Toyota 2009-2010 Recall Case Study Crisis Communication

This crisis was extremely detrimental for Toyota because they have always been one of the top global brands. They maintained a positive record in regards to other car companies and have had great customer feedback. The severity and frequency of the accidents causes a huge news presence and which forced Toyota to rebuild their brand to the prior positive image (Knoespek, 2011).
Toyota’s Target Market

The United States holds up to 30% of Toyota’s total consumers. Due to the number of vehicles models and difference in pricing, Toyota bases their target market on the specific vehicle and believes in the philosophy of “Right Car in the Right Place” for the right person (Dobin, 2002). However, they have a clear focus on customer satisfaction and a mission “to sustain sustainable growth by providing the best customer experience and dealer support" which is posted on their website (Toyota).

Their demographic are those who have a license, especially families who are environmentally aware. Their customers live in both rural and urban settings and travel via car on a daily basis. They are value oriented, price conscious and believe safety is the most important factor of a vehicle (Feenstra, 2014).

Due to the mass number of vehicles recalled in 2010 and the variety of models, Toyota had to target a larger audience than usual. They weren’t focusing on price, location or the environment and instead put all their focus in safety. They needed to connect to all of their existing customers, future customers and the entire nation because of the massive news coverage the crisis was receiving.

Those that were most affected were the owners of the recalled vehicles because they were the most in danger of a potential accident. Their first priority was to connect with these customers with a written apology, which stated:

“For two generations, we have provided Americans with cars and trucks that

are safe and reliable. And we fully intend to produce even safer, high quality vehicles in the future...” He continues saying, “We acknowledge these mistakes, we apologize for them and we have learned from them (Knoespek, 2011). These apologies focused on reliability and Toyota’s self-acknowledgement of their mistakes.

Evaluation of Target Audience

The audiences that were targeted were the best and most effective group for Toyota. Although they didn’t follow a traditional crisis control model they did what they felt was right in the moment and complied with cultural differences along the way. The sincerity of the apologies was questions by some of the public because of the way they defended the company, which was off putting (Knoespek, 2011). Instead of telling the public the positive past about the company they should have sincerely apologized, confronted to issues then address their previous accomplishment to rebuild that reputation.

Through SMART research (Swift Market Analysis and Research Teams) Toyota investigated consumer complaints and created advertisements that answered real customer questions. They turned to digital and social media to reach more customers and receive related questions about the recall, vehicles and future of the company. This method targeted a younger audience of involvement but answered the questions that customers of all demographics would have (Christians, 2015).

Although Toyota started off in a negative light with the public they slowly figured out the best methods to involve the public and connect through these campaigns, advertisements and research methods.

The aftermath of this crisis left the Toyota Motor Corporation in a state of desperation, with a significant amount of damages to their brand and reputation. Toyota wanted to reassure customers that their products were of the highest quality, formulate more efficient communication systems between the United States and overseas offices, and become more transparent and honest with their customers. At this point in time, Toyota established several objectives that needed to be achieved in order to rebuild their corporation. These objectives can be categorized into three groups: awareness, acceptance, and action.

Upon initial reports of safety issues with their cars, Toyota did not properly respond and were not aware of how the public felt towards their corporation. From making assumptions to jumping to conclusions about the cause of the safety defects, Toyota did not provide clear answers to consumer questions. Ira Kalb, an auto industry expert stated, “Jim Lentz, president and chief executive officer of Toyota Motor Sales, USA, went on the Today Show and looked like a ‘deer in the headlights’ in response to Matt Lauer’s cross-examination”. Americans throughout the nation negatively responded to Lentz’s television appearance; in a poll conducted prior to his appearance on the Today Show, “37% of the [population] said they were less likely to buy Toyota cars. The negative numbers jumped to 56% after he spoke” (Kalb 2012). Americans felt that Toyota’s response, or lack thereof, in this situation significantly affected the corporation’s credibility. People did not know where to look for insight, and did not know what to believe since there were so many diverse responses.

An additional instance that led Americans to be doubtful of the corporation was the unprofessional communication between Toyota’s American and Japanese public relations practitioners. Overall, Toyota was stagnant in acknowledging the situation, which led consumers to assume Toyota was disguising their discretions. The initial accident that led to the death of a consumer occurred on August 28^th, 2009, and throughout the year leading into 2010 about 8.1 million vehicles had been recalled. From the beginning, Toyota should have began investigating the defects in their vehicles to inform themselves of what was occurring, how to correct it, and what proof they had so far. By neglecting to do this, people became unsure of Toyota, a brand that was so well known for its quality vehicles and services, which negatively impacted the publics’ perceptions of the brand. A suggested awareness objective for the Toyota corporation is to be upfront, honest, and transparent when it comes to crisis situations, whether it be through a press release, press conference, social media etc. They need to become increasingly aware of how situations like this take a toll on not only their sales, but more specifically their brand’s reputation.

By the same token, Japanese chief executive officer, Akio Toyoda, did not formally speak about the situation until February 5, 2010. This can be attributed to the differences in cultural communication between Toyota’s American and Japanese public relations practitioners. Typically, Americans expect the CEO of a company to formally acknowledge a crisis situation. However, in Japan, CEOs bow as their form of an apology. The deepness of the bow represents the severity of the apology. The cultural divide between Americans and Japanese led Toyota’s public relations practitioners to dispute over what the best course of action for handling the crisis was. Unfortunately, this ended up worsening the situation by adding unnecessary conflict and delaying the delivery of a proper response (Nichols 2011).

A suggested acceptance objective for Toyota is to develop a more open relationship with their overseas offices. Meetings between the American and Japanese could take place every three months to communicate cultural norms, business practices, and brand perceptions in their countries. This would establish a better connection between the countries by enabling Toyota executives and public relations practitioners to interact, and create a firmer crisis communication plan, tailored specifically to the people of their countries. These meetings could alternate being held in Japan and America, giving each country the opportunity to physically experience the diverse cultures. Moreover, this shows Toyota’s acceptance and understanding of each other’s cultures and increases global diversity.

Another acceptance issue for Toyota following the recall crisis was further investigating the safety defects. In order to begin exploring safety hazards, the National Highway Transportation Authority (NHTSA) intervened. NHTSA is the government body in charge of regulating automobile safety. To increase the accuracy of the investigation, NHTSA partnered with NASA to study the electronics of Toyota cars that were identified as the cause of the defects. Jeffrey Liker of the Harvard Business Review stated,

“The only causes NASA found were improperly installed floor mats and sticky gas pedals that can be slow to return. There has been only one documented accident caused by the floor mats[…]and there have been no documented cases of accidents caused by the very small number of sticky pedals. Most accidents have been attributed to driver error. We also learned that the NHTSA knew all along that the only problems were floor mats and sticky pedals, but they had to go head with the NASA study to convince members of Congress who believed electronic were the cause of sudden acceleration despite a total lack of evidence to support that belief” (Liker, 2011).

     Essentially, this investigation was conducted for the mere purpose of the NHTSA being able to prove that they made the correct assumption from the beginning of the crisis. Despite millions of dollars being spent on the NASA study, the NHTSA was able to prove that electronically there were no apparent issues with Toyota’s vehicles. A suggested acceptance objective could have been to communicate more efficiently with their key publics and target audience the fact that there was no evidence of electronic safety defects with their cars. This could have provided the factual verification that Toyota needed to reassert and establish their brand as a quality carmaker. If this was conducted in a more timely fashion, and if the information was published earlier on, Toyota’s reputation and credibility would not have suffered as greatly as it did. The distribution of this information could have occurred very simply through a press release, press conference, and on social media platforms as well.

Taking Action

        Correspondingly, following the recall crisis, Toyota had a variety of action objectives to be achieved as well. One of the main actions Toyota wanted to accomplish was improving the production and development of their cars, ensuring that high quality was maintained.

As previously mentioned, this recall crisis caused consumers to question the quality of Toyota cars. Between 2008 and 2010, Toyota rapidly expanded both in Japan and America, which lead to delegating increased amounts of work to employees. This negatively impacted the company because their employees were being spread too thin and were unable to keep up with the increased demands. At this point, Toyota outsourced engineers who were not as well trained and informed about the high quality of Toyota cars. Business expert Robert E. Cole discussed how, Japanese researcher, Takahiro Fujimoto believes that this contributed to manufacturing errors. He said, “In the wake of rapid growth, Toyota increasingly failed to properly evaluate and approve components designed by outside overseas suppliers. As a result, Toyota’s relationships with suppliers became less collaborative […] (Cole, 2011). A suggested action objective based on this information would have been for Toyota to hire specially qualified employees, and provide them with sufficient training to enable them to produce the best Toyota cars. Completing this action would have exemplified Toyota’s efforts to improve the quality of their cars.

An additional action objective for Toyota was to, “Focus more on emerging markets for new growth, aiming for 50 percent of its sales from those nations, up from the current 40 percent” (Kageyama, 2011). Toyota identified North America as the region that they wanted to increase their sales in the most. Aiming to this target, Toyota increasingly began to promote their hybrid vehicles. In fact,

“They [Toyota] announced two new, bigger versions of its hit Prius hybrid-station wagons that are set to go on sale in Japan next month. The five-seater version

will also go on sale in North America later this year. The seven-seater, packed with a new lithium-ion battery, will go on sale in Europe as well next year” (Kageyama, 2011).

By taking this action, Toyota made strides to increase their sales after they had plummeted following the recall crisis.

Lastly, another action objective Toyota should have taken was producing an advertisement during this time proclaiming that this would have been an ideal time to purchase a Toyota. This could have been supported with evidence from the NASA investigation, which would make Toyota more credible. They also could have included a prolonged warranty to reassure customers that if any issues were to occur, that they would be taken care of.

In response to this recall crisis, Toyota incorporated several campaigns to achieve their objectives. James T. Berger of the Wiglaf Journal stated, “Toyota clearly belongs in the team pictures of the worst of failures-and will pay dearly in the end. However, making the mistake is not the biggest problem; it is how the crisis is managed that transcends the crisis and transforms a mere crisis into a marketing disaster” (Berger, 2010). In this case, how the crisis was managed did in fact turn the situation into a marketing disaster.

After recalling about 8.5 million cars, Toyota’s CEO Akio Toyoda was not prepared to acknowledge the public. Toyoda neglected his responsibilities as a leader and even went into hiding. This left Toyota’s American CEO, Jim Lentz to speak on behalf of the entire company by himself. Toyoda neglected the media and also continued to allow Toyota’s quality issues reach an unattainable level. Additionally, disputes over who would respond to the crisis delayed a formal apology and acknowledgment even further. As mentioned in the previous section, the initial accident that sparked this crisis occurred in August of 2009, and a formal response was not made until February 5, 2010. In relation to the awareness objective of becoming more transparent, this proved to be an ineffective strategy of handling interpersonal communication. Their stagnant response led publics to believe that they were hiding something, and consumers no longer felt aware of what exactly was going on with the Toyota brand and corporation as a whole.

Despite the ineffectiveness of this strategy, Toyota launched a new slogan for their brand which was, ”Let’s Go Places.” Toyota’s Division general manager said, “It is energetic, aspirational, inclusive and very versatile. The phrase conveys a dual meaning of physically going places and taking off on an adventure, while also expressing optimism and the promise of exciting innovation that enriches people's lives (Advertising Age, 2012). Directly correlated with suggested awareness, acceptance and action objectives, this was an extremely successful form of interpersonal communication that invited consumers to “go places” with the brand. Also, this really appealed to people’s emotions by giving them hope for the corporation, and putting them at ease knowing Toyota was moving forward with strides back to what their brand used to be. This tagline was communicated verbally and non-verbally through television commercials, print advertisements, digital advertisements, through social media and many more as well. We believe this was an effective form of both verbal and non-verbal interpersonal communication, and really assisted the brand in clearing their name.

We agree with this strategy because throughout the crisis situation, Toyoda was depicted in a negative light and was deemed to be afraid and unaware. The decision for Toyoda to speak in English was an excellent example of good news media relations, and correlated with the acceptance objective of Toyota developing a well-established relationship with their overseas offices. Furthermore, this gave Toyoda the opportunity to exemplify that he does care about Toyota and is eager to further incorporate improved cross-cultural communication.

Lastly, a successful form of verbal communication, both interpersonal and organizational was that throughout the crisis, Toyota did not fire or layoff any of their employees. David K. Hurst of the Harvard Business Review said,

“Toyota, which famously treats its people as appreciating assets rather than variable costs, did not lay off any permanent employees, as many of its competitors did; neither did it bully its suppliers. Instead, the firm reduced work

hours and instituted temporary pay cuts. It also seized the opportunity to work on projects aimed at improving flexibility, such as reducing the breakeven point of its plants from 80 percent capacity to nearly 70 percent-a huge challenge for a company already noted for running lean” (Hurst, 2011).

This directly correlated with acceptance and action objectives of improving their brand’s image, and also appeals to the emotions of people who may have been fired or laid off when their employer was experiencing a difficult time. This was considered successful because it depicted Toyota as a family, and showed that through good times and bad, the company and its employees remain together. Furthermore, this exemplified unity and also increased the company’s credibility by showing good corporate structure.

Throughout this entire recall crisis, and the events that took place as a result Toyota’s key message became evident: Although the corporation experienced a great deal of setbacks and negativity, they continuously stuck by their brand reputation of producing high quality, affordable cars. Whether through news media relations, social media, and interpersonal communication within the company and their publics, Toyota wanted everyone to understand the same message.

Although it may have been communicated differently based on the target audience, the message remained the same, further proclaiming that Toyota is a world-renowned quality carmaker.