfield's and McCoy's. In today's day and age, conflicts of interest abound. The US Government has a large ownership stake in both Chrysler and GM, those dastardly unions heavily financed and supported the current occupant of the White House, plus this administration has displayed a tendency to be protectionist and anti-free trade. It doesn't take a genius to see the potential problems at play working against Toyota from a governmental standpoint. However, these problems aren't insurmountable, they just need to be noted and Toyota needs to integrate them into their communications strategy as they launch a recovery.As much as Detroit seems to be enjoying this meltdown at Toyota, they seem to be missing the message the credibility isn't going to be sourced in a nasty web of conflicts of interest and lame rhetoric. Good management and valuing consumers will do that just fine.

Brand image and commitment to that image are what lead to credibility. Credibility fuels consumer purchasing and loyalty. At the moment, credibility seems to be wanting in all sectors of this drama. What do you all think?

1 comment:

  1. I don't understand this claim I keep hearing that Toyota was known for "quality." Honda was, and is, known for quality. When I think Toyota I think of this paper-thin, tiny piece of crap of a car that almost disintegrated when a one of my parents got in an accident when I was a little kid. So I'm either unlucky or should count myself ahead of the curve :)