The Samsung brand is blowing up — not in a good way
With over 70 reported cases of Samsung’s Galaxy Note 7 devices overheating in the U.S., Samsung has become the hottest brand of the moment for all the wrong reasons. But while exploding batteries may have triggered Samsung’s ongoing brand crisis, other brands are exacerbating the smartphone maker’s woes.
— NYCT Subway (@NYCTSubway) September 13, 2016
The Federal Aviation Authority in the U.S., transit authorities like New York’s Metropolitan Transportation Authority and New Jersey Transit as well as airlines including Singapore Airlines, Qantas and Virgin Australia are all telling passengers not to turn on Note 7s or charge them on flights, buses and trains. These warnings come on the heels of a massive global recall of Galaxy Note 7 devices by Samsung, which has already damaged its reputation and caused a decline of $26 billion in its market value, according to financial data provider Factset, Engadget reported.
The MTA, which operates New York City’s subway and bus systems, the Long Island Rail Road and Metro North, said in its warning Wednesday that “customers should turn off #Samsung Galaxy Note 7 before entering station or boarding bus due to concerns device’s battery can ignite.” Meanwhile, New Jersey Transit “strongly urged” all customers “not to use or charge the mobile device on board trains, buses, light rail vehicles or in stations and facilities.”
“It’s pretty poignant and is impacting them in a serious way,” said Gene Lewis, partner and chief creative officer at Digital Pulp. “When it is a genuinely scary issue of phones blowing up, people may not care if it is the Galaxy Note 7 specifically, and all Samsung smartphones may collectively start facing backlash.”
It certainly doesn’t help Samsung that the safety issue is being constantly brought up by the MTA and FAA, said Red Peak brand strategist Kristen Nozell. “It’s a persistent reinforcement of a negative incident to both Samsung owners and general consumers,” she said. “They’re not bashing the brand, they’re just trying to maintain safety – but, of course, it extends the conversation around and awareness of a negative incident.”
Indeed, audience sentiment around the Galaxy Note 7 has taken several hits in the last couple of weeks, according to data crunched by to marketing technology company Amobee. Since Samsung announced the recall on Sept. 2, over 75 percent of the digital content engagement around it has been negative. The FAA urging passengers not to use their Samsung Galaxy Note 7s on planes has further worsened the perception problem around the product, with a 200 percent increase in negative sentiment Sept. 8 onwards. Overall, there have been over 33,000 tweets mentioning both Samsung and the word “fire” between Sept. 2 and Sept. 13, and the fire emoji has been used 2,000 more times alongside Samsung on Twitter in the same time period.
The timing of the crisis seems to be particularly unfortunate, directly coinciding with the announcement of Apple’s iPhone 7, experts said. Consumers usually tend to be loyalists as far their smartphone preferences go, but such incessant negative chatter around the brand is organic advertising for many of its competitors and could prompt at least a segment of its audience to defect to them. A CNET poll reports that nearly half will make the switch.
“This is almost like a political election,” said Rick Milenthal, CEO of The Shipyard. “And the swingers are likely to switch sides to other brands.”
Since the iPhone 7 was announced on Sept. 7, there has already been 14 percent more digital content engagement around it than around the Galaxy Note 7, according to Amobee. “It’s not a major narrative around the phone, but people are talking about the iPhone 7 Plus more because of the Galaxy Note 7 problems,” Jonathan Cohen, principal brand analyst at Amobee, said.
To make matters worse, Samsung’s response to the crisis has been largely sub par, experts said. The approach taken by the South Korean company is slow and haphazard, and the narrative is being driven by external agencies like the FAA and other airlines. While the company is trying to be proactive and asking users to download a system that won’t let Note 7 batteries charge past 60 percent, it could stand to be far more aggressive in its approach, experts said.
“Their passivity is hurting them. It seems that they are hoping it just blows over,” said Lewis. “The biggest problem is that it is a large, faceless corporation and has no figure at the forefront of the damage-control efforts. Had it been Apple, I would imagine Tim Cook taking the challenge head on.”
While it’s brand may have taken a severe beating, experts said that it is unlikely that Samsung would face any serious long-term consequences. It definitely isn’t the first company to face battery troubles. Just this year, both HP and Sony both recalled computer batteries for fire hazards, and about 500,000 hoverboards were also recalled due to fire risks. Moreover, it has a diverse portfolio of products beyond smartphones.
“When an organization is pushing the envelope in pursuit of innovation, people are more likely to forgive mishaps like this,” said Milenthal. “They must embrace the cost of fixing it, adopt full disclosure, mobilize an honest campaign and unleash their brand evangelists.”
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