High-Profile Product Recalls Need More Than the Bat Signal
July 2001
Discover tips on ways you can ensure that
a recall of a product with the potential to cause injury or harm reaches the
right people in time to save lives, save corporate reputation, and mitigate
litigation.
by Jeanne
Finegan, APR
The Garden City Group, Inc.
Product recalls have become an unsettling part of our lives, especially those
that have the potential to cause catastrophic harm. Tragically, all too frequently,
those affected by a faulty product don't find out in time. How can you ensure
that a recall of a product that has the potential to cause injury or harm reaches
the right people in time to save lives, save corporate reputation, and mitigate
litigation?
Define Potential Target Groups
The first step is to include a media plan in your crisis communication plan
that defines potential target groups both demographically and psychographically.
Why? Because this type of plan will target the right people, it will incorporate
scientifically accepted advertising industry standards for audience measurement,
and it will hold up under scrutiny if challenged by the Consumer Product Safety
Commission, Food and Drug Administration, or others.
Demographics and psychographics have become increasingly important in high
profile legal notice programs, and now in high-profile product recalls. Demographics
are studies that among others are compiled by the US Bureau of Census and syndicated
media research bureaus. The studies analyze population characteristics by age,
ethnicity, size, geographical distribution and density. They are the foundation
for media selection.
Psychographics are studies compiled by media
research bureaus, such as Mediamark Research Inc., and Simmons. The studies
survey adults 18 years of age and older and characterize them in "clusters"
by their media usage habits. Psychographics reveal media preferences among target
audiences. Studies indicate whether target audiences are heavy users of newspaper,
magazine, television, radio, or Internet. The studies reveal the magazines,
radio and television stations, Internet portals or sites that are watched, read,
or visited, and at what time of day. Psychographics are central to zeroing in
on a target group because they overlay product usage preferences and media usage
habits.
Design an Appropriate Media and Recall Plan
The second step is to have ad copy drafted that has been reviewed and approved
by legal counsel and senior executive staff. Risk managers should ensure that
the ads are ready to be published or broadcast in the appropriate media on short
notice and that a final report can be generated which states the media objectives.
The media plan should include the definition of the target audience, what
percentage of the audience was reached, with what level of frequency, and what
response the program generated by way of an Internet site, toll-free 800 number,
or mail-in program. The product recall media plan should be designed by a qualified
litigation communications expert who is prepared to provide expert testimony
on the adequacy of the communications effort, if needed.
While it is important to incorporate the same media channels that are used
to market the product, risk managers must be cognizant of several factors central
to defensible high-profile product recall notification. Marketing and advertising
programs designed to sell products rifle shot the messages to prospective target
buyers when they are ready to buy or are in the market. Frequently, the marketing programs have low overall reach
but are highly targeted.
For example, home improvement magazines are wonderful vehicles to move a
number of products including, windows, doors, locks, furnaces, sinks, cleaners,
and security systems. It is assumed that those who are looking for those products
will go to a very market-specific publication and find the best offering. Conversely,
once that consumer has made the purchase, it is safe to assume they might not
be a loyal reader of that publication. Loyal readers will tend to subscribe
to a magazine three out of four issues. That's why the savvy risk manager must
consider a product recall plan that takes into account the consumer's psychographics,
or values and lifestyle characteristics (and what media they use), when the
consumer is NOT in the market to by your product.
Now with this in mind, one can develop a "bulletproof" recall notice program
that scientifically models the target group and will demonstrate for peer review,
that a known percentage of this group was reached with an appropriate frequency1 of message delivery. Because Americans are saturated daily with marketing messages,
product recall and legal notice programs need to shout above the other estimated
3,000 marketing messages2we receive daily.
Consider how media has changed over the past 30 years. Where there once were
3 major networks, one public broadcasting network, and a limited number of local
and network radio outlets, now there are: 12 major and minor television networks,
42 cable television networks, 34 radio networks, 10,00 consumer magazines and
Web-zines, 56 newswires, 63,000 Usenet groups, 956 radio and television Web
sites. Strikingly, newspaper distribution and readership has declined by 30
percent over as many years according to the National Association of Newspapers.
That is why a one-time ad published in the local newspaper, or USA Today won't hold up under scrutiny
if the product recall program is challenged by a third party or legal counsel.
The company must demonstrate that a best practicable attempt was made to notify
those who may be at risk. Just because a newspaper enjoys nationwide distribution
does not mean that it is read by your target audience. By utilizing scientifically
accepted methods to formulate a potential recall notice program, the risk manger,
legal counsel and senior staff can quantify the communications efforts made
and, therefore, demonstrate a good-faith effort to interested parties that the
notice disseminated was actually communicated to the RIGHT people.
In product recall campaigns where life and limb are concerned, risk managers
are well advised to adopt the same high standards for notice as those found
in large scale class-action notice programs. These programs model the target
groups both demographically and psychographically. Additionally, the campaigns
demonstrate scientifically that a majority of the affected target audience has
been reached with a specific frequency of message delivery.
Adequate Reach and Frequency
Central to the defensibility of a high profile product recall is a concept
known as adequate reach and frequency. The basic idea is that one is appropriately
targeting the audience to reach a majority. In a high-profile product recall,
the minimum average frequency of message delivery should be three times.
This idea has very deep seeded roots, and it has been supported in a number
of pivotal studies. It's popularity in modern advertising strategy came from
a 1970 study published in the Journal of Advertising
Research by RCA executive Herbert Krugman. Krugman suggested that the
minimum number of exposures to a message to elicit a behavioral outcome was,
on average, three times. The idea was that the first exposure elicited curiosity;
the second, recognition; and the third, a decision or behavioral action. This
is the mantra of the advertising industry, and has been adopted by the courts
as the standard by which adequate notice is delivered to target audiences.
A Case Study
For several months, individuals have had trouble with a certain product manufactured
by XYZ Medical Products. Inquiries have been made to several news sources, and
newsgroup postings have recently appeared to find out if others have had this
problem. Only recently, letters have begun to appear in various company offices,
customer service, the advertising department, and the CEO. The letters indicate
that patients feel the product is defective, and they want answers.
The company quietly recalls the product. The product has a limited distribution,
so the company issues only an advisory memo to a distribution network of hospitals
and physicians, alerting them to the problem. The company feels that it has
done an adequate and reasonable job of communication. Has it? Key individuals
responsible for removing the product, returning or destroying that product may
not have paid attention to the memo, may have been out of the office for some
reason when the memo came in, or the memo could have been routed to another
by mistake.
The problem is that the person who needs to know still doesn't, customers
who have had problems haven't been contacted, remedies have not been provided
to those customers and the manufacturer is now responsible, because the product
has not been removed, and more patients, by accident, have received it. Plaintiff
lawyers have seen the posting on the newsgroup and are now making inquiries
for others who have been "injured" and are now conducting discovery. That smacks
of litigation, possibly a class action.
What would have happened if XYZ Medical had conducted a recall notification
program that was consistent with standards of class action as directed by the
Federal Rules of Civil Procedure Rule 23 (Fed. R. Civ. P. 23) at the time they
learned of the product's potential for harm? Adequate product recall notification
could potentially reduce XYZ Medical's exposure to liability for future harm
caused in that those individuals harmed after the recall should have known of
the product's inherent dangers. Rule 23 requires that notice be provided to
reach the majority of those affected in a class action. Additionally, the ALI
Restatement of Law III § 10 chapter 2 paragraph g, p.195, states: "…When direct
communication is not reasonable, it may be necessary to utilize the public media
to disseminate information regarding risks."
The scientifically measurable notification program that takes into account
demographics and psychographics of the target audience ultimately shifts the
greater burden of financial responsibility (for all products that continue to
remain on shelves and are sold, injuring consumers) to those individuals who
should have removed the product from the shelves. Now ultimate liability for
the tortious conduct (willful or negligent civil wrong that exposes an entity
to litigation) has shifted, and XYZ Medical is no longer the ultimate tortfeasor.
Obviously, if exposure is limited, or just one lawsuit can be averted, the
cost benefit analysis will reveal that money spent, up-front, on the notification
program far outweighs that of sustaining litigation. Further, as XYZ Medical
has not only preserved reputation, but also actually increased their integrity
in the public eye for their commitment to consumer safety.
Conclusion
When high profile legal notice or product recall campaigns are required,
defensibility centers around correctly defining target groups based on their
demography, values, and lifestyle habits to ensure that those who need to know
are reached in a timely and measured manner.
Opinions expressed in Expert Commentary articles are those of the author and are
not necessarily held by the author's employer or IRMI. Expert Commentary articles
and other IRMI Online content do not purport to provide legal, accounting, or other
professional advice or opinion. If such advice is needed, consult with your attorney,
accountant, or other qualified adviser.