By Cathy Rose A. Garcia
Staff reporter
Apple’s mishandling of its response to the iPhone 4 antenna problem could have a negative impact on consumers’ perceptions and loyalty to the brand in the future, according to an international crisis management expert.
Daniel Laufer, an associate professor from Yeshiva University in New York, said Apple’s response, which involves refusing to admit its mistake and passing the blame on other factors, leaves much to be desired.
``They’re saying this isn’t a big problem and that you can put a case (on the iPhone) and it will fix it. They say it’s not a big deal but they have to be very careful with that because how consumers are going to perceive it and how it plays out, it is going to be very crucial. Because in terms of Steve Jobs' strategy, his strategy was not conciliatory at all,’’ he told The Korea Times, Thursday.
In Apple’s case, the much-hyped iPhone 4 was found to have a major design flaw with its external antenna band. Holding the phone in a certain way that touches the antenna band causes loss of reception and dropped calls.
Instead of apologizing, Apple has tried to shift the blame, claiming other smartphones have similar problems and that users should try to avoid touching the antenna. It also claimed the problem will be solved by a software update or by a free rubber case.
The Apple case is especially relevant in Korea, where iPhones have quickly become a must-have item. The iPhone is exclusively distributed by KT, the nation’s second largest telecommunications company. But the iPhone 4’s release in Korea has been delayed.
``In the U.S., in the beginning when (the iPhone 4 problems) happened, the blame was on AT&T. What you'll find is if something similar happened in a Korean context, the party with a weaker reputation in an ambiguous situation might get most of the blame... In this case, you would have to blame the party with the lesser reputation and this would be KT,’’ Laufer said.
Apple should tread carefully, especially since its iPhone woes have become a joke. ``Once your product becomes a source of jokes from late-night comedians, it's very bad. It creates a situation when they have to respond. The stock price reacted... so having your finger on the pulse is important.’’
Laufer is currently teaching a special undergraduate program at Korea University, with a focus on crisis management. The field, he said, involves dealing with three aspects: pre-crisis or crisis prevention; actual crises or how to respond; and post-crisis or lessons learned.
As Korean companies become more globalized, they should be prepared for any crisis and learn from the experiences of its competitors. Japanese carmaker Toyota Motor’s problems with a worldwide recall of millions of its vehicles could serve as a lesson for Korean carmakers Hyundai Motor and Kia Motors.
Most companies might think that having a good reputation would help them weather any storm, but Laufer said this is not always the case. ``It depends on what type of crisis. If there’s an ambiguous crisis where it is not clear who is at fault, consumers’ biases come into play. A strong reputation can help. In the case of Toyota, consumers gave it the benefit of the doubt. But when it became clearer that it was Toyota’s fault, there was a strong backlash,’’ he said.
Multinational companies should also learn how to manage crises in Korea, where the level of ``uncertainty avoidance,’’ which refers to a society’s tolerance for ambiguity, is higher.
``For multinationals in Korea, they’re going to have much less time to respond to a crisis because Korean consumers are going to demand a response immediately,’’ he said.
Crisis management is a complex issue, but Laufer offers a few handy pieces of advice for companies. He said companies should respond to a crisis as soon as possible and assess the public’s perception.
``It's important to realize that those perceptions don’t necessarily have to reflect reality and consumers are going to respond based on their perceptions,’’ Laufer said.
Companies should also be prepared and learn the concepts of crisis management from corporate training or business schools. ``When a crisis occurs, that’s the worst time to start learning about what's important in crisis management,’’ he added.