Saturday, April 17, 2010

E-WOM & PR crisis: KFC's credibility questioned in China




KFC,the fast food chain, is currently facing one of most talked-about online PR crises in China. Failure to deliver a promised, half-price discount on a Family Value Barrel has transformed an online promotion into a major word of mouth crisis within just a couple of days.

The company has a chain of more than 2,000 stores in China. It first announced its April promotion – Super Tuesday – on its official site www.kfcyouhui.com, offering 50% discounts for 3 popular items on its menu:

The KFC Family Barrel was planned to be on a half-priced promotion during April 6th to 9th. Money-off coupons were made available to download in small batches at highly specific times of day, and were only accessible via KFC's page on Taobao, the ecommerce platform. According to a Chinese media source(Globaltimes.cn)- The Family Barrel started its “flash sale” at 16:00 on Apr.05, with 100 limited coupons, whereas by the time numerous customers arrived claiming their discounts, many of them were refused the meal packs. Why? Appearantly many stores weren't aware that 16:00 was the starting point, relying on the exact promotion period: April 6th-9th.



Anyway, copies soon spread virally across the web, which pushed the overall level of demand far beyond company's expectations. Thus, an other reason showed up: illegitimate coupons. Dissatisfied consumers showed their reaction in both online and offline terms:

1. Online consumers' reaction:
- a search on baidu.com (Google's equivalent in China) for “KFC half-price Family Barrel” showed nearly 50,000 negative results;
- a single post about the matter on Tianya, one of China's biggest internet communities, had been viewed almost 360,000 times and generated 2,279 comments in one week.

Some of the examples of public comments are quite representative for the overall sentiment:

olpe
Stop going to KFC. No nutrition and now no credibility!


夜礼服假面瘫
Let’s all go to Taobao, bid, pay and then give a bad comment!


面具面具
KFC earns a lot, but during the donation period for the natural disaster, KFC and McDonald’s donated nothing.

Source: Littleredbook.cn (the site covers Chinese advertising and media industries)

2. The offline public reaction spread accordingly:

- 20 branches of KFC in Nanjing were "besieged" by dissatisfied customers, while 30 people refused to leave a restaurant in Shanghai, as reported by The China Daily:



While the long-term impact on KFC remains unclear, there's an obvious negative sentiment shared among KFC's both online and offline customers. Moreover, Globaltimes reports that the company has been already sued citing a breach of contract and violation of consumers' rights. Major argument appears to be the lawyer's claim that "Employees did nothing to test the authenticity of the coupons"

Clearly, when the brand image is damaged on either offline or online platforms, the brand's reputation will have to be "healed" within both of them.
The company has already taken a stand, by making an official statement, although there's been no significant measure taken so far to challenge its online negative sentiment. It seems, the company believes that the offline impact should spread virally.

Efficient or not? The most effective answer to me is the one placed firstly within the very platform where the crisis was generated - it would have lead to a quicker reaction and much higher transparency.

Any thoughts?

Yours,
@Digilunch
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4 comments:

sergiu.birca on May 13, 2010 at 10:53 AM said...

Very good post.

nadejda.tatarciuc-birca on May 13, 2010 at 11:24 AM said...

Thank you!!

Nadya on May 26, 2010 at 1:21 AM said...

Thank you!!

Petrus Hansen on January 25, 2011 at 3:16 AM said...

Without getting political, there has been a lot of buzz on the Web on Internet restrictions and censorship in China, especially after Google threatened to pull the plug last year, find about the the current conditions there now in 2011 from a social media blogger's prespective.

Read the full blog post @ http://bit.ly/glL4tN

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