Opinion

Boeing: Navigating brand reputation

17 April, 2019 Share socially

The launch of the Boeing 737 Max airplane heralded massive growth for the company in its race with Airbus to bring low-cost airliners to an ever growing global travel market. The significance of Boeing’s newest plane to its bottom line cannot be underestimated – in January this year, they reported record revenues following the delivery of 806 planes, 560 of which where the 737 Max.

Fast forward to present day, and Boeing now finds itself in the midst of a reputational crisis following two fatal crashes within the past six months, both of which have been attributed to the same software flaw in the 737 Max – now grounded worldwide by regulatory authorities.

Boeing has subsequently lost tens of billions of dollars in market value and is potentially exposed to legal liability from US prosecutors, victims of the crashes, and airline operators looking to cover some of their losses from grounding the planes. Furthermore, the aviation industry now fears a downturn spurred by the scrutiny that has followed the crashes.

Rebuilding trust

The broader implication for Boeing is the extent of reputational damage to its brand, an issue that has been acknowledged by CEO, Dennis Muilenburg, who has vowed to “do everything possible to earn and re-earn that trust and confidence from our airline customers and the flying public in the weeks and months to come”.

Boeing therefore have two major issues to fix: the technical problem with the plane, and their brand reputation. The former will be far easier than the latter to resolve.

Prior to their struggles, Boeing led the industrials sector in the 2018 FutureBrand Index and had significantly higher perception than number 1 placed Disney for Innovation and Indispensability dimensions.

Boeing vs. Industrials average - FutureBrand Index 2018
Boeing: Navigating brand reputation

The actions that the company takes now will have a crucial impact on its ability to maintain or even grow its brand perception in the face of an international scandal. They would do well to ignore the advice of Donald Trump to “rebrand with a new name” and instead, take note of the actions of other global corporations who have faced similar challenges in recent history.

The rise and fall and rise again

Mercedes are one of the classic cases of how to effectively manage and restore brand reputation in the face of adversity. In 1997, their new A-Class car failed the ‘Moose Test’ by rolling over whilst swerving – presenting them with a major reputational failure that struck at the very core of their brand DNA. They were able to navigate this through transparent and honest dialogue with the public whilst recalling all A-Class cars that been built. They fast-tracked life-saving technology (ESP) and relaunched the car with this in-built as standard – a first for the compact segment. Studies showed that after the relaunch, the brand image of Mercedes had actually improved from before the Moose test.

In the 1980s, Johnson & Johnson were left reeling from the Tylenol poisoning scandal – their market value fell by $1bn. However, they were extremely quick to act in the face of consumer concern. Having recalled all of its best-selling product, J&J won praise for quick and appropriate action and innovated by developing tamperproof packaging. Crucially, J&J were prepared to pay the short term cost in the name of consumer safety and were praised as a consumer champion as a result. Within five months, the company had recovered 70% of market share for the drug and had preserved long term value of the J&J brand.

For a salutary lesson in how not to manage a corporate crisis, look no further than BP’s handling of Deepwater Horizon disaster. Following the oil spill, BP attempted to spin their way out of trouble rather than tackle it head on, focusing heavily on advertising whilst then President Obama used them as a political punch-bag. They failed to deliver on the level of standards that they talked about so proudly – they didn’t walk the talk. A subsequent change in leadership and a more ethical communications strategy produced more signs of success, but the brand has taken longer to recover due to its initial actions.

Stopping it at the source

The primary concern for Boeing is whether they will be able to limit the contagion to the master brand from the 737 Max sub-brand. Mercedes and J&J were both able to effectively ‘seal-off’ their sub-brand product issues from the corporate brand, whilst BP found it far more difficult to prevent damage to the master brand.

The FutureBrand Index 2018 showed that companies in the Industrials sector, far from being left behind, are epitomizing the fightback of long-established brands and are starting to receive deserved credit for reimagining and recasting their role, purpose and experience in order to stay relevant. These companies have worked hard to move beyond their original raison d’êtres and have embraced the 21st century with both hands.

It will be interesting to see if Boeing can maintain their position at the forefront of this sector in the coming months and years, and if they can rebuild and deliver genuine trust and emotional connection with all stakeholders across the value chain.