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Part III: The Publics

Chapter 14: International Consumer Relations

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Learning Objectives

To examine the important public of “consumers,” both in the United States and around the world.

To explain the nuances of consumer relations; dealing persuasively with customers and prospects to build an agreeable consumer experience.

To discuss the growth of the “consumer movement” in America and around the world.

To explore the differences in media and management between international organizations and those in the United States.

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Opening Example: Apple

Companies must be sensitive to the customs and culture and feelings of their host countries

In the second quarter of 2015, Apple made $13 billion in China

Two years prior, China Central Television and The People’s Daily accused Apple of consumer negligence

Figure 14-1 (Photo: Pan Yulong Xinhua News Agency/Newscom)

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The Chinese media accused Apple of skirting warranty periods, adopting customer-service policies that discriminated against Chinese customers, and formulating an inadequate and arrogant response to the reports. The government-controlled media claimed Apple refused to provide customers with new iPhones if they brought in damaged or defective phones, unlike in other countries. They also said Apple didn’t give consumers a new one-year warranty after their Phone was fixed.

Apple’s Response

After two weeks of constant media pounding, Apple CEO Tim Cook wrote a personal letter in Chinese

Cook apologized for customer service policies and promised to revamp them

He suggested the underlying issue was lack of communications, not arrogance or ignorance of customer feedback

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Apple apologized for concerns or misunderstandings and posted the letter, which was written in Chinese, on Apple’s Chinese Web site.

China’s state-run media also went after Germany’s Volkswagen, America’s Yum Brands, and similar multinationals, letting everyone understand that consumer relations in China needed to be scrupulously tailored and carefully conducted.

Think Global, Act Local

Thanks to e-commerce, the world continues to evolve into a society of consumers

Global companies must be sensitive to local surroundings

Deliver dependable products in a manner that is service-oriented and ethical

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Thinking global and acting local is important. At the core of international consumer relations lies an attitude of delivering dependable products in a manner that is service-oriented and ethical. The aim is to offer products and brands that are stellar not only in quality but also in reputation.

Learning Objective 1

To examine the important public of “consumers,” both in the United States and around the world.

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Worldwide Consumer Class

More than 1.7 billion people worldwide belong to “consumer class”

Highly processed foods

Desire bigger houses and more and bigger cars

Higher levels of debt

Lifestyles devoted to accumulation of nonessential goods

The wealthiest 20% of the world accounts for more than three-quarters of world consumption

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Nearly half of consumers in the consumer class are in the developing world. Worldwide, private consumption expenditures, the amount spent on goods and services at the household level, topped $20 trillion in 2000.

Worldwide Consumer Class

Revenue from international tourism reached $1.5 trillion in 2014, in spite of…

Currency fluctuations

Economic weakness in Europe

Terrorism

Civil strife in the Middle East

Economic inequality

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The global market for consumption keeps increasing. Driving this charge to consumer is tourist spending around the world. When tourists fear the impact of a negative force, they travel elsewhere.

Worldwide Consumer Class

Globalization and social media increase pressures on multinational companies

Differentiate product from the rest

Behave responsibly

Public relations techniques and social sensitivities help

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The spread of consumerism has placed fresh pressures on multinational companies to act ethically, in the best interests of their global customers. Globalization and the spread of social media and the Internet mandate that companies walk a fine line between behaving responsibly and promoting their products. Often it is public relations techniques and societal sensitivities that help distinguish a company and its products from the competition.

Public Relations Techniques Help

Walt Disney, addressing concerns over child nutrition, did not license popular characters to food that was not nutritionally acceptable

Mattel revamped safety measures at Chinese manufacturing plants to eliminate lead paint

Burger King began buying eggs and pork from suppliers that did not confine their animals in cages and crates

McDonald’s and KFC fought reputations when local Chinese suppliers were exposed as processing expired meat

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Such were the socially responsible public relations initiatives and complications that companies faced in confronting worldwide consumer relations in the 21st century. Public relations solutions can help cut through the clutter and distinguish one company from the next, enhancing the sale of a firm’s products.

Learning Objective 1 Discussion Question

What are the implications of a worldwide consumer class for public relations professionals?

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Learning Objective 2

To explain the nuances of consumer relations; dealing persuasively with customers and prospects to build an agreeable consumer experience.

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Consumer Relations Objectives

Keeping old customers

Attracting new customers

Marketing new items or services

Expediting complaint handling

Reducing costs

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Building sales is the primary consumer relations objective. A satisfied customer may return; an unhappy customer may not.

Customer relations efforts should be made to keep established customers happy, since most sales are made to them. Customer relations techniques can influence the sale of new products. An educated customer is usually the best customer.

Consumer-Generated Media

New lead voice in town is social media

Gives consumers a voice

Gives consumers a publishing platform

Gives consumers a forum where their collective voices on products and services can be heard, shared and researched

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As the use of social media increases, the amount of CGM about particular companies also increases. The challenge is to align CGM with one’s consumer objectives.

Consumer-Generated Media

Online consumer word-of-mouth originates from

Blogs

Message boards and forums

Public discussions

Discussions and forums on large email portals

Online opinion/review sites and services

Online feedback/complaint sites

Consumers trust fellow consumers

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Techniques for addressing CGM include engaging in dialogue with consumers via social media, encouraging consumers to talk about their brand experiences, analyzing what people are saying, and acting on their comments.

Handling Consumer Complaints

Only 4% of dissatisfied customers complain

Bedbug letter – prewritten, generic response not desirable

Risk of consumer complaints going viral always present

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Many customers who have a complaint never say anything. A vast majority of dissatisfied customers won’t repurchase from the offending company.

Really good companies understand the benefit of applying the personal touch to rectify consumer problems.

Today, the risk of consumer complaints going viral is always present. Airlines seem to suffer more than others, with Twitter becoming the go-to source for instantaneous complaints about everything from cancellations to lost luggage.

Handling Consumer Complaints

Ombudsperson

Originally responded to complaints about abuses by public officials

Now outsourced location customers call to seek redress for grievances

Companies that express understanding and courtesy will keep customers

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To respond quickly to complaints, companies established ombudsperson offices. The ombudsperson function is outsourced to a central, often overseas location that customers can call to seek redress of grievances. Call center employees can often anticipate product or performance deficiencies.

Personal touch

There’s a reason Four Seasons hotel chain is always ranked at the top of customer service lists; it takes pains to deal properly with clients

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Photo courtesy Fraser Seitel

Learning Objective 2 Discussion Question

Why is consumer-generated marketing relevant to public relations and consumer relations professionals?

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Learning Objective 3

To discuss the growth of the “consumer movement” in America and around the world.

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The Consumer Movement

Legislation to protect U.S. consumers emerged in 1872 – Criminal Fraud Statute

1887 – Interstate Commerce Commission

Upton Sinclair’s novel The Jungle – Food and Drug Act and Trade Commission Act

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Although consumerism is considered to be a late 20th century concept, legislation to protect consumers first emerged in the United States in 1872, when Congress enacted the Criminal Fraud Statute to protect consumers against corporate abuses. In 1887, Congress established the Interstate Commerce Commission to curb freewheeling railroad cartoons. However, the first real consumer movement came right after the turn of the century when journalistic muckrakers encouraged legislation to protect the consumer.

The Consumer Movement

1927 – 1938: Consumers safeguarded from abuses of stakeholders in well-known brands of commercial products – Food, Drug and Cosmetic Act

1965: Ralph Nader’s Unsafe at Any Speed

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Consumers were safeguarded from the abuses of manufacturers, advertisers, and retailers of well-known brands of commercial products.

Nader’s 1965 book pointed out how GM Corvair was literally a death trap. GM stopped production of the Corvair (when they could not stop Nader).

Targeting Plus-Sized Critics

Page 297

Did Target make a mistake in limiting the Altuzarra line only to size 16?

How would you assess its response to its critics? What other options did it have?

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Photo: Handout/MCT/Newscom

Target was taken to task for ignoring plus sizes. They launched a new line and invited critical bloggers to help - and to model it.

The Consumer Movement

1960s: President John F. Kennedy proposed consumer bill of rights:

Right to safety

Right to be informed

Right to choose

Right to be heard

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The Consumer Movement became stronger and more unified in the early 1960s. John F. Kennedy proposed that consumers have their own bill of rights, containing four basic principles.

Consumerism Today

Government overseers of consumer interests

Labels, packaging, product safety

Consumer Financial Protection Bureau

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Labeling, packaging, product safety, and a variety of other issues continue to concern government overseers of consumer interest. The federal consumer-protection bureaucracy extends through multiple agencies. The Consumer Financial Protection Bureau was created in the wake of Wall Street scandals in 2011 to promote fairness and transparency for consumer financial products and services.

Learning Objective 3 Discussion Question

What is a consumer bill of rights? How should it be communicated to consumers?

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Learning Objective 4

To discuss the differences in media and management between international organizations and those in the United States.

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Operating Around the Globe

Multinational corporations must be sensitive to how their actions affect people of different cultures/ geographies

Seven of the 10 most powerful brands in the world are based in the U.S.

Multinational companies face challenges from local communities and organizations

Figure 14-5 (Courtesy of Interbrand)

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The actions of individuals and organizations in one part of the world are felt instantly and irrevocably by people around the globe. Multinational corporations must be sensitive to how their actions might affect people of different cultures in different geographies. American companies have seven of the 10 most powerful brands in the world (plus Samsung, Toyota, and Mercedes-Benz) and 14 of the top 20 are the most prominent of the prominent

Examples: Challenges for Multinational Companies

McDonald’s and Coca-Cola drew criticism for offering products that promote obesity as sponsors of the 2012 London Summer Olympics

In 2012, Apple was embroiled in a scandal involving working conditions at Chinese plants manufacturing iPads and iPhones

In 2015, the European Union’s Executive Commission, launched an anti-trust case against six major U.S. movie studios

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All foreign companies operating internationally must constantly reinforce the notion that they are responsible and concerned residents of local communities. Most resort to the public relations philosophy of leading with proper action and then communicating it. Thinking global and acting local can help win lasting friendship and support in other countries.

Consumer Internet Activists

Organic consumer movements have been stimulated by the Internet

2011 Occupy Wall Street rallied troops with social media

Consumers use Internet to keep companies honest

Consumers Union – Consumer Reports

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Organic consumer movements – directed at individual companies, industries, or even multinational agencies such as the World Trade Organization – have spread like wildfire around the globe.

The Consumers Union was formed in 1936 to test products across a wide spectrum of industries. It publishes the results in a monthly magazine, Consumer Reports, which reaches about 3.5 million readers.

Consumer Internet Activists

Consumer Federation of America

Digital activism uses Internet to

Enable faster communications

Coordinate citizen movements

Example: Arab Spring

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The Consumer Federation of America was formed in 1968 to unify lobbying efforts for pro-consumer legislation. The federation consists of 200 national, state, and local consumer groups, labor unions, electric cooperatives, and other organizations with consumer interests.

A great deal of digital consumer activism deals with helping consumer make better decisions and more quickly resolve problems. Recommendations for travel, lodging, and eating through such Net firms as TripAdvisor, Yelp, Angie’s List, eBay, Craigslist, Airbnb, and others have helped education millions of consumers.

Perhaps the most striking recent example of Internet activism stemmed from political activists who raged against established dictatorships and, in some cases, brought them down

Think Multilingual and Straighten out Your English

It is important for companies to know how their brand names translate into other languages

Burrada = giant burrito; colloquial meaning = “big mistake”

Country Mist makeup = country manure in Germany

Colgate Cue toothpaste; Cue = porno magazine in France

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Photo: (Photo: Courtesy of Rivkin & Associates)

Steve Rivkin is America’s foremost “nameologist,” having written extensively on what organizations and products must consider before they choose a name. There are challenges if organizations that venture overseas do not think multilingual.

Think Multilingual and Straighten out Your English

Coca-Cola was initially rendered as “bite the wax tadpole”

Finland’s leading brand of de-icer is Super Piss

Japan’s leading coffee creamer is Creap

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Photo: (Photo: Courtesy of Rivkin & Associates)

There are challenges if organizations that venture overseas do not think multilingual.

Foreign Lands Must Make Sure of English

Copenhagen airline ticket office: “We take your bags and send them in all directions”

Norwegian cocktail lounge: “Ladies are requested not to have children in the bar”

Budapest zoo: “Please do not feed the animals. If you have any suitable food, give it to the guard on duty”

In a doctor’s office in Italy: “Specialist in women and other diseases”

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It is equally beneficial for our friends in foreign lands to make sure of their English. These are signs posted in various establishments around the world.

Foreign Lands Must Make Sure of English

Paris hotel elevator: “Please leave your values at the front desk”

Tokyo car rental firm: “When passenger of foot heave in sight, tootle the horn…trumpet melodiously at first…then tootle him with vigor”

Hong Kong dentist: “Teeth extracted by the latest Methodists”

Acapulco hotel: “The manager has personally passed all the water served here.”

Bucharest hotel lobby: “The lift is being fixed for the next day. During the time we regret that you will be unbearable.”

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It is equally beneficial for our friends in foreign lands to make sure of their English. These are signs posted in various establishments around the world.

Business Gets the Message

Consumer relations started as a way to handle complaints/unanswerable queries

Investment in consumer service pays off

Bad service can lead to negative word-of-mouth

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Few organizations can afford to shirk their responsibilities to consumers. Consumer relations divisions have sprung up, either as separate entities or as part of public relations departments. Consumer relations began strictly as a way to handle complaints, but now companies have broadened the consumer relations function to encompass activities such as developing guidelines to evaluate services and products for management, developing consumer programs that meet consumer needs and increase sales, developing field-training programs, evaluating service approaches, and evaluating company effectiveness in demonstrating concern for customers.

Business Gets the Message

Companies broadened consumer relations function to encompass activities like

Developing guidelines to evaluate services and products for management

Developing consumer programs that meet consumer needs and increase sales

Developing field-training programs

Evaluating service approaches

Evaluating company effectiveness in demonstrating consumer for customers

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In adopting a more activist consumerist philosophy, firms have found that consumer relations need not take a defensive posture. Consumer relations professionals must themselves be activists to make certain that consumers understand the benefits and realities of using their products.

Consumer Philosophy at Jet Blue Airways

Valentine’s Day ice storm stranded thousands of customers and hurt reputation

“Wakeup call for Jet Blue”

New customer “Bill of Rights”

Figure 14-7 (Courtesy of JetBlue)

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JetBlue published an apology in full-page newspaper ads and included the signed letter from its CEO on the JetBlue Web site after a Valentine’s Day ice storm grounded its fleet.

Case Study: Hiding “Under the Dome”

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Why do you think the Chinese government immediately endorsed Chai Jing’s film?

Why do you think the government reneged on its endorsement?

How would you assess the success or failure, in a public relations sense, of Under the Dome?

Figure 14-8 (Photo: Dai Tianfang Xinhua News Agency/Newscom)

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No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

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