A crisis that occurs in a business is a problem that disrupts the way an organization conducts business and attracts significant new media coverage and public scrutiny. These crises can cause a company to have negative financial, legal, political, or government repercussions on a company if not dealt with promptly and properly. A crisis seems to occur at the most unexpected time and can take an organization by complete surprise. Effective communication is important in handling a crisis within an organization. The case study: “There’s a syringe in my Pepsi can!” will be used to evaluate the effectiveness of communication among PepsiCo and its publics.
In the summer of 1993, PepsiCo found itself in a fast, widespread news story during that time. Multiple claims of foreign objects being found in unopened cans of Diet Pepsi were surfacing. On June 9, 1993, a couple from Tacoma, Washington claimed they found a used syringe in a half-empty can of Diet Pepsi. The couple turned the can over to their lawyer who in turn contacted the health department. The following day a report of the incident was broadcasted on a local television station. Two days after the initial incident, a second needle claim was made in Washington. Local media picked up the story and added that there have been no reports of injury in either case. On June 12 the Food and Drug Administration (FDA) issued a five-state consumer alert. This alert asked all consumers to pour soft drinks into a cup before consuming. The FDA did not recommend recalling the Diet Pepsi soft drink at this time. The next day, there was another claim of a syringe found in a can of Diet Pepsi but this time the claim came from a consumer in New Orleans. By June 16 there have been claims filed in 24 states. In one week’s time 50 incidents had bee reported but none of the reports involved any illness or injury.
When the incidents were first reported, PepsiCo let the local bottler, Alpac Corporation handle the media investigation. Alpac conducted an investigation and found nothing that would allude to the cans of Diet Pepsi being tampered with on the filling line. These findings did not stop the complaints or the growing media coverage on the issue. PepsiCo decided they needed to get involved and do so on a national level. The response centered on four principles. The first principle is to put public safety first. Pepsi needs to look at the problem through the eyes of the public and address their concerns. The second principle is to find the problem and fix it. Pepsi does not feel that the problem was within the production facilities so they need to investigate and respond to all complaints. The third principle is to communicate frequently, quickly, and regularly. The company needs to make sure that they make sure they use both broadcast and print communication tools to their advantage. The final principle is to take full responsibility for resolving the crisis. The company needs to make sure to not point fingers or blame others for this crisis.
The crisis coordinator for the company identified four primary publics to address. The four publics were the news media, customers, consumers, and the employees and local Pepsi-Cola bottlers. The news media, customer, and consumers , all external publics, need to be assured that the Pepsi products are safe and the company will do what it needs to in order to prove this and gain back the trust of the public. The employees and bottlers, the internal publics, also need to be assured but for different reasons. The company needs to assure the employees and bottlers that there was no fowl play internally and the management team is behind their employees and the products they produce 100%. PepsiCo decided not to bring in an outside crisis communication consultant, instead the company thought it would be in the company’s best interest to keep everything within the company.
To address the publics, Pepsi used many internal resources such as public affairs, customer relations, scientific and regulatory affairs, sales and marketing, manufacturing and legal. The public affairs department was ready to respond to media inquiries and provide updates on facts and developments. A 24-hour toll-free hot line was manned by Customer Relations to take calls from consumers with questions and comments. The Scientific and Regulatory Affairs department assigned technical and quality assurance specialists to work with the FDA to track each complaint. Sales and Marketing employees made sure the relationships with customers who sold Pepsi products was maintained on a good basis. Manufacturing experts assisted the FDA in developing a simple, easy to understand explanation of the filling line process for the public and news media. The legal department was involved from the very beginning to the very end of the crisis.
PepsiCo needed something to prove to the publics that what the company was being accused of was not occurring inside the plants. The company produced a video news release showing exactly what happens on a can filling line and how the alleged objects getting into the cans is nearly impossible. The video news release broadcasted to into 100 million homes. Shortly after the filling line video, another video news release showed a woman trying to stick a syringe into a Diet Pepsi can while no one was looking. Since tampering with food is a felony, the woman was arrested. Once this video news release was aired, the accusations and claims began to disappear. By June 21 the FDA announced that “the hoax is over”. (Center, 2003) There were a total of 54 people who were prosecuted and convicted for their roles in the hoax.
There were some second guesses in how PepsiCo handled this crisis. Not recalling the product was one concern and Pepsi felt that since there were no health or safety issues reported recalling the product was unnecessary. Time was the enemy for Pepsi as well as the media. The investigation took time and the company had to make sure the information they were relaying to the publics was accurate and honest.
Considering technology, the internet, globalization of markets, and the speed at which information can be distributed, if the same incident happened today, the crisis would become a global problem. Pepsi would not only have to deal with the public in the United States, but now other countries as well. However, the same steps the PepsiCo took in 1993 would be the same steps the company would need to take today. Effective communication is the key and Pepsi showed that. The ensuing activities of PepsiCo and the U.S. Food and Drug Administration won the company the coveted “Best of Silver Anvils” in the 1994 Public Relations Society of America competition. (Center, 2003)
Answers.com (2007) Crisis Management. Encyclopedia of Small Business
Retrieved March 3, 2007 from http://answers.com/topic/crisis-management
Center, A. (2003). Public Relations Practices: Managerial Case Studies and Problems (6th ed.). Retrieved March 3, 2007, from University of Phoenix Student web page Web site: http://ecampus.phoenix.edu/content/eBookLibrary