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Mattel 2007 Toy Recall

Presentation for PUR4404 International PR
by

Paul Flagg

on 8 October 2012

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Transcript of Mattel 2007 Toy Recall

Mattel’s Public Relations Campaign in China Following 2007 Toy Recalls Paul Flagg & Maris Snell
Professor Pelfrey
PUR4404 International PR
8 October 2012 Covering series of Mattel recalls affecting approximately 21 million toys beginning in August 2007

Looking at public relations both during and after crisis, as well as how the incident affected business relations between America and China Mattel & China Mattel Background 1940s & 1950s 1960s & 1970s 1980s & 1990s 2000s & Today Harold “Matt” Matson and Ruth and Elliot Handler founded Mattel (formed from a combination of Matt and Elliot) in Southern California. Ruth Handler was inspired by her daughter Barbara (“Barbie”) to develop a three-dimensional doll, which soon lead Mattel to the forefront of the toy industry. 1945 1959 Listed on the New York and Pacific Coast Stock Exchange in 1963.

Fortune 500 company by 1965. 1963 & 1965 1968 • Mattel brought Hot Wheels to the public.

• Mattel embarked on “World of the Young” acquisition strategy, which included the purchase of Ringling Brothers and Barnum & Bailey Circus, a theme park and a motion picture company, among other ventures. Moved to new worldwide headquarters in El Segundo, Calif. 1990 Introduced best-selling products such as Cabbage Patch Kids, Fisher-Price and Tickle Me Elmo to the Market 1990s Today Mattel is the world’s largest toy company based on revenues. It produces more than 800 million toys per year worldwide. Through the Years Vision & Values Vision

Creating the Future of Play

Values

Play Fair: Act with unwavering integrity on all occasions, treat each other with respect and dignity, trust each other to make the right decisions, be accountable for all that passes in front of us.

Play With Passion: Make a positive impact on the lives of children and families around the globe with unparalleled creativity and innovation, love what you do and have the courage to make a difference.

Play to Grow: Seek continuous improvement and deliver quality results in every part of our business, provide opportunities and support for personal and professional growth, reward excellence and achieve financial goals so that we can continue to play.

Play Together: Play as a team to realize our full potential, form deep partnerships with the people and companies with whom we work, enrich the communities in which we work and play. History of China China has a culture that dates back 5,000 years. First unified Chinese state established by Qin Shi Huang, who declared himself the “First Emperor”; China remains under imperial rule until 1912. 221 BC Republic of China formed, but time period consists of continuous power struggles between Chinese Nationalist and Communist Parties. 1912 to 1949 Mao Zedong proclaims the People’s Republic of China, a Communist government. 1949 Mao meets with President Nixon to establish relations with the US; PRC admitted to the United Nations and granted permanent membership to the Security Council. 1972 China has undergone considerable economic and political reforms, achieving an increasingly open market, and leaders characterize the government as “Socialist with Chinese characteristics.” 1978 to Present Political & Economic Environment in China China is the second largest country in the world.

Also has the second largest economy.

Is one of five remaining Communist states, but has moved toward more Socialist ideals in recent times.

However, there are still strict limitations on Internet use, the press, freedom of assembly, reproductive rights and freedom of religion.

China's economic success has been primarily due to manufacturing as a low-cost producer. High-Context Society

Power Distance: China - 80; U.S. - 40

Individualism: China - 20; U.S. - 91

Masculinity: China - 66; U.S. - 62

Uncertainty Avoidance: China - 30; U.S. - 46

Long-Term Orientation/Confucianism: China - 118; U.S. - 29 Hofstede’s Cultural Dimensions Primary & Secondary Audiences Parents of children with Mattel toys

Chinese business partners, toy manufacturers and public

Stockholders, employees, etc. Q&A Evaluation Millions of website visits

Millions of calls and emails to consumer relations hotlines

Hundreds of media inquiries

Increase in sales in 2007, according to Mattel consumer report

Received widespread media coverage and praise for communications efforts

Named one of Fortune’s “100 Best Companies to Work For” in January 2008 Campaign Basics

Mattel communications staff of 7 people

Partnered with global PR firm Weber Shandwick and Cone

Focused on corporate communications, global crisis communications, brand marketing and corporate social responsibility

Issues

Communicating with offices in different time zones

Sharing accurate information before the media Global PR and communications leader

Unit of The Interpublic Group

Maintains largest PR network in the world, operating on six continents

Offices in 81 countries Weber Shandwick Blaming China Mattel's initial reaction -- to blame crisis on China

September 2007, Mattel apologized

Recalls due to design flaws and not Chinese toy manufacturers

China faced issues with Chinese-made food, drugs and other exports found to contain potentially fatal substances. Crisis Response Strategies Deny Strategies
Attack the Accuser: Blamed consumers in past Power Wheels recall
Denial: Refusing to address crisis till a month after discovery
Scapegoat: Blaming Chinese manufacturers
Diminish Strategies
Excuse: Flaws were not intended by the company
Justification: Only a small percentage of products were affected
Rebuild Strategies
Compensation: Offered monetary compensation to some and vouchers worth equal or greater value to most
Apology: Apology to China
Reinforcing Strategies
Bolstering: Trusted company for 75 years
Ingratiation: Thanks parents and other audiences who continue to trust company and see communications efforts over crisis Best Crises Practices Best Practices According to Jules Andres, Mattel Corporate Communications Director:

Act responsibly when the crisis situation erupts.

Use various vehicles to convey messaging.

Update your list of contacts.

Have a crisis communications plan in place.

Don't forget your employees.

Communicate quickly and transparently to your target audience.

Leverage social media and the Web to get the word out. Recall Timeline August November September June October July 8: Mattel first alerted to possible lead paint contamination

9: Consumer Product Safety Commission deadline for Mattel to report problem

10: CPSC deadline passes; Mattel fails to act 26: Mattel files full recall report with CPSC June to November 2007 2: Mattel voluntarily recalls 1.5 million Fisher-Price toys supposedly coated in paint containing dangerously high levels of lead.

7: Mattel identifies Chinese factory as source of contamination scandal.

14: Mattel voluntarily recalls 17.4 million additional products containing loose magnets easy for children to swallow (Mattel Play Sets and Barbie Doll & Tanner). 4: Mattel voluntarily recalls 850,000 toys due to lead paint contamination.

11: CEO publishes opinon piece in Wall Street Journal.

21: Mattel VP Thomas Debrowski apologizes to China for blaming suppliers for recalls. 25: Mattel voluntarily recalls Go Diego Go! Rescue Boats coated in paint containing hazardous levels of lead. 6: Mattel voluntarily recalls 155,000 Laugh & Learn and Learning Kitchen toys, manufactured in Mexico, due to choking hazard. Fast Track Tactics Staffed call center, created CPSC-approved script
Created recall page on website
Informed retailers of recall in advance
Sent news releases to media
Started toll-free, multilingual interactive voice response phone line to assist callers
Launched web-based recall ID tool in more than 20 languages
CEO video posted on website
Allowed customers to register product for recall online or by phone
Mailed recall notification letters to customers on customer relations database (from past recalls)
Ran full-page ads in newspaper in August and September: USA Today, The New York Times, The Los Angeles Times, The Chicago Tribune and The Washington Post
Conducted print, online and TV satellite interviews
Posted ads on websites frequented by parents: Disney, Nickelodeon, Cartoon Network and Yahoo!
Offered customers prepaid postage labels for returns
Compensated customers with vouchers equal to or greater than retail price plus tax Key Messages Commitment to children

Dedication to open and transparent communication

Encouraging parents with additional safety precautions

Outsourcing manufacturing of products not a compromise in quality

New standards set in place by working closely with Chinese governments and suppliers

Mattel made up of moms and dads, not just a corporation Internal Reorganization Corporate Responsibility Division
500 global employees to monitor domestic and international vendor and manufacturer adherence to Mattel's toy safety standards

Product Integrity Policy and Audit
Combine internal and independent audit organization to monitor company's toy safety standards

Three-Point Safety Check System
Only use paint from certified suppliers; every batch at every vendor to be tested
Increase unnanounced testing and inspections at every stage of manufacturing process
Test finished toys before from every production run before being shipped to retailers Impact on Chinese Relations Chinese business partners and the people in general were offended by misplaced accusations (loss of face).

Owner of one factory committed suicide.

China filed law suits against Mattel for reputation damage after Mattel's apology.

Corruption Perception Index

Ongoing American suspicion of Chinese business practices and ethics
Full transcript