The Toyota Fiasco: Lesson # 1 – The Product
Posted by Menachem Lubinsky on February 9, 2010 under Out of the Box, Quality Control | 
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The recent Toyota debacle is already becoming a textbook case for marketers on how not to handle a crisis. Surging gas pedals and faulty brakes are not necessarily what are preoccupying the marketers. They are obsessed with how the company handled the crisis and there is a great deal to learn from their mistakes, but I chose to focus on the pedals and brakes.
There is sufficient evidence that the company knew about some of the problems with the gas pedals and with the brakes. In fact, sources say, that Toyota officials were told months earlier of safety issues with the gas pedals.
The Japanese appear to have a history of sweeping such problems under the rug. Sources say that they often simply delay in the hope that either the problem will go away or some solution will surface in time as opposed to American companies that know that delay will not augur well for them in the long run.
Ironically Toyota had always positioned itself as a model of quality and reliability. It almost single-handedly took on the American auto manufacturers and possibly contributed to the decline of the auto industry in this country. Toyota’s problems had an immediate impact on Ford which took advantage of the silenced Toyota showrooms to make some instant profits, something that had failed them in recent years.
There is an important lesson here that perhaps takes precedent over the crisis management issues that we will no doubt discuss in the weeks ahead. There is no excuse for an inferior product, and certainly if it also involves health and safety. The consumer can forgive many flaws in a company but not when it produces a product that is not up to standard.
Nearly a year ago, a young man asked for my marketing advice on a new food product that he promised would be a “big hit.” It was a dietetic product that seemed to mimic the “real thing,” as he put it. He invested considerably into the packaging and on the surface I agreed that the product might be a winner.
The initial launch seemed to go well as the product made it into many stores including several supermarkets. But soon the problems began. Although the shelf life was approximately 6-7 weeks, customers complained of spoilage well before the date. Several stores called to say that a few of the customers complained of severe stomach cramps after they had eaten the product.
It wasn’t until two weeks had passed that the entrepreneur reached out to me for advice on how to handle the crisis. It seems that at least three of the stores had cancelled orders and worse, a Letter to the Editor appeared about the spoilage issue. I advised him to issue an instant product recall and to quickly deal with the quality issue, with an analysis by a lab and a review by a food technologist that I had recommended. The culprits were found and the product was reformulated. While the taste was slightly off from the original, it still was superior to a competing product. But it was too little too late. The stores would not give him another chance. Despite large ads of the reformulation, customers abandoned the product in droves and the venture died a slow death.
Of course, the ideal scenario would have been if the product were properly tested in the first place. The entrepreneur admitted that he had tried to save the cost of the additional testing. He also agreed that he thought that the initial complaints of the spoilage were isolated and not a reflection on the product.
There can be no compromise when it comes to quality, either in a product or service. Investing in marketing is naturally a good thing but not if it comes at the expense of product perfection. There are indications that the Toyota pedal issue may in the end turn out to be a software issue. Early on, Toyota said that it was not a problem for cars manufactured and sold in Japan because those parts appeared to be working well. All not very comforting to the average consumer in the US.
Too often a manufacturer will attempt to cut corners when it comes to quality, feeling that the consumer would accept the product as being more than adequate. It was perhaps the beginning of the problems with China when that country was more bent on churning out volume at cheap prices than to deal with quality issues. It too was caught with its severe shortcomings in quality.
I suspect that Toyota will get it right in time, but its road back to respectability and reliability will be long and arduous. The first lesson that we can all learn from the Toyota fiasco is that there is no replacement for quality; quality that is tested and retested, to avoid what one of the world’s largest auto manufacturer went through.
