Much has been said and written about crisis communication, and most public relations practitioners have their own approach and tool set based on experience and peer-to-peer learning. Even with the multitude of methodologies there is consensus that this is a fast evolving space in a world where news can spread virally across social networks and geographic boundaries.
The new book Risk and Crisis Communication – Navigating the Tension between Organizations and the Public by crisis comms pundits Robert S. Littlefield and Timothy L. Sellnow is an attempt to define a more robust, scholarly framework to analyse and manage crises as they are unfolding. They identified seven areas where organisations face dialectic tensions (dialectic refers to the discourse of different stakeholder viewpoints) in a crisis situation and how it affects their communication strategy:
• Timeliness: Immediate versus Delayed: How soon should an organisation comment in a crisis and how a delayed response can impact public perception.
• Amount of Information: Open versus Closed: Looks at the risk of withholding information and subsequent loss of public trust.
• Confidence in Information: Certainty versus Uncertainty: An organisation’s authority will be diminished if it disseminates inaccurate information.
• Focus of Interest: Self-Serving versus Other-Serving: Are an organisation’s crisis efforts perceived to be ultimately self-serving or do they serve the public?
• Level of Responsibility: Owning versus Disowning: Taking responsibility is a critical step but can often be mitigated by law and liability concerns.
• Control of the Narrative: One Voice versus Multiple Voice: If too many actors are communicating, the message can be lost even when the narratives are complementary.
• Empathy with the Publics: Sensitivity versus Insensitivity: Failure to demonstrate a level of sensitivity can lead to a long term loss of confidence with consumers.
Public relations crises can occur in many industries, but the most high profile cases can be found typically in the food and health sector. Littlefield and Sellnow draw on the 2007 Menu Food pet food recall, the E.coli outbreak in Europe, the 2008 melamine milk crisis in China and the Queso Fresco crisis to validate their framework with real world examples.
Bellamy’s Organic at the Centre of Australia’s Infant Formula Shortage
China’s 2008 melamine infant formula crisis is a particularly tragic example, and it was frequently quoted as one of the forces behind the recent baby formula shortage crisis affecting Australian consumers. Here is what happened.
While certain brands of premium infant formula had been in short supply for a couple of months, the shortage reached crisis point in on the first weekend of November 2015, when it became impossible to buy formula at retailers across Australia’s biggest city, Sydney. This followed on the heel of reports in local newspapers in Western Australia. There, consumers and retailers aired their frustration, citing a flourishing gray market with China as the reason for the shortage. The worst affected brand was Bellamy’s Organic, an ASX-listed, Australian producer of organic dairy and food products for infants and toddlers, which holds a virtual monopoly on the organic infant formula market in Australia.
In crisis terms, it would be fair to say that doesn’t get more emotionally charged than with baby formula. The Bellamy’s story had all the ingredients for a major news story. I can attest to that because as an affected mum and Bellamy customer I was annoyed enough to speak to media about my personal quest to source the product, so by way of disclosure I am no object observer of the crisis.
On the contrary, the Fairfax story, which was syndicated across the Sydney Morning Herald, Canberra Times, Brisbane Times and other major online news outlets acted very much as a trigger point that forced the company out into the open. Up to this point discussions had been running hot on social media, especially Facebook, but Bellamy was not answering customer calls as the office was closed due to a public holiday. The website provided no further information other than that certain products were temporarily unavailable. The resulting information vacuum led to wild speculation from increasingly desperate parents scouring suburb after suburb in Sydney for the last remaining tins of the sought after milk powder. There were even rumours that the dairy farm had been bought out by the Chinese (which were found to be unsubstantiated). Eventually, the situation attracted mainstream media attention with broadcast stations reporting on the infant formula shortage in the week commencing 10th November (at this point it was not just Bellamy but also other brands too), which eventually saw the Minister of Trade commenting on the shortage on Australia’s public service broadcaster, ABC.
Applying Littlefield’s and Sellnow’s methodology, how did Bellamy manage the issue of timeliness? In the light of the local media reports from WA and with increasingly anxious and annoyed parents venting their frustration on Facebook for close to a week it would be fair to say it was delayed. The company maintains social media profiles on a number of channels including Facebook, Twitter, LinkedIn and Google+ but seemed to be unware of the online conversation and sentiment affecting their brand. Many customers including myself tried to get in touch with the manufacturer via traditional channels (phone and email), the answering machine at the office must have been overflowing with messages by Tuesday morning. Bellamy finally responded with a blog post on the 3rd of November apologising for the inconvenience the supply issues had caused to customers. The post pointed to higher than usual demand and customers were directed to the online store to place their orders.
Was this a sufficient amount of information? Probably not, as it was only the Fairfax interview request that forced Bellamy’s CEO to explain why Australian customers were unable to find the product on retail shelves. Bellamy referred to Singles Day on the 11th of November, an annual online shopping event in China bigger than Black Friday in the US. The story ran in print on the front page of the Sun Herald, was syndicated across Fairfax’s online outlets, and generated a considerable amount of social media chatter with more than 2,000 people talking about the article on Facebook at the time.
Was the information accurate? Bellamy’s response certainly looked genuine and by explaining how market forces affected demand consumers gained a better understanding of the situation. However, some retailers subsequently raised doubts in the press about the immediacy of the shortage, stating that they have been trying to order more stock for months but had received no response from Bellamy.
Was Bellamy’s response self-serving or serving the public? Most customers, although disappointed, acknowledged that the shortage was largely to blame on a sudden spike in popularity rather than the company’s wrongdoing. By directing customers to the online store (where products were made available again), Bellamy’s move seemed fair with the goal to reward local customers for their loyalty. Online sales were limited to ANZ customers and three tins per person. However on social media some mothers did remark that $18 for express delivery seemed excessive in the situation.
How did Bellamy manage the issue of responsibility? As an ASX-listed company Bellamy needed to take a cautious approach. Only when prompted by media the CEO provided a further explanation, laying the blame on market forces. And after all, strong demand for one’s products both domestically and in an overseas market like China with one billion consumers is not a bad problem to have. Investors were certainly not put off and shares in the company have further risen since the crisis hit. But as this analyst pointed out, for a smaller manufacturers like Bellamy demand issues might not only disappoint loyal customers but also investors in the long run. The limited size of Australia’s domestic organic agricultural market means upscaling production with imported ingredients might impact product quality and ultimately jeopardise the brand reputation as “Australian made” that both Australian and Chinese consumers favour.
While not comparable with the gravity of the 2008 melamine crisis in China (were six infants died and more than 300,000 had to be hospitalised), the Australian infant formula shortage provides useful insights into the dynamics of crisis communications in the age of social media. Bellamy’s Organic is in a comfortable position with a quasi-monopoly on the Australian organic infant formula market and investor confidence high eyeing the market opportunity in China. However, the company has been slow to respond to customer feedback and ignored or misread the sentiment on social media channels. Instead Bellamy waited until the shortage became a PR problem. Lucky for them, the situation has since somewhat relaxed, although the product still often sells out within hours of hitting supermarket shelves. Many parents now order formula directly from Bellamy’s online store. The long-term reputational impact on the brand, and how it ultimately affects parents’ buying decisions, remains to be seen, for example if a competitor jumped on the opportunity to enter the organic formula market in Australia.