Chapter 10 SK-IIVS CONTEC: The difference between arrogance and rationality

SK-II and Contec encountered a crisis of trust at different times and in different fields.In the face of the crisis, Procter & Gamble and China-US SmithKline have completely different responses to the outside world, and the final results are also completely different. At the same time, they have left us with two completely different typical cases in terms of crisis management. . SK-II and Contac, one is one of the most high-end cosmetic brands in the world under Procter & Gamble, and the other is Sino-US Smith Keline, which has occupied the domestic cold medicine market of 600 million yuan since its entry into the market, and its cumulative sales in 11 years exceeded 5 billion tablets of well-known cold medicine.They both encountered brand credit crises at different times and in different fields. Facing the crisis, the two companies adopted very different ways to deal with the crisis, and the consequences of the two ways were also very different.One paid the price for arrogance, and the other was appreciated for reason.

SK-II and Contec are two very different cases of crisis management. Here, we might as well make a comparison. According to relevant information, in January 2005, a Jiangxi female consumer named Lu Ping, who was engaged in the insurance industry, believed the well-known cosmetics brand SK-II's statement that "continuous use for 28 days, fine lines and wrinkles were significantly reduced by 47 %” advertising campaign, I spent 840 yuan in a large department store in Nanchang to buy a 25-gram pack of SK-II Skin Firming and Anti-Wrinkle Essence.As a result, after 28 days of use, Ms. Lu not only did not find that her "skin was 12 years younger, and fine lines were reduced by 47%", but she also experienced skin itching and partial burning pain during use.For this reason, she entrusted a lawyer to sue SK-II on false advertisements and other issues.

According to the lawyer's investigation, the product of this SK-II firming and anti-wrinkle essence milk is also suspected of having unknown ingredients and containing corrosive substances.According to Ms. Lu’s client, Mr. Tang, they tore off the Chinese self-adhesive description on the bottle of this product, and found that the Japanese description of the product ingredients was originally printed on the bottle. The product ingredients on the Japanese label showed that this SK -II Firming and anti-wrinkle essence contains chemical materials such as sodium hydroxide, polytetrafluoroethylene, and sodium benzoate. Among them, sodium hydroxide is commonly known as "caustic soda" and is highly corrosive, while polytetrafluoroethylene is commonly known as "special" "Fulong" and "Teflon" are common chemical materials used in the manufacture of rice cooker non-stick pans.

Therefore, Mr. Tang believes that not warning the relevant ingredients in Chinese on the product packaging violates the provisions of Article 28 of my country's "Product Quality Law"; not labeling the ingredients in Chinese violates the Chinese consumers' right to know. This became the beginning of Procter & Gamble's brand credit crisis. The client, Lu Ping, had some adverse reactions during the use of SK-II products, so she consulted with the consulting service personnel. At that time, the consulting service personnel told her to "wait for 28 days!" However, after 28 days, the adverse reactions became more severe.So, she went to the SK-II counter to reason. It was said that the service staff was very rude and unreasonable, and said: "You can sue wherever you want!" Reasons to sue Procter & Gamble:

1.False advertising: SK-II's advertising brochure claims that "after 4 weeks of use, the skin will be 12 years younger and fine lines will be reduced by 47%". Cases of itching and partial burning of the skin.The ad is suspected of being fraudulent. 2.Violation of consumers' right to know.After Ms. Lu and her client, Mr. Tang, tore off the self-adhesive Chinese description on the bottle of the product, they found that the Japanese description of the product ingredients was originally printed on the bottle.The product ingredients marked in Japanese indicate that the ingredients of this SK-II firming and anti-wrinkle essence include sodium hydroxide and other chemical materials. Among them, sodium hydroxide is commonly known as "caustic soda" and is highly corrosive.Therefore, Ms. Lu and Mr. Tang believe that the Chinese consumers' right to know has been violated by not warning the relevant ingredients in Chinese on the product packaging.

On March 10, Procter & Gamble China Co., Ltd. became the defendant and was approved by the court, and Procter & Gamble received a court summons. After the crisis expanded and was sued, Procter & Gamble did not take the initiative to control or guide the media, but just issued a statement hastily, saying that "their products have double insurance to ensure their safety", and emphasized that "the promotional content of the products in the product manuals has been tested. data support".Procter & Gamble issued a few clarifications, which were overwhelmed by more violent doubts. Procter & Gamble was also accused by public opinion of being rigid and even arrogant.

SK-II storm intensified.Media reports on "Procter & Gamble's SK-II defendant contains corrosive ingredients" have reached a fever pitch.But until March 11, Procter & Gamble did not hold any media meeting activities, nor did it take the initiative to provide newsworthy written materials to the media.As a result, Procter & Gamble missed the best time to put out the fire, and the media hype intensified, eventually becoming out of control. As the saying goes, good things don't go out, but bad things travel thousands of miles.In the first 12-24 hours of a crisis, news will spread at high speed in a fission manner like a virus. The company must act decisively, respond quickly, take decisive action, and communicate with the media and the public.It is a pity that P&G reacted regrettably by cutting off a possible opportunity for reconciliation with consumers and activists themselves.After the crisis, SK-II's "suspected false propaganda" and "caustic soda scandal" spread quickly under the attention of the media. From consumer complaints, to the intervention of the industrial and commercial departments, and to the filing of the case by the court, it took only a few days.

When Procter & Gamble was sued, Qiqi, the spokesperson of SK-II, sent a fax on March 8 to say that she would continue to support SK-II. They also sent emails expressing their solidarity, saying, "I am happy to continue supporting SK-II."However, Carina Lau's support was immediately questioned by the plaintiff, Ms. Lu's agent, Mr. Tang, and Carina Lau and Procter & Gamble were added to the list of defendants. At this time, it is very inappropriate for Procter & Gamble to move out the image spokesperson of the product. Anyone who is not mentally handicapped will understand that the solidarity of the spokesperson is based on the commercial interests of millions of dollars, and its credibility can be imagined. At best, it just adds a little more material to the media, allowing reporters to earn more manuscript fees.

Under such circumstances, it is not advisable for Procter & Gamble to use celebrity spokespersons to free itself from the siege of public opinion.For the public, how many stars can be trusted?When a lot of advertising remuneration is in the bag, the stars use "rhetoric words" to help companies shout, use "sweet words" to persuade consumers, use "sweet words" to deceive consumers, and use "nonsense words" to deceive consumers.Such a view has become the consensus of some people, and celebrity support is really not enough to win the trust of the people.Procter & Gamble once again put itself in a passive position.

After the diversion crisis, Procter & Gamble did not try to solve the problem, but launched a series of public welfare activities smartly, trying to divert the attention of the media and the public. "Growth" and donated 4 million yuan to the No. 1 brand of public welfare undertakings in China - Project Hope. But to untie the bell, one must tie it.If the source of the fire is not extinguished, how can the fire be brought under control? In fact, the public and the media often already have a steelyard in their minds, and have psychological expectations for the company, that is, how the company should handle it before I will be satisfied.Therefore, enterprises must not choose to confront and evade, and attitude is very important.Procter & Gamble wants to get out of the predicament by diverting attention, but how can such a serious public brand credit crisis be changed with only one charity event?Therefore, the holding of public welfare activities did not restore people's confidence in the SK-II brand, and P&G's public relations once again deviated from the core of the crisis.

On March 21, Henan's "Today's Ann Daily" disclosed that a consumer in Zhengzhou decided to sue Procter & Gamble because he was worried about the quality of SK-II and was refused to return the product.Many media reposted the news and questioned SK-II's safety again. This almost once again pushed Procter & Gamble into the vortex of public opinion. After a crisis occurs, the public will be concerned about two issues: one is the issue of interests.Interests are the focus of public attention, so no matter who is right or wrong, companies should take responsibility.On the other hand, there are emotional issues. Enterprises should express sympathy and comfort from the standpoint of the victims, and take practical measures to win the understanding and trust of the public.After the incident, although P&G issued an open letter and statement, P&G did not try to appease consumers, but played itself as a victim of a "conspiracy", characterized the incident as "malicious hype", and even claimed that there were interest groups behind it instigated.Everything P&G does is centered on the interests of its own company. This will not only make many consumers feel that they have been wronged, but also make consumers doubt and panic about it. Netizens are just as irrational as adding fuel to the fire.As a result, various media have followed up. On the Internet, topics such as "Procter & Gamble's SK-II defendant contains corrosive ingredients" and "90.56% of netizens believe that SK-II contains sodium hydroxide is harmful to the human body" are everywhere. All, and no surprise. On March 25, Procter & Gamble issued an "Open Letter to the Media", saying that their test results for SK-II Firming and Anti-Wrinkle Essence showed that all indicators met the national requirements and there was no quality problem. At the same time, Procter & Gamble reiterated that sodium hydroxide is one of the commonly used ingredients in the cosmetics industry. When this ingredient is used to adjust the pH value of skin care products, relevant regulations in China, Japan, the United States, Europe and other markets do not require There are special warning signs. As for the Nanchang Industry and Commerce Bureau’s investigation conclusions on Procter & Gamble’s SK-II skin firming and anti-wrinkle essence product brochure, “the definition is not clear enough” and “the description of the experimental data is not comprehensive enough”, P&G said: “For the Nanchang Industry and Commerce Bureau’s Procter & Gamble accepts the findings of this investigation. We also hope to express our sincere apologies to consumers for the omissions in product brochures through this letter." In April, Procter & Gamble went to the Nanchang City Administration for Industry and Commerce to sign and acknowledge the punishment. The Nanchang City Administration for Industry and Commerce fined P&G 200,000 yuan in accordance with regulations. The industrial and commercial penalty of 200,000 yuan is really a drop in the bucket for Procter & Gamble's promotional expenses for SK-II.However, the SK-II brand lost far more than this mere 200,000 yuan.According to Procter & Gamble’s latest market survey data on SK-II’s target consumer groups in early April, 12% of SK-II consumers questioned the safety of products due to the turmoil of SK-II. In , this data is 25%. The industrial and commercial punishment shows that Procter & Gamble has indeed violated consumers' right to know. At this time, it seems that it is neither honest nor responsible.The understatement of the word "negligent omission" is even more deliberate, and one can imagine how the public will react to these words. Although Procter & Gamble admitted that the description of the experimental data of SK-II Firming Anti-Wrinkle Essence was not comprehensive enough, and stopped using the brochure of this product, it was lucky and did not modify the advertisements of other products. On April 7, Wang Hai, an anti-counterfeiting person, reported to the State Administration for Industry and Commerce that Procter & Gamble SK-II advertisements defrauded consumers.Wang Hai stated in the report materials that the advertisement of SK-II skin care essence published by Procter & Gamble "can amplify the anti-aging effect by 2 times, the whitening effect by 3 times, and the moisturizing effect by 4 times." The various data cited did not indicate the source , and obviously has no factual basis, which violates the provisions of Article 10 of the Advertising Law of the People's Republic of China. Procter & Gamble was caught with braids again, but since it was caught with one braid, why not cut off all the braids?Procter & Gamble may really have to reflect on Mr. Zhang Ruimin's words - "always tremble with fear, always walk on thin ice". A single spark can start a prairie fire.Today, with the development of information and information, a small mistake is enough to kill a company.In the face of public opinion, enterprises are vulnerable.The most important principle of crisis management is to nip the crisis in the bud.Multinational companies that consider themselves prudent but are regarded as arrogant by public opinion should pay attention to whether they are perfect enough. In this case, Procter & Gamble has always put on a righteous posture and behaved arrogantly in front of the public. Even if it later adopted some efforts to reshape the brand, it has inevitably lost many opportunities for recovery, and the media is almost one-sided. Questioning Procter & Gamble, anyway, the plaintiff pointed out the mistakes in Procter & Gamble's brochure after all.Procter & Gamble finally paid the price for this and lost the market. In some cities, SK-II sales fell by even more than 20%. The sales of SK-II have already been affected, and in this turmoil, Procter & Gamble has become the main body of media reports, and P&G has a large number of well-known brands, and the image of the entire company has obviously been affected.Afterwards, Procter & Gamble admitted that the company had insufficient communication and cooperation with the print media, especially the online media, and finally admitted that "we are wrong if we are wrong." Also suffering from the brand credit crisis, Procter & Gamble's attitude made people feel that it was too arrogant, and the crisis became deeper and deeper. Let's look back at how Contec handled the brand crisis in the PPA incident that happened a few years ago. Contec and Kangde, the two flagship products of Sino-American SmithKline.It is reported that since entering the market, Contac and Kangde have occupied the domestic cold medicine market of 600 million yuan, with cumulative sales of more than 5 billion pills in the past 11 years.Some insiders estimate that Contac and Kangde occupy 80%-90% of the cold medicine market. However, everything is unpredictable. On November 15, 2000, a day that may be remembered forever by Sino-American Smith Kline, this day will be written into their own corporate history.On this day, the State Drug Administration issued a notice on suspending the use and sale of drugs containing PPA, and Contac and Kangde both contain PPA. medicines are pulled from the shelves.At this moment, if there is a little carelessness, not only the brand Contac will suffer, but also the Sino-US SmithKline enterprise will suffer.After the incident, Contec became the target of media criticism for a while, because Contec was so famous that people almost equated PPA with "Contec", but at this time, competitors quickly put up billboards that did not contain PPA , to snatch the cold medicine market, intending to completely drive Contac out of the market.There are many crises. This leading company, which once firmly held the top spot in the cold medicine market, seems to be about to collapse in the precarious situation. Too many people, including competitors, are paying attention to the dynamics of China-US SmithKline. Over time, "New Contac" without PPA reappeared in the market and quickly became a hot seller. People can't help but be surprised: how Sino-US SmithKline survived the crisis in such a short period of time. If we want to sort out how China-US Smith Kline survived the brand crisis, we have to go back and re-look at the incident that almost killed China-US Smith Kline. The time of the PPA incident went back to November 15, 2000. The State Food and Drug Administration issued a notice: Prohibition of PPA. On November 16, Sino-US SmithKline established a crisis management team immediately after receiving the official notice to formulate the tone of the position to deal with the crisis and unify the caliber; the communication team is responsible for information release and internal and external information communication; the marketing team is responsible for Speed ​​up the development of new products; the production team is responsible for organizing and adjusting production and handling intermediate products on the production line.At the same time, the crisis management team issued a crisis public relations program: implement the government's moratorium order, suspend production and sales; notify dealers and customers to immediately stop the sales of Contac and Kangde, and stop advertising and marketing activities. At noon on November 17th, a general staff meeting was held to inform all staff of the ins and outs of the matter, and announced that the company would never lay off employees. During this turmoil, Smith Kline did not lay off an employee because of the suspension of production of Contac and Kangde. what role.Smith Kline’s leadership made such a decision because they believed that they would not be trapped in the PPA incident for too long, and firmly believed that the economic benefits created by skilled technical workers in the future were higher than the losses suffered by the company’s retention of them now; another On the other hand, in addition to Contec and Kangde, the products of Smith Keline also include Fenbid, Tagamet, and Changchongqing. In order to ensure the normal production of these products, Smith Keline must do its best to stabilize people's hearts.This is like the first domino falling down. In order to prevent the following cards from falling down one after another, you must try your best to stabilize the latter one and control the risk within a limited range.The economic benefits of doing so are beyond consideration, but it firmly binds the employees and the company together. Afterwards, an employee of Square Kline said: "We have gone through ups and downs with the company, and we share weal and woe. It doesn't make sense to leave when you get frustrated." On the same day, more than 50 sales managers across the country were recalled to the headquarters, and the crisis management team went deep into it to do ideological work.The dealer got a clear promise from Smith Kline that no refund will be made if there is no refund, and 100% of the refund will be refunded. At the critical moment, Smith Kline exchanged its own loss for the dealer's loyalty. On November 18, China-US SmithKline's "Letters to Hospitals" and "Letters to Customers" were sent nationwide.Dozens of trained full-time operators are in place, and 15 consumer hotlines are fully opened, responsible for answering inquiries from customers and consumers. On November 20, China-US SmithKline held a news media meeting in Beijing, and made a stand and determination not to affect investment in China and "will give consumers a satisfactory solution after the results of the PPA come out".It is precisely because of the implementation of these measures that Contec's good brand image has been preserved. In order to persuade the company's major shareholders to restore confidence in the company and continue to invest in the company, the senior management of Smith Kline invited the shareholders to the production site to let them see that the employees of the company maintained high morale; The headquarters dispatched experts to demonstrate the feasibility of new anti-infection drugs.In addition, make a complete set of solutions to let the headquarters know how the company will deal with these difficult problems and what resources the headquarters needs to provide, all of which are supported by scientific data.In this scientific demonstration, the headquarters saw the regained business opportunities and agreed to continue to invest more.Shareholders' confidence, abundant liquidity and good business reputation ensured that SmithKline did not experience a serious financial crisis during the entire process. Not only did it bear the direct economic loss of 700 million yuan caused by the destruction of Contec, but it also had follow-up funds Research and develop new drugs. It can be said that SmithKline's response was quite quick and rational.During the nine months of the crisis, Yang Weiqiang, the general manager of China-US SmithKline, took the trouble to accept interviews from various media.China-US SmithKline always takes the initiative to communicate with the media and strives for opportunities to speak. They believe that the public is passive in receiving information. China-US SmithKline needs to communicate with different media. The facts are conveyed to consumers, and in order to maintain a unified voice to avoid unnecessary misunderstandings, the company only speaks to the outside world by Yang Weiqiang.Yang Weiqiang has a clear mind and views on media hype and false reports. He once said in response to reporters' questions: "We have analyzed the situation in all aspects and made a quick judgment. Regarding media reports, we do not recognize or raise Different opinions are wrong, because at this time, any excuse will be considered as the company's sophistry for the benefit of the company. How credible is it? At this time, you can't say different voices from the perspective of the company. Even if you say it, others will not I will believe it.” It can be said that SmithKline’s communication with the media in this crisis was quite successful. Like many companies in the face of crisis events, after the event, considering that stopping sales or production will cause huge economic losses to the company, the company has to face investors and major shareholders. There are many concerns: how to deal with so much inventory?Do you accept returns and how?Can working capital support the development of enterprises?How to deal with negative impact, how to turn negative impact into positive impact?How to deal with shareholders?How to deal with the relationship between employees and enterprises?The core problem of all is to solve the human problem. China-US SmithKline has grasped this core, and at the same time calmly analyzed the possible development of the situation. It believes that there may be three situations in which the country suspends the PPA. One is to continue indefinitely To pause, one is to resume sales, and the other is to stop forever.Based on this analysis, it is of course better to resume the suspension, and it will be a matter of time to continue the suspension and stop forever. As a company, it can only face the reality and make other plans early.This mentality has played a key role in helping China and the United States Smith Kline overcome the crisis. After the PPA incident, the outside world equated PPA, Contac, and Sino-American SmithKline. In fact, Sino-American SmithKline also has many well-known products such as Fenbid.If Contac cannot be distinguished from other products, it may affect the survival of the entire Sino-American SmithKline.Therefore, they quickly divided the staff into two stalls, and made it clear that the management should separate the Contac incident from other businesses, while the staff below formed a special team to deal with the resulting intricate affairs.The result of doing so has achieved extraordinary results. In the words of a reporter from Tianjin Daily at the time: "Facing the crisis, the management is normal, the production is normal, the sales are normal, and everything is normal." No one knows how much hard work this normality took.When SmithKline decided to remove all the products from the shelves, the distributors still had 100 million yuan worth of goods in their hands. The liquidity of the distributors would be affected, and the distributors would suffer great losses. How can we cooperate in the future? .China-US SmithKline took corresponding measures to minimize the losses of the dealers. First, they did not collect the money and talked about it after the problem was solved in the future; then they invited the dealers to come to the company to communicate, reach a mutual understanding, and promised in other aspects Make compensation; at the same time provide dealers with solutions for downstream customers.Since the plan provided by Sino-American SmithKline is very thorough, and the two parties have established a mutual trust relationship in the long-term cooperation, and the normal operation of other products of Sino-American SmithKline has also provided confidence to the distributors. After the incident, many competitors of Contec launched advertisements that did not contain PPA, so as to snatch the market gap left by Contec’s withdrawal and aggravate the crisis of Contec at the same time.But at the time they had no choice but to be silent, and they couldn't stop others from doing that.If there is any action, it will just give the media a reason to hype, and it will not be of any benefit to China American Smith Kline. On the contrary, it will be beneficial to competitors, and it may also attract more attention to the opponent's advertisements.The silence of China-US SmithKline shows everyone their generosity, and they have not been thrown into chaos by the aggressive attacks of their competitors. New Contac released According to market surveys, the Contac brand enjoys a recognition rate of over 89.6% across the country, and it outperforms similar products in terms of key characteristics such as "good curative effect, fast onset of action, and long duration of action".During the period when Contec was withdrawn from the market, consumers still had a certain favorable opinion of the brand.In the quantitative survey of 20 cities across the country in 2001, 90% of consumers expressed that they "will accept" or "can consider accepting" Contac's return to the market.It is precisely because of the strong brand equity formed by the Contac brand in the market and the trust given to the brand by consumers that Sino-USSmithKline is full of confidence in new products. Nine months later, New Contac went public.There is a reason why new products are developed and brought to market so quickly.According to Yang, the general manager of China-US SmithKline, the drug Contac has been included in the pharmacopoeias of the United Kingdom and the United States, so there is no need to change a lot. New Contac does not contain PPA and is replaced by pseudoephedrine hydrochloride (PSE) The ingredient of chlorpheniramine makes Contac safer.The technology used by Contac has not been adopted by any company in China so far, so the advanced technology provides a guarantee for the stability of the medicine.Before the crisis, the company began to research and develop new cold medicines without PPA from the perspective of environmental protection. It was basically successfully developed in 1999. The occurrence of the PPA incident accelerated the pace of declaration to the state.Strong technical strength has given Contac a new lease of life in a very short period of time. Based on the confidence brought by consumers to Sino-American SmithKline and the support of strong technical strength, Sino-American SmithKline has invested 145 million yuan in new products, and the new products that have been relaunched still continue the brand strategy of Contec. It is also fully launched in various places and on the central station. They are very confident in this product. It is reported that "New Contac" has won an order of up to 370,000 boxes in the South China market on the first day of its listing. After the Contec PPA incident, there is one point worth thinking about.After Contac withdrew from the arena, it left a huge market vacuum and a market share worth 700 million yuan per year. This is "a golden opportunity" for any cold medicine manufacturer (Yang Weiqiang).At that time, someone asserted that the OTC market would be reshuffled, and people in the industry speculated who would replace Contec as the leader.However, until the reappearance of "New Contac", in the past 292 days in the OTC market for the treatment of colds, no pharmaceutical company stood out as the leader. . The answer given to us by Sino-USSmithKline is that at that time, Contac was able to stand out among many cold medicines. On the one hand, it was of excellent quality. Contac’s unique slow-release technology can make the curative effect of the drug precise and stable within 12 hours. So far, there is no cold medicine comparable to Contac in terms of long-term relief of cold symptoms; on the other hand, Contac has a very clear market position, mainly used to relieve the symptoms of colds at the initial stage, usually taken for two days 4 capsules can have a very obvious effect. Although Contac has withdrawn from the market, no pharmaceutical industry can replace Contac's position. Looking back at the handling of the Contac incident, it is no longer as thrilling as it was when it happened.Although Sino-American Smith Kline paid a price of 600 million yuan for this, its new life has rediscovered its own market for it.After the whole incident happened, Square Kline’s performance in handling the crisis was used as a model for the company to deal with similar crises in the future, setting an example for other companies, and “Contec” became a benchmark in crisis management cases.The words of Yang Weiqiang, general manager of China-US SmithKline, may better let us know how a company can better survive the public relations crisis and make the company tide over the difficulties.He said: "The more standardized a company is, the less public relations crisis will occur. Even if a crisis is encountered, it will come from outside the company and will not be an internal problem of the company. As a pharmaceutical industry, it is necessary to continuously develop safer and more effective drugs. As an enterprise, it is necessary to keep its position stable when the crisis comes, and only with a good crisis management mechanism can the enterprise tide over the difficulties and regain its new life.” There are not many companies that stand up after falling down, and the market is unpredictable. A crisis is as hard to guard against as a disease for companies.Looking at the market history in China in recent years, many once-familiar companies are like meteors across the sky, blooming brilliantly and then quickly falling and disappearing without a trace. What is left to us is almost sighs and MBA lesson plans. Another failure case.At the same time, everyone who cares about the fate of the enterprise is looking for a model to stand up again from failure. SK-II and Contec encountered a crisis of trust at different times and in different fields.In the face of the crisis, Procter & Gamble and China-US SmithKline have completely different responses to the outside world, and the final results are also completely different. At the same time, they have left us with two completely different typical cases in terms of crisis management. .