Will Galaxy Note 7 fiasco damage Samsung brand?


SEOUL, SOUTH KOREA — The fiasco of Samsung's fire-prone Galaxy Note 7 smartphones — and its stumbling response to the problem — has left consumers from Shanghai to New York reconsidering how they feel about the South Korean tech giant and its products.

Samsung Electronics said this week that it would stop making the Note 7 for good, after first recalling some devices and then recalling their replacements, too. Now, like the makers of Tylenol, Ford Pintos and other products that faced crises in the past, it must try to restore its relationship with customers as it repairs damage to its brand.

Samsung shares plunged as much as 8 percent in Seoul, their biggest one-day drop since the 2008 financial crisis, after the company apologized for halting sales of the Note 7 .

"I'm in a state of 'I don't know,'" said Pamela Gill, a 51-year-old who works at Pratt Institute, a college in New York City, and likes her replacement Note 7.

"You're thinking, 'Do I have to turn it in? Is it going to blow up?'" she said.

Some consumers blame Samsung for not dealing decisively with the issue. Hahm Young-kyu, a 43-year-old South Korean office worker in Seoul whose wife is still using the Note 7, exclaims in frustration that the manufacturer tried to "cover up" the Note 7's failings.

Samsung's initial recall had a rocky start. After the first reports of overheating devices, it offered replacements, but not refunds. It waited a week before advising consumers to stop using the affected devices. And critics complained that some retailers didn't have up-to-date information until Samsung made a coordinated announcement with the U.S. Consumer Product Safety Commission.

"Ultimately they did the right thing, which was to announce a full recall," said Jan Dawson, a tech industry analyst with Jackdaw Research. "Now they've got to demonstrate why potential buyers shouldn't worry about future Samsung devices," Dawson said.

"A company's brand is their promise to consumers," said John Jacobs, an expert on reputation and crisis communications at Georgetown University. "If you break that promise, you lose the customers, you lose their loyalty."

Initially, the Note 7 got glowing reviews for its size, features and big battery capacity. Now the company is struggling to figure out what exactly is wrong.

"They have to comprehensively check everything from the very basics, outside the battery and inside the phone," said Park Chul Wan, a former director of the next generation battery research center at the state-owned Korea Electronics Technology Institute.

Samsung needs to win back consumers' trust by the time it launches its next high-end phone, the Galaxy S8, likely early next year, Dawson said. "They have that time to come up with a convincing story and a set of actions that will reassure customers that when they buy an S8, it's going to be safe."


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