Issues and Crisis Management Essay Example

ISSUES AND CRISIS MANAGEMENT

Issues and Crisis Management: Kendall Jenner Pepsi Ad Backlash Case Study

Introduction

PepsiCo. Inc is a leading beverage company that manufactures and sells its products in more than 200 countries around the globe. The Pepsi company began in 1965 with a merger of Frito-Lay and Pepsi-Cola in 1965 (Pepsico.com). The company is a parent company to more than 22 different established brands such as Tropicana, Quaker, and Gatorade. Today the company is a global beverage and food leader through the 19 different product lines that it offers (UNEP 2015, p.1). With annual revenues of around $60 billion, the company enjoys unique sustainable growth, which is attributed to its marketing strategies (UNEP 2015, p. 1). In 2013, PepsiCo’s food business accounted for around 52% ,while the beverage business accounted for around 48% of the company $66.4 billion gross revenue.

The Crisis Faced by the Company

On April 2017, the Pepsi company faced an ad backlash as it tried to use counterculture and protest movements to sell its products (Alexander 2017). According to Jake (2017) in the LSB magazine, the company was aiming at projecting a global message of peace and understanding in its ad campaign featuring Kendall Jenner, only for the ad to be misinterpreted. In the two minute ad, Jenner comes from the midst of the protesters, walks up to the controlling police officers, and hands him a Pepsi beverage (Jake 2017). The audacity of the company to seal the Pepsi beverage in a visual language of movement resistance prompted a harsh backlash on the various global social media platforms.

The ad trivialized the urgency of racial protest movement issues that were currently happening in the country. According to activist McKesson, the ad diminishes the gravity of why the protestors were in the street in the first place (Alexander 2017). In the eyes of many, Pepsi intended to make light of the black lives movement and minority struggle which was happening in the country. In pulling down the ad, the Pepsi company failed to apologize to all people who have been protesting for the two years, a factor which led to more critics of the company even after the advert was pulled down (Alexander 2017). The climax of this issue occurred when some took to twitter, calling out the Pepsi brands with satire (Jake 2017). Customers started tweeting that they are boycotting the Pepsi products until the company does something blasphemous.

Perspectives of the Major Stakeholders

According to Roberto (2017), Pepsi stakeholders have expanded in terms of their demands alongside the company’s mission in global growth and expansion. All the same, the corporate stakeholder’s consideration remains to be one of the company’s core objectives (Miles & Darroch 2006, p. 195). As such, the major Pepsi stakeholder’s interest still remains satisfied. The following is a list of the Pepsi main stakeholders arranged according to the company’s stakeholder prioritization; customers, communities, employees, investors, and the government (Kahla 2013, p.6). From the company prioritization of the consumers, it’s clear that the consumers and the customers are given the top priority while the government is accorded the lowest priority in the company’s strategic planning and crisis management as well.

The company’s consumers, both the existing and the potential ones developed very negative stances on the Kendall Jenner ad backlash (Charles 2017). Some went to the extent of demanding an apology from the company and threaten to boycott the company’s products if the management failed to apologize (Alexander 2017). This stance was caused by the failure of the company to properly forecast the consumer’s emotional and cognitive reactions. The ad also caused a lot of anger and distress among the community as shown in the torrent of mocking memes and tweets that followed the release of the ad (Jake 2017).

How the Management Managed the Issue/Crisis

The Pepsi management responded to the ad backlash crisis by starting with pulling the ad down and then proceeded to apologize on the same (Kaila 2015). According to an official statement released by Pepsi, the company was trying to project a global message of unity and understanding. The company admitted that they had clearly missed the mark and apologized for the same (Julia 2017). All these crisis management strategies were enacted after the management initially tried to defend the ad by stressing that it was meant to reflect people from different diversities coming together in harmony. According to the Mary Sue (2017), these initial attempts came in the midst of the endless stream of mocking meme designated towards the brand

Effectiveness of the Pepsi response

The effectiveness of an Ad backlash can be crisis management can be determined by a crisis management framework which looks at the response level and the impact of the response. The level of the ad backlash response is identified as a controversial issue (David 2015, p. 14). The controversial issue situation is always complex since it requires the input of the major stakeholders which at times might be varied. It’s in this context that the crisis management approach can be described as ineffective as the company failed to apologize to the all the people who have been protesting for the alleged two years. According to NBC news (2017) activists argued that the company should have first realized that it’s this group which was responsible for creating the crisis in the first place, and therefore first began with apologizing to them.

Accessing the impact of the crisis response is another way in which the effectiveness of the ad backlash crisis response can be determined (Claeys & Cauberghe 2014 p,182). The afterward brand reputation, image, and identity should be a clear indication of the effectiveness of the crisis response approach that was used in managing a crisis (Larissa 2013, p.31). The Pepsi apology and response to the ad backlash did a very little help to the already destroyed brand image, this was evident in two months down the line when the company experienced a drastic fall in its marginal revenues. In addition, Pepsi failed to show any concerns in their corporate social responsibility. In responding to the crisis, the corporate should as well parade their policy on the racism issue (Vos 2003, p.141). It’s the failure to depict its social corporate responsibility on the alleged issue which made the response less effective.

Recommendations

In case the Pepsi Company faces an ad backlash in the future or an issue similar to this one, it needs to strategically arrange on how, who, and when to address the crisis (Emma 2017). Some of the crisis management recommendations that can effectively mitigate such crisis in the future include:

Understand the Crisis

Before acting on the crisis, the company should first have fully understood the crisis. It’s critical to first ascertain all the issues and understand the exact possible impacts of the crisis before addressing it (Kim & Krishna 2017, p. 19). This means that the company should first identify the key stakeholders affected by what the long-term ramifications might be. This information will help the management to determine the best solution for the company. For instance, in the occurrence of Kendall Jenner ad backlash, the company should have first analyzed and prioritized the stakeholders’ interest affected before coming into a strategy (Alexander 2017).

Manage the Expectations

The case study presents an issue that Pepsi fully failed to do during the Kendall Jenner ad backlash. According to (Emma 2017) the company should have first analyzed both the customers and community expectations before determining what to do next in addressing the scenario (Zhao & Park 2014, P.842). In managing the ad backlash, for example, the company should have considered its social corporate responsibility by stressing on their stand on the racism issues. Generally, when a company is in such a situation, there is need to come up with SMART (specific, measurable, time specific, realistic, and achievable) goals and communicate them to the affected group (Peloza & Shang, 2011 p.117). This acts as a proof that the firm is serious about rectifying the previous issues.

References

Alexander Smith. 2017. Pepsi Pulls Controversial Kendall Jenner Ad After Outcryhttp://www.nbcnews.com/news/nbcblk/pepsi-ad-kendall-jenner-echoes-black-lives-matter-sparks-anger-n742811

Claeys, A.S. and Cauberghe, V., 2014. What makes crisis response strategies work? The impact of crisis involvement and message framing. Journal of Business Research, 67(2), pp.182-189.

2017.How did Pepsi’s ad even get off the drawing board. https://www.usatoday.com/story/money/2017/04/06/pepsis-ad-diversity/100133470/Roger YuCharisse Jones and

pic.twitter.com/HsvUvj27BlCharles M. Blow (@CharlesMBlow) April 5, 2017. https://t.co/9Rf91nLVyX

David R. 2012. Crisis Management Plan. The university of Memphis. http://www.memphis.edu/crisis/pdf/crisis_mgmt_plan.pdf

.2017. Crisis management for entrepreneurs: how to deal with PR disasters https://www.theguardian.com/small-business-network/2017/apr/25/crisis-management-entrepreneurs-pr-disasters-united-airlines-pepsi Emma Sheppard

Jake Miller 2017. More PR problems for Pepsi: When ads turn into issues. LSB Blog. http://www.lsb.com/pr-problems-for-pepsi/

. 2017 19.50 BST. Pepsi pulls Kendall Jenner ad ridiculed for co-opting protest movements. https://www.theguardian.com/media/2017/apr/05/pepsi-kendall-jenner-pepsi-apology-ad-protestJulia Carrie Wong

Kahla, Standwich O. , Klein A. and Hudson J. M. 2013.Crisis Management Plan. Pepsi Crisis Management Plan

Kaila Hale-Stern April 5th, 2017Pepsi Decides to Pull Its Disastrous Kendall Jenner Ad After All. The Mary Sue.

Kim, S. and Krishna, A., 2017. Bridging strategy versus buffering strategy: enhancing crisis management capability in public management for relational and reputational improvement, and conflict avoidance. Asian Journal of Communication, pp.1-19.

Larissa Ott. 2013.Reputation in danger: Selected case studies of reputational crises created by social networking sites

Miles, M. P., Munilla, L. S., & Darroch, J. (2006). The role of strategic conversations with stakeholders in the formation of corporate social responsibility strategy. Journal of Business Ethics, 69(2), 195-205.

Peloza, J., & Shang, J. (2011). How can corporate social responsibility activities create value for stakeholders? A systematic review. Journal of the academy of Marketing Science, 39(1), 117-135

Roberta Greenspan 2017. PepsiCo’s Stakeholders: A CSR Analysis. http://panmore.com/pepsico-stakeholders-csr-analysis.

UNEP Case Study 2015. PepsiCo Technologies That Replace HCFCs http://www.unep.fr/ozonaction/information/mmcfiles/7490-e-PepsicoCS.pdf

Vos, J. F. (2003). Corporate social responsibility and the identification of stakeholders. Corporate Social Responsibility and Environmental Management,10(3), 141-152.

 Zhao, M., Park, S.H. and Zhou, N., 2014. MNC strategy and social adaptation in emerging markets. Journal of International Business Studies, 45(7), pp.842-861.