If the bizarre onslaught hurt the company's fortunes, however,
it seems like it's going to pull through pretty well. Operating
profit in the second quarter hit $12.7 billion, a new high for the
company, and its mobile division fell but remained in the black.
Earlier this year, Samsung also snagged three top honors at the
Cannes Lions International Festival of Creativity for a Galaxy
smartphone ad about an ostrich learning to fly by using VR.
Experts say Samsung was able to survive its crises by halting
all marketing for a time, save for an apology ad, and being open
with consumers, regulators and the media. Last November, it
addressed the Note 7 debacle with a full-page mea culpa in
publications like The Wall Street Journal, The New York Times and
The Washington Post, which noted that "we are
During the Oscars telecast in February, Samsung ran several
commercials that focused on its rigorous product testing. But it
also began to pivot back to other messages: YouTube personality
Casey Neistat appeared in another spot, representing and courting
the sort of creative types who shoot and produce everything with
And Samsung significantly raised the ante when in March it
introduced its Galaxy S8 phone, delivering a curved screen, better
colors, facial recognition and a slew of other upgrades, and, this
month, the the Galaxy Note 8, the successor to the explosion-prone
-- George Slefo
Chipotle: Botched Burritos
Free chips and guacamole. Buy one burrito, get one free. Online
games. New ads. None of it could save Chipotle after food-safety
woes. Now the "Food With Integrity" chain is pinning its hopes on a
new hero: queso.
"You shouldn't underestimate how much potential it has," Chief
Marketing and Development Officer Mark Crumpacker told Chipotle
investors in July, ahead of the fast-food chain's national queso
It's been about two years since E.coli-induced restaurant
closures, norovirus and salmonella outbreaks first put Chipotle in
the spotlight, and it has yet to find firm footing. Early apologies
to the public fell flat. Its stock price plunged. And a mix of
fixes, including the implementation of new cooking procedures and
staffing protocols, led by James Marsden, the newly hired executive
director of food safety (think: more hand washing and staying home
when sick), didn't help its bottom line.
Last year was bleak: comparable sales plunged 20.4%,
transactions declined 14.4%, and total revenue fell 13.3%. And
Chipotle had other issues to contend with, including Crumpacker's
arrest on cocaine charges, an activist investor buying shares,
shuttering its small ShopHouse Asian chain and board shakeups
including the departure of the co-CEO, Monty Moran.
And just as news was improving—Chipotle's same-store sales
rose in the first two quarters of 2017—bad news reared its
head. A malware attack hit card transactions in March and April. A
fresh norovirus outbreak at a Virginia location in July was
believed to stem from someone working while sick, proving that
issuing protocols doesn't mean everyone follows them. And, oh yeah,
rodents fell from the ceiling of a Texas location, an incident
captured on video. Though it may have had more to do with a
structural issue in the building than store cleanliness, the video
went viral and viewers were plainly disturbed.
Chipotle is forging ahead, hoping some of its latest efforts
will kick-start a rebound: playing up its clean-label ingredient
lineup in new ads, app updates, service tweaks. It's also
continuing to open hundreds of locations each year, with plans for
its first drive-through. After all, some patrons need more than
queso to convince them to give Chipotle another shot. --
Volkswagen: Diesel Duplicity
Volkswagen went from Fahrvergnügen to Farfrumlegal in the
wake of its 2015 emissions scandal. And once-proud owners who drove
diesel VW vehicles for their environmental appeal were not shy
about expressing their outrage that the company had cheated on
emissions tests. One ad agency even sold magnets at VWsham.com
meant to be displayed on VWs with slogans such as "Future former VW
owner," "VW. German for FU," and, yes, "Farfrumlegal."
"We had a surge of interest," says Nat Gutwirth, a partner at
Philadelphia-based agency Left Hand Creative, which created the
magnets in partnership with Jonathan Perloe, a communication
strategist. "People who were driving these cars were embarrassed
for having been bamboozled, so we wanted to give them an emblem of
their outrage to share their discontent. We're still getting orders
here and there."
But two years later, VW appears to have put the worst of the
scandal in the rearview mirror, based on its sales and profits,
even as it shells out billions of dollars to settle legal claims.
Globally, the Volkswagen Group reported second-quarter operating
profit that more than doubled. In the U.S., unit sales of VW
branded vehicles jumped 5.9% in the first seven months of 2017,
according to data compiled by Automotive News. Sales at VW Group of
America, which includes Audi, were up 5.7%. Volkswagen Group's
stock has not fully recovered, however. Preferred shares on the
Frankfurt stock exchange traded for 127.15 euros on Aug. 10,
compared with 190.85 euros on the same date in 2015 before the
In the midst of the scandal, VW resisted the temptation to run a
big-budget apology campaign that might have only brought more
attention to the issue. Efforts have been more tactical, like
running newspaper ads in late 2015 that declared "we're working to
make things right," while plugging a customer goodwill program.
In the U.S., the comeback strategy involves selling more
family-friendly SUVs and electric vehicles, while plugging
high-tech features such as driver-assistance systems. VW this year
even turned to a grandma for help, putting a 78-year-old Irish
immigrant in a series of emotional ads for the new Atlas SUV in a
campaign by Deutsch L.A. that broke in May. -- E.J.
United Airlines: Skepticism Flies
The scene was a shocker: David Dao, a doctor who refused to give
up his paid-for seat to a United Airlines employee in April, was
forcibly pulled out of it, screaming, and then dragged down the
aisle by aviation security officers. Upset passengers, some up in
arms, shot the scene on phones, and videos—one of which shows
the doctor's subsequent bloody face and pleas "to go
home"—quickly went viral.
Talk about a PR blunder. Hard to imagine things could get worse.
But later that month, a giant show rabbit died during a United
flight and then was cremated by the airline before cause of death
was determined, leading its owners to claim a cover-up had
"Years of brand building have been lost and won't be recovered
anytime soon," says Gene Grabowski, partner at PR firm Kglobal. And
he cautions not to be misled by United's last quarterly report,
which showed consolidated traffic (revenue passenger miles)
increased 3.9% and consolidated capacity (available seat miles)
jumped 4.6% in July, year-over-year. It represents, Grabowski says,
only "short-term success."
The airline, of course, is trying to get back into consumers'
good graces. It has made a number of changes since April, such as
adding new flight routes, eliminating the red tape on permanently
lost bags by adopting a "no questions asked" policy on lost
luggage, and increasing customer compensation incentives—up
to $10,000—for voluntary rebooking. It also created the new
role of senior VP-customer solutions and recovery, tasked to step
in when a customer's trip goes off course.
"We recognize that we're on a journey to earn back customer
trust," Maggie Schmerin, director of brand PR for United Airlines,
wrote in an email. "And we'll continue to work harder than ever to
put our customers at the center of all we do."
The airline's united front would be more effective if mishaps
were avoided. But April was followed by turbulence in July when
United gave a toddler's paid-for seat to a standby customer,
forcing the mother to hold the baby the entire flight. At month's
end, Comic-Con passengers were banned from packing comics in their
checked luggage in what was likely a misinterpretation of an old
TSA blog post.
The brand is trying "to paint a rosy picture while it continues
tripping over itself in customer relations," says Hennes
Communications VP Howard Fencl. "To repair its reputation, United
needs to upend its corporate culture and back up its promises with
-- Lindsay Stein