The Analysis of Crisis Communication Strategies Essay Example for Free

The Analysis of Crisis Communication Strategies Essay By definition crisis is a situation that has reached a critical phase (Crisis definition). Crisis is characterized by its lack of stability, unpredictability and short decision-making time. According to Fearn-Banks (1996) crisis is â€Å"a major occurrence with a potentially negative outcome affecting an organization, company, or industry, as well as its publics, products, or good name†. The negative consequences of a crisis are not limited; crisis can be, but not necessarily, a very serious threat to organization’s functioning and stability. Some scholars argue that an organization can benefit from a crisis situation if such is handled properly (Ulmer, Sellnow, 2000). Communication scholars have been conducting multiple researches, seeking to formulate some generalized and applicable theories of crisis communication and crisis management. Since crisis is a crucial period in lifetime of an organization that can affect its future, understanding crises and knowing how to manage these difficult situations effectively are essential skills that corporate managers should posses. This paper will explore the crisis of Redux Beverages which was caused by controversy surrounding the launch of the new product. On September 25, 2006, a new Las Vegas based brewing company – Redux Beverages launched a new energy drink called Cocaine. Since the first days on the market the drink has become very controversial. The public didn’t have a problem with the content of the new beverage, which is very similar to Red Bull or Monster. It was its’ name that people didn’t really feel quite right about. Redux Beverages’ CEO and inventor of Cocaine, Jamey Kirby thought that naming an energy drink after a dangerous narcotic was â€Å"a fun name†, the public, however, did not agree (â€Å"Cocaine drink claims† 2006). The negative publicity that Redux Beverages received as a result of the launch of new product led to the eruption of a reputational crisis. The public accused Redux Beverages of promoting and glamorizing drug usage among teens and young adults, who are the major target and consumer of energy drinks. Just about a month after the introduction of Cocaine a convenient store giant 7-Eleven decided to pull Cocaine from the shelves (Mooney, 2006). The controversy related to Cocaine energy drink continued throughout the fall and winter. People started questioning not only the name of the drink, but also the marketing strategy used by Redux to promote their product. On April 4, 2007 the Food and Drug Administration issued a warning letter notifying the firm that their product was marketed illegally as an alternative to an illicit drug and a dietary supplement. The letter from FDA claimed that â€Å"street drug alternatives, i.e. , products that claim to mimic the effects of recreational drugs, are not intended to supplement the diet and, as a result, cannot lawfully be marketed as dietary supplements† (Douaud, 2007). Moreover Redux Beverages was accused of having identified some of the drink’s ingredients incorrectly as dietary supplements that could lower blood cholesterol, protect nerve fibers, or help patients with anxiety, depression and obsessive-compulsive disorders. The FDA threatened that the failure to respond to these violations would result in legal actions (Other, 2008). On May 5, 2007 Redux Beverages announced that the company decided to temporarily cease the distribution of Cocaine. In the same announcement the beverage’s makers notified consumers that the drink will be still available for purchase under a different name – Censored. Redux Beverages crisis isn’t an example of a severe, dramatic case. Unlike some crises, Cocaine crisis wasn’t unexpected. The makers chose a scandalous name because they knew it would be controversial and as Jamey Kirby said â€Å"controversy sells† (Nizza, 2007). The controversy was expected and somewhat desired. Redux Beverages knew that breaking into the energy drink market was a very challenging task and that they had to come up with a marketing strategy that would win them new customers. It was quite obvious that naming an energy drink after an A-class narcotic would result in negative opinions and outrage, what was not predictable was the extent of that outrage. Redux Beverages could not have predicted that the product will be eventually pulled from the shelves and that the controversy surrounding the product would initiate a battle with the Food and Drug Administration. This situation could be explained with chaotic systems theory – the uncertainty of how people will react to the launch of a controversial product resulted in inaccurate prediction of long-term outcomes (Sellnow, Seeger, 2001). Due to the controversy surrounding the launch of Cocaine energy drink Redux Beverages’ public image has suffered. The firm was accused of promoting and glamorizing drug use among teenagers and young adults. The marketing strategies used to promote the drink were perceived negatively and were widely criticized. In response to such accusations Redux Beverages used some of the theorized by Benoit known as Image Restoration Theory. According to Benoit (1997) image repair strategies can be applied if an individual or an organization is perceived as responsible for an offensive act. Moreover Benoit (1997) claims that it is not important whether the act was truly offensive; important is what people’s perceptions are and if the public believes that an organization committed a heinous action then its reputation and stability is at risk. In case of Redux Beverages one could argue that the act was not extremely offensive and people’s reaction might have been exaggerated, still the percentage of negative responses from the audience was that high that Redux had to react and address the arisen issues. At first Redux Beverages’ representatives appeared to be quite difficult to reach. Numerous news reporters covering the story stated that they had been unable to reach anyone who could represent the firm and make some comments regarding Cocaine controversy. Throughout the duration of the crisis Jamey Kirby, the CEO and inventor of Cocaine had been the most active spokesperson for the firm. Kirby denied the accusations of promoting and advocating drug use to young people. Kirby focused mainly on reduction of offensiveness of the committed act; he used image restoration strategies such as: bolstering, minimization, differentiation, transcendence and attack accuser (Benoit, Czerwinski, 1997). In the first few interviews Jamey Kirby responded to some of the questions regarding the controversy surrounding his product Cocaine. In efforts to defend the drink Kirby highlighted some positive aspects of Cocaine (bolstering) – in an interview for CNBC Street Signs Kirby said that Cocaine is the energy drink that has â€Å"by far the best quality†; according to Kirby Cocaine doesn’t give the consumer a â€Å"crash from the sugar and the jitters from the caffeine† (Burnett, 2007). But even with that having been said the public remained outraged and kept accusing the drink makers of promoting illegal drugs, especially to teenagers and young adults. The public was concerned that the marketing of the controversial drink was mainly focused on media channels such as MySpace and YouTube that are known from being widely used by young, impressionable people. Kirby uses minimization claiming that â€Å"people know the difference; I don’t think people will look at our drink and say, ‘Oh, I’m going to buy some real cocaine’†(William Pres, 2008). This was definitely not the best response. Teenagers are definitely a very impressionable group and ignoring the risk of selling a product that could potentially cause some to reach for an illegal substance is pretty irresponsible. Some outraged people raised voices that not only is Cocaine advocating drug use, but also putting at risk the health of its consumers due to a very high content of caffeine. According to the product’s label an 8. 4 ounce can contains 280 milligrams of caffeine, 750 milligrams of taurine, guarana, B vitamins and sugar (Redux Beverages, LLC). All these ingredients are supposed to give the drinker the energy high. Some people were concerned whether such high doses of caffeine will not harm young drinkers. In response to these concerns Kirby used differentiation and compared the content of a can of Cocaine to other energy boosting beverages such as Starbucks coffee. In the interview for CNN News Room Kirby says â€Å"if you look at the other beverages on the market a Starbucks 20 oz. Grande Coffee has 500 milligrams of caffeine we are just slightly over half that, so we don’t have any pathological levels of caffeine in our drink†(Nguyen, 2007). Kirby’s comment may seem to be a bit irrelevant, especially if to look at the fact that he compared 500 milligrams of caffeine in a 20 oz.size cup. If to pour Cocaine drink into a 20 oz. cup one would drink an equivalent of almost 670 milligrams of caffeine, nearly 1786 milligrams of taurine and even more energy boosting ingredients. As a result of the controversy and negative public response to the new energy drink the Food and Drug Administration decided to step in and take a closer look at Cocaine drink and its marketing. In April of 2007 the FDA issued a warning letter in which Redux Beverages was accused of marketing Cocaine drink illegally as an â€Å"alternative to an illicit street drug† (Other, 2008). Moreover, the Food and Drug Administration disliked the fact that Cocaine was marketed as a dietary supplement â€Å"intended to prevent, treat, or cure disease conditions† (Cruse, 2007). According to the product’s label one of the ingredients, more specifically inositol â€Å"reduces cholesterol in the blood; helps preventing hardening of the arteries, and may protect nerve fibers from excess glucose damage†(Cruse, 2007). Redux Beverages was given 15 days to correct the violations, otherwise the company would have faced legal responsibility (Other, 2008). In response to this occurrence Jamey Kirby said: â€Å"We are correcting the violations that the FDA believes we have†. As a result Redux Beverages initially made some changes to the marketing strategy and removed slogans such as: â€Å"liquid cocaine† and â€Å"speed in a can†. The webpage was also corrected and instead of calling the drink a dietary supplement Cocaine had become an energy supplement (Other, 2008). In the beginning of May 2007 the official webpage of Cocaine energy drink announced that the beverage’s distribution had been temporarily ceased. Following the decision Clegg Ivey, one of Redux Beverages partners revealed that the company was planning to keep selling the drink under a different name which would be released soon. In addition Ivey made a quite ridiculous comment advocating the product: â€Å"Of course, we intended for Cocaine energy drink to be a legal alternative the same way that celibacy is an alternative to premarital sex†. Ivey also revealed that Redux decided to cease the distribution of the product because the FDA had threaded with punishment by imprisonment (Serrano, 2007). Few days later Redux resumed the sale of Cocaine under a new name – Censored. The official website of Cocaine drink featured multiple slogans and notifications marking the end of Cocaine. The new slogan for Censored energy drink was â€Å"Censored by the Man† which clearly referred to FDA’s decision to ban Cocaine name. On July 17th of 2007 Redux Beverages decided to change the name of the former Cocaine once again. The new name would actually be nameless. Redux Beverage’s new marketing strategy was to sell the drink in a can that looked almost like a red former Cocaine can; the difference was that the logo was missing. The drink makers decided to design a can which would feature a blank box in which consumers could write whatever name they wanted. Since then the controversy surrounding Cocaine energy drink had started to die down. That was until early 2008 when the energy drink was re-released under its original name. Redux Beverages had addressed and corrected the violations highlighted by the FDA and resumed sales of Cocaine. The marketing strategy had been modified. Cocaine was available in three versions: original (with the throat-numbing effect), cut (mild version) and free (sugar-free). Following the re-release the Food and Drug Administration issued another warning letter. On July 9, 2008 Redux Beverages received another warning in which the FDA expressed concerns regarding fonts used by Redux on the drink cans. Cocaine was distributed in red, 8. 4 oz. cans with a logo spelled out in a white, powdery font. The letters resembled letter-shaped lines of drug cocaine. In addition, the FDA had objection to the use of word â€Å"cut† as to an additional logo tagging a milder version of the drink. Jamey Kirby responded to these accusations with transcendence: â€Å"In the last year or so, the US has experienced life-threatening problems with our domestic supply of tomatoes, spinach, peanut butter, imported seafood and even pet food. Worse, many experts predict that the next terrorist attack could focus on our food supply. So, why is the FDA wasting its precious resources complaining about what fonts Redux is using to advertise our product? † (just-drinks. com editorial team, 2008). In this situation using a strategy such as transcendence cannot result in anything positive. Kirby accused the FDA of bothering him with some ridiculous claims while more important work should be in progress. Then the company attacks the FDA and makes fun of the agency saying: â€Å"School teachers everywhere should now be on notice that things written in chalk will be scrutinized more closely by the federal government and could subject the chalk-bearer to civil and criminal liability. No word from the government on whether a chalk ban is next, but school districts across the nation would be well-advised to consider a shift to dry-erase boards. But please, for goodness sake, do NOT sniff those markers! † (just-drinks. com editorial team, 2008). Eventually Redux Beverages decided to use yet another image repair strategy – corrective action – and announced that the firm is working to address the FDA’s concerns and correct the violations that the agency had identified. The case of Redux Beverages from the Image restoration Theory could serve as a great case study presenting a script for image abolition. Redux Beverages has not done anything to lift up the company’s public image after the onset of crisis. The majority of press releases made by Redux during Cocaine controversy didn’t help to persuade the public that their concerns are unnecessary and groundless, but rather reassured them that Redux doesn’t care about anything else than sales and profit. Since public opinion about the company and its product are very important in Cocaine crisis, the case could be also analyzed from the perspective of Group Opinion Formation Process. Many people express concerns about impressionable groups such as teenagers or young adults who may be easily influenced by mass media or peers that can result in some reckless decisions. Many adults react with outrage when they see that their children may be exposed to things such as cigarettes, alcohol, sex or drugs. According to Struges (1994) theory of Group Opinion Formation these concerns could be classified as the first step of group opinion formation (1)â€Å"latent issue†. Redux Beverages’ launch of Cocaine energy drink would be the second step representing the (2) triggering event. Then the controversy and people’s debate would represent the next two steps of the process – (3) formation of pros and cons and (4) debate initiation. Then the onset of crisis would represent (5) the time lapses which leads to (6) formation of public’s opinion. In case of Cocaine crisis the public’s opinion about the company was mainly negative – Redux Beverages has received countless words of criticism and contempt. The last two steps involve formation of (7) social action and (8) social norm (Struges, 1994). Generating and maintaining a positive public opinion is vital for organizations, thus if the initial opinion about a company is positive, then the chances of keeping this perception during crisis are significantly higher. Redux Beverages has generated a negative public opinion during the onset of Cocaine crisis, if to suppose that the company will face another crisis in the future it will be much more difficult to gain the support of the public and generate a positive public image. The theory purposed by Struges (1994) is somewhat related to Coombs (2007) theory of Situational Crisis Communication. The SCCT recognizes reputation as â€Å"a valuable, intangible asset† which â€Å"can attract customers, generate investment interest, improve financial performance, attract top-employee talent, increase the return on assets, create competitive advantage and garner positive comments from financial analysts† (Coombs, 2007). Organizations with better reputation before crisis will still have better reputation than organizations which pre-crisis reputation was poor (Coombs, 2007). In case of Redux Beverages the crisis which had occurred between 2006 and 2008 was not too serious. The company had encountered some financial losses due to the temporary cease of distribution and several rebranding actions. Still, the crisis dealt mainly with the firm’s public image and reputation loss. According to Situational Crisis Communication Model if Redux Beverages is to face a more serious crisis in the future the company is very likely to suffer much more than in the aftermath of Cocaine controversy. The two components linked to the previous crisis – crisis history and prior relationship reputation will negatively affect the attribution of crisis responsibility. Knowing what strategies Redux Beverages used to deal with the previous crisis it is very likely that the potential crisis response strategies will also increase the attribution of crisis responsibility. Redux Beverages poor reputation and high attribution of crisis responsibility will result in public’s negative reaction to an organization. In case of another crisis, Redux Beverages is much more likely to be held fully accountable for the offensive act. Redux Beverages have not done any work to prepare for any potential crisis. The firm does not follow any of the ten best practices for risk and crisis communication purposed by Venette (which include: 1. Process approaches and policy approaches there has been no data released about any policies formulated by Redux Beverages. 2. Pre-event planning – Redux Beverages was not prepared for the crisis caused by controversy surround sales of Cocaine and continues its operations without any pre-crisis planning. No data has been released that would state otherwise. 3. Partnership with the public – Redux beverages seems to care about the sales, and thus about their buyers. Still Redux doesn’t seem to be concerned about their consumer’s health and disregards any doubts about the safety of their highly caffeinated product. 4. Listen to the public’s concerns and understand the audience – Redux Beverages failed to address the public’s concerns regarding the risk of selling a product that is being marketed as a street drug alternative. 5. Honesty, candor and openness – Redux Beverages repeatedly denied comments and interviews with proves that the honestly and openness are not the company’s priorities. 6. Collaborate and coordinate with credible sources – the conflict with the Food and Drug Administration indicates that the organization doesn’t collaborate and is not coordinated with credible sources. 7. Meet the needs of the media and remain accessible 8. Communicate with compassion, concern, and empathy – Redux Beverages fails to communicate in this manner. 9. Accept uncertainty and ambiguity 10. Messages of self-efficacy. The way in which Redux Beverages decided to manage the crisis caused by the controversy surrounding the launch of a new energy drink was not very effective. The crises communication strategies chosen by the organization didn’t really help its reputation and basically created a solid base for even worse crisis in the future. The lost reputation of the company will cause that any little mistake on their behalf will never be perceived as an accident or misfortune, but rather as their own fault. Redux Beverages has not gained any support in the eye of the public, nor governing and legal agencies. The only success of Redux Beverages is that the company gained the rights to re-release and resume the sales of the energy drink with a controversial name – Cocaine. References Benoit, W. L. (1997). Image repair discourse and crisis communication. Public Relations Review, 23(2), 177-186. Benoit, W. L. , Czerwinski, A. . (1997). A critical analysis of USAir’s image repair discourse. Business Communication Quarterly, 60(3), 38-57. Burnett, E. (Speaker). (2007). Cocaine energy drink [Television series episode]. In CNBC Street Signs. New York. Cocaine drink claims to be real thing. (2006, September 21). Mail Online, Retrieved from http://www. dailymail. co. uk/news/article-406304/Cocaine-drink-claims-real-thing. html Coombs, T. W. (2007). Protecting organization reputations during a crisis: The development and application of situational crisis communication theory. Corporate Reputation Review. 10(3), 163-176 Crisis definition. (n. d. ). Retrieved from http://www. merriam-webster. com/dictionary/crisis Cruse, A. E. . Public Health Service Food and Drug Administration , Los Angeles District . (2007). Warning letter (W/L 10-07). Irvine, CA: U. S. Department of Health Human Services. Retrieved from http://www. fda. gov/ICECI/Enforcement Actions/WarningLetters/2007ucm076349. htm Douaud, C.. (2007, June 19). Cocaine goes no-name. Nutraingredients USA, Retrieved from http://www. nutringredients-usa. com/Industry/Cocaine-goes-no-name Fearn-Banks, K. (1996). Crisis communications: A casebook approach. Mahwah, NJ: Lawrence Erlbaumn Just-drinks. com editorial team. . (2008, July 11). US: Redux accelerates cocaine rebranding on fda pressure. Retrieved from http://www. just-drinks. com/news/redux-accelerates- cocaine-rebranding-on-fda-pressure_id94412. aspx Mooney, P. N. . (2006, October 27). Cocaine energy drink pulled from 7-eleven shelves [Web log message]. Retrieved from http://www. associatedcontent. com/article/78750/cocaine_energy_drink_pulled_from_7el even. html? cat=71 Nguyen, B. (Speaker). (2007). In CNN News Room. New York: CNN. Nizza, M. (2007, May 7). The end of cocaine the beverage [Web log message]. Retrieved from http://thelede. blogs. nytimes. com/2007/05/07the-end-of-cocaine-the-beverage/ Other, . (2008, February 6). Cocaine energy drink back on the shelves. Convenience Store News, Retrieved from http://www. csw. com/top-story- cocaine_energy_drink_back_on_the_shelves-43048.html Redux Beverages, LLC, . (n. d. ). Cocaine Energy. Retrieved from http://www. drinkcocaine. com Sellnow, T. L. , Seeger, M. . (2001). Exploring the boundaries of crisis communication: the case of the 1997 Red River Valley flood. Communication Studies, 52(2), 152-167. Serrano, A. . (2007, May 7). â€Å"Cocaine† pulled from shelves nationwide. CBS News, Retrieved from http://www. cbsnews. com/stories/2007/05/07/health/main277254. shtml Struges, D. L. (1994). Communicating through crisis: A strategy for organizational survival. Management Communication Quarterly. 7(3), 297-318. Ulmer, R. R. , Sellnow, T. L. (2000). Consistent questions of ambiguity in organizational crisis communication: Jack in the Box as a case study. Journal of Business Ethics, 25(2), 143- 155. Venette, S. J. (2006). Special section introduction: Best practices in risk and crisis communication. Journal of Applied Communication Research. 34(3), 229-231. William Pres, . (2008). Cocaine – the new energy drink. Retrieved from http://hubpages. com/hub/Cocaine_-_The_NEW_energy_drink.