• Product failure affects reputation and consumer behaviour

    Businesses that rely on the success of their products will be well aware of the effects of highly publicised failures. From heightening reputational risk management concerns to disrupting sales forecasts and consumer confidence, widespread issues can greatly influence the way a business operates. 

    Few industries have been exposed to these concerns like the automotive sector over the past 12 months. News that a range of Volkswagen's diesel-powered vehicles were able to cheat emissions tests sparked one of the biggest crises in recent years, with the resulting consumer uproar forcing the company to respond and begin repairing its damaged reputation. 

    The recalls involving Takata airbags also provided manufacturers with some food for thought, revealing that the actions of their respective supply chains could impact their public image. 

    How have these trends changed the way the public responds to automotive companies?

    New car purchasing trends reflect negative publicity

    Automotive research firm J.D Power recently published its 2016 U.S. Auto Avoider Study which reveals the many conditions that factor into a new car purchase for the general public. 

    According to the firm, the 2016 results mark the first time in nearly 10 years that reliability has emerged as the most desired feature in a new vehicle. The majority of survey respondents (55 per cent) indicated the lack of mechanical issues and ongoing maintenance is the most important characteristic in a new vehicle. 

    Vice President, Quality Practice Dave Sargent directly attributes these trends to the number of product recalls and other failures that dominated automotive news headlines over the past 12 months. 

    "With so many auto recalls in the news and challenges with the introduction of new technology, consumers are even more attuned to the expected reliability of new vehicles," he explained. 

    Dave also noted the fragility of an organisation's reputation in an industry where regular product recalls quickly become widespread. The fact that negative consumer reaction is appearing in a quantifiable form through this data is further evidence of how it affects reputational risk management

    "Bad news can tarnish an automaker's reputation in an instant, yet, can take years to build back up," he continued. "Automakers need to convince consumers of the true reliability of their vehicles so it is not a reason to avoid selecting a particular model." 

    As an industry that is continuing to evolve and push the limits of technology, it's important that automotive companies realise how the general public react to errors of judgement. 

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