Volkswagen made headlines yesterday when company officials admitted they had installed software on diesel vehicles to cheat on emissions tests required to comply with federal regulations. Its brand reputation and stock price sank, and deservedly so.
A Place in Our Hearts
The first Volkswagen “Beetle” entered the U.S. market in January 1949. Since then, more than 5.5 million Beetle models have been sold in the U.S., according to the company.
The first Beetle was more than a car for each new owner. Owners entered into a love affair with this little car that had no gas gauge and practically no storage space.
The first cars did have a little daisy flower holder. In the beginning there was so few of the original beetles on the road that owners would honk and wave when they drove by each other. The reservoir of good will was overflowing. People loved their cars and Volkswagen.
The iconic ad campaign “think small” by the ad agency Doyle Dane Bernbach boosted sales and contributed to the feeling that owners were part of a club that owned this “lemon” of a car.
Over time – especially in the 1970s – “flower children” personalized their cars by painting them in psychedelic colors and designs.
Volkswagen owners were the best advertisement for the automaker.
Greed is what happened. Volkswagen grew to be one of the largest automakers in the world with the upscale Audi as part of it brand product line. The residue of consumer good will carried over for years as VW introduced larger and more fully equipped cars. It became the largest exporter to the U.S of diesel-fueled automobiles.
But the carmaker felt it was above the law. How did a company the size of Volkswagen think it was going to get away with cheating on such a grand scale? What hubris. The E.P.A. has said it will require Volkswagen to recall almost a half-million vehicles sold in the United States from 2009 to 2015.
It isn’t OK in business to tell a “little white lie,” and this one by VWE was a whopper. Analysts predict that the company will never regain its reputation in this country. VW owner are mad – really mad, as they should be. No one likes to be duped.
Is this what happens when brands become too big and begin to dominate the market in a category? Just look at the reputation of the major cable companies in the U.S. Their customer service is dismal. But they own a disproportionate share of the market, as consolidation across all industries accelerates
The stated purpose of these mergers is to provide a better customer experience, but mostly they are to slash costs, reduce training of customer service representatives and control what customers watch or buy.
Fines as a Cost of Doing Business
Did you notice that General Motors was recently served with a $900 million fine, which the Washington Post called “just a slap on the wrist?” But did any of the executives who knew about the faulty ignition devices that killed 174 drivers get fined or will any spend any time in jail? No.
Here is my fear and concern. Big brands will continue to grow like octopuses, gobbling each other up. And if they’re fined for breaking the law or killing a few people, it’s just the cost of doing business. Usually, the fines are only a small dent on the balance sheet, nothing to be too concerned about.
Is this the society we want for ourselves? Where brands thumb their noses at their customers and regulations enacted to ensure our safety. In survey after survey, Millennials tell us they want to work for companies with a social conscious and a respect for the environment.
This year they will surpass Baby Boomers as the largest demographic group. Let’s hope they retain their values as they begin their rise in the corporate ranks to rule the big brands.