Crisis Management in Marketing
What is the first thought that comes to our mind on hearing the phrase ‘crisis management’? It usually pertains to natural calamities or some trouble that we have encountered in our personal lives. Crisis management is an equally important term in the business sector as well. No matter how well the business or brand is secured from situations and factors that might contribute to any crisis in the future, it is only natural for business disasters to occur every once in a while.
Any business, large or small, may run into problems that negatively impact its normal operations. A crisis can take many forms like a fire at the workplace, the death of a CEO, a terrorist attack, a data breach, or a natural disaster. It can lead to tangible and intangible costs to a company in terms of lost sales, damage to its reputation, and a decrease in income.
While talking about crisis management, a textbook example of the same is the COVID-19 crisis that began in early 2020. Businesses around the world were forced to close down. Millions of employees were sent home. Essential services struggled to function. In short, every plan fell flat on its face when the global crisis came crashing down on everyone.
Therefore, it is ideal to have a crisis management strategy and team for such unforeseen situations and something that most marketers in the top marketing agencies in Delhi NCR and around the globe should take notes.
A business crisis is defined as a situation that can be threat to the success and health of a company. A business crisis can tarnish its reputation, damage its business operations, negatively impact its finances, or harm its employees. It can be caused by factors both internal and external. Due to the severity of a business crisis, it’s important to be prepared to manage one of these events with a plan that is created in advance.
Crisis management is the process of preparing for and managing any disruptive or unexpected emergency situations that affect the business, stakeholders, employees, customers, and revenue and is an important factor of public relations.
Types of Crisis
Crisis management can be undertaken only if marketers have a thorough knowledge of the various types of crises a brand can encounter. Let’s have a look at those types:
Financial crisis
A financial crisis occurs when an organization suddenly loses a large amount of money, making it difficult to meet its financial obligations or service its debts. Some factors that can contribute to a financial crisis include loss of revenue, inflation, bankruptcy, loss of market, and sudden changes in market trends. A financial crisis can have a harmful effect on an organization thus lowering its ability to serve customers effectively. This type of event also raises the risk of talent loss, which makes it vital to be proactive in managing the crises to prevent the destabilization of a business.
Technological crisis
Technological crisis can include hardware and software failures or industrial accidents. An organization can face this type of crisis if the technological tools it relies upon for its operations fail without warning.
Personnel crisis
A personnel crisis happens when somebody from an organization becomes involved in illegal or unethical behaviour, impacting the company’s public reputation. An employee’s conduct at work or in their private life largely acts as a catalyst in this case. The way the company manages the situation is extremely important, as handling it effectively can help them maintain a more positive public image.
Organizational crisis
There are three basic types of organizational crises, including:
Deception: When an employee from a company misrepresents information about the organization, which damages its reputation and misleads others, it is called deception crisis. Taking legal and disciplinary action against the employee is an effective strategy for managing this crisis.
Management misconduct: This crisis occurs when management gets into unethical actions such as selling fake products, selling customers’ confidential information or engaging in illegal activities.
Questionable management values: This happens when management makes a decision that helps the organization profit in the short term without consideration for long-term consequences, which puts investors’ money at risk. Management may withhold information about investments or misuse their powers to achieve their aims.
Natural crisis
When disasters like earthquakes, tornadoes, tsunamis or hurricanes disrupt a company’s business, it is called natural crisis. While most businesses can quickly recover from natural disasters, some companies, especially in the extractive and power industries, may be severely impacted.
Confrontational crisis
A confrontational crisis happens when an individual or group of people has specific demands and takes action to make management meet their needs like strikes, boycotts and blockages of the workplace.
Crisis of malice
A crisis of malice occurs because of unhealthy rivalry or competition. This happens when, let’s say, a rival company launches a smear campaign against a top executive or even a line of products, thus, discrediting a more successful competitor with the purpose of ruining the public trust and market share. Another instanceis when people write negative reviews about a business or spread rumours about its products or services to damage customer confidence.
Human-made disasters
A human-made disaster is a type of crisis caused by the actions of people. Like a cyberattack can disrupt the operations of a business and make it difficult to restart them. Additionally, financial crises which result from high-level market manipulation and transportation accidents can also lead to a serious crisis for a company.
