Brands Create Customers

Sometimes brand problems hit you like a sneaker wave, completely unseen until you’re locked in their grasp.

This brand problem begins when the M/V Cougar Ace, a 650 ft. car carrier loaded with 4,700 new Mazda vehicles, almost capsizes in the North Pacific on a voyage from Japan to Vancouver. While re-ballasting the ship at sea the crew pumped too much ballast water to port, and the ship heeled over. Within minutes it’s at 60 degrees, then 80 degrees. The crew abandons ship. World news covers the ship’s dire condition. For three weeks the Cougar Ace lies precariously on its side as salvage teams carefully board it, then slowly tow it 400 miles to safety in the Aleutians. There it’s finally righted, and made ready to be towed to Portland, Oregon where it can finally unload its cargo.

The cars survived—now rescue the brand

Initial inspections reveal that—miraculously—the cars on the Cougar Ace’s 14 decks are not totalled. They were individually secured to lash points on the deck, and didn’t pile up in a heap when the ship keeled over. Most hung from their restraining straps, defying the pull of gravity. Apparently, very few cars actually shifted. Some cars were damaged; many more appear to be perfectly fine.

So, the ship is saved, the cars are somewhat saved, and Mazda faces a daunting brand challenge. How does it rescue the brand? The accident has placed the Mazda brand in jeopardy. Every potential Mazda customer who’s seen pictures of the foundering ship, or heard about it, will be thinking: “I like Mazda’s, but I’m not sure I want one from that ship. What happens to a car when it’s been clinging to an 80 degree deck for three weeks, in an abandoned ship flat against the ocean? What kind of car would I be getting? How would I know?”

Brand trust: the cargo that counts

Brand trust is really what’s at stake here. Mazda can’t afford to lose it. Those are not just 4,700 Mazda vehicles aboard the Cougar Ace. Those are now 4,700 unknowns, and question marks corrode brands. In figuring out how to proceed, the company must weigh the commercial value of the shipment ($100+ million before the accident) against a potential loss in brand trust if customers believe that the Mazda name might be linked to vehicles of questionable integrity. Above all, what Mazda must preempt is a worst case scenario in which customers simply avoid any doubts about Mazda cars by avoiding the brand altogether.

A heading from the helm

While the captain of the Cougar Ace could justifiably abandon ship, the captain of the Mazda brand cannot. The brand needs a heading from the helm.

For starters, Mazda must acknowledge the brand issues raised by the Cougar Ace accident. Mazda can’t pretend that “nothing happened.” Their customers, many devoted to the brand, are looking to Mazda for brand leadership.

One option: keep these vehicles off the market

Mazda has greatest brand leverage if it can negotiate a full value settlement for the entire shipment from the shipper and insurers. This would enable Mazda to affirm that these vehicles were effectively “lost at sea,” and will be kept off the market to protect the customer, and the brand. The brand logic behind this strategy is that these vehicles have the taint of damaged goods. If allowed into the market they could spread doubt across the entire Mazda brand, disrupting future sales and re-sale values, even if the salvaged cars were to show no outward defects. The mere belief that random Cougar Ace vehicles are “out there” could haunt the brand for years.

Market-based scenarios

What if a full-value settlement isn’t possible? And what if Mazda’s very survival depends on revenue from these cars? Could Mazda still sell unscathed vehicles and maintain brand trust?

It could, but that would be difficult: 1) for the reasons noted above, and 2) because it would require flawless execution across a set of brand programs, many needing customer participation. The cars and the customer experience would have to be “better than new,” in a process that transformed the cars from question marks into desirable vehicles. (Significant PR campaigns would also be needed.)
A return-to-market scenario also requires a risk analysis of possible legal liabilities if any Cougar Ace vehicles are ever involved in accidents (or any other litigation-inspiring activity).

A leasing option

If Mazda takes the revenue course, it would have to inspect and re-certify the vehicles, and probably offer them with discounts and extended warranties. Leasing the cars under attractive lease and buyback terms may be the best way to sidestep any ownership qualms, and still maintain a strong brand presence. In any case, customers would need to know exactly what they were getting: where their vehicle was on ship, and what happened to it. (Map, photos, inspection report, certification sign-offs.) Every potential doubt and every potential question would have to be addressed, and answered. Mazda would also need to permanently identify the vehicles as Cougar Ace survivors, to preclude rumors about unknown “Cougar Ace specials” that could diminish the Mazda brand.

Selling the cars for parts

Selling the cars for parts may be considered as an option. It could ease the brand burden somewhat, but it couldn’t be undertaken in the spirit of sweeping dust under the rug. Unless certification and documentation steps are implemented, a shipload of questionable Mazda parts can’t work in favor of the Mazda brand.

Ordeal at sea unites company and customers

Wouldn’t the above subhead be the perfect conclusion to the Cougar Ace saga? Mazda and its brand were caught up in an ordeal at sea, as were Mazda customers awaiting pristine new models. By leading with its brand Mazda can unite with its customers, and put this ordeal to rest. In fact, Mazda should view the whole episode as a way to renew its customer foundation. The reality is that Mazda’s future will be written by customers, not cars.

UPDATES:

See updates here and here.

Photo: BYM

This entry was posted on Monday, September 4th, 2006 at 2:11 pm and is filed under Fundamentals. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.