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Ghoulish business disasters not to emulate

Posted on 30th October 2017 Posted in Blog

You’ve undoubtedly heard about business success stories and what to learn from them. But how about the disasters? There are mistakes made in businesses all the time but sometimes they can prove to be costly ones - as these examples will demonstrate.

You’ll laugh and cry in equal measure hearing some of these terrible tales of blundering buffoonery. Don’t say we didn’t warn you.

Lesson 1 - Don’t call your product crap. (Gerald Ratner)

A classic gaffe and one which bought Gerald Ratner’s jewellery company to its knees. When speaking to the institute of directors in 1991, he described one of his Sherry Decanter’s as being “total crap” and even went on to say that a Marks and Spencer sandwich lasted longer than his earrings.

It’s fair to say that these comments went down like a lead balloon. Within a few weeks, over 500 million was wiped off the firm and Ratners Group would become obsolete.

Take aways - Sometimes honesty is not the best policy and disparaging remarks about your own product (even in a humorous way) is not very clever and will make you look extremely unprofessional.

Lesson 2 - If it ain’t broke, don’t fix it. (New Coke)

Ever heard of New Coke? Thought not and there’s a reason for that: it was brief and it was a disaster. Back in 1985, the company decided to alter its award winning formula and rebrand it as New Coke. It’s fair to say consumers did not take well to a change that was completely unnecessary. This led to Coke’s radical formula change being dubbed “marketing blunder of the century”.

The company received thousands of complaints that summer and consequently binned the new formula, reforming it as Classic Coke.

Take aways - The lesson here? Don’t change something for the sake of it. You might be told a rebrand is a good idea by your marketing department (and maybe it is) but if your audience doesn't feel the same way it’s pointless.

Lesson 3 - Race shootings and a Chai Latte aren’t a good combination. (Starbucks)

Three words come to mind when discussing this campaign; WHY OH WHY. This particular calamity went something like this. In the midst of race related shootings in America, in 2015, Starbucks CEO Howard Schultz created the “Race together” campaign. This involved Starbucks Baristas writing “Race together” on customers’ cups and even engaging with them on the subject of race (we told you it was bad).

Whoever signed off on this noble but misguided gesture clearly didn’t anticipate how badly this would be received. This proved to be the case with the company being panned on social media for this trivialisation of a deeply sensitive issue.

Take aways - If you are thinking about taking advantage of current affairs to showcase empathy with your audience then we would advise treading water. When tackling political issues be very careful, because if you make a mistake it could prove to very bad PR for your business.

Lesson 4 - Exploding products aren’t generally a good thing. (Samsung)

It’s fair to say that when someone buys a product, the last thing they would expect to happen is for it to explode. You might think this sort of thing could never happen, and certainly not from a blue chip company. But in August 2016 it did. That year, Samsung released their brand new Galaxy Note 7 to much fanfare and anticipation. This new product was seen as a genuine rival to Apple’s dominance in the smartphone market.

Initially sales were strong on its release, but over the next few weeks reports started to filter through of handsets exploding. 2.5 million phones had to be recalled as a consequence. The whole affair not only damaged Samsung’s reputation but it also wiped off $17 billion in its stock price valuation.

Take aways - Never underestimate the importance of constantly testing out a product and checking for possible bugs. A flawed product not only makes your business look incompetent, it can also lose you many customers in the process.

Lesson 5 - Where’s the beef - there’s too much horse. (Tesco)

Something a bit closer to home, but this is another example of a big brand’s attempt to mislead its audience blowing up in their faces. In 2013, it was discovered that many of Tesco’s beef products contained traces of horse meat. The scandal dominated the front page of most national newspapers. Even senior politicians voiced their disgust at this horrendous attempt to hoodwink millions of Tesco shoppers.

The company got in huge trouble with many different groups. That’s without even mentioning that horse is not commonly eaten in the UK - so people were incredibly shocked when they realised they had been doing so without knowing. Tesco also created issues with other religious groups such as Muslims and Jews - who are forbidden to eat horse.

Take aways - As a business owner, you should not mislead your customers by using anything suspicious or dubious in connection with your product or service. This could leave yourself open to a wide range of accusations. Not only is it wrong but it’s also a massive risk - you are bound to get found out sooner or later, so just don’t do it at all.

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