Assessing the Impact of a Sexual Harassment Lawsuit at a Metropolitan Restuarant

A popular metropolitan restaurant recently suffered the negative publicity of a sexual harassment lawsuit. The courts settled the suit in favor of the restaurant, but an interesting question is how would we measure the damage to the restaurants brand equity. Since I had our mandatory Fair Employment Practices training this week, it's an apropos topic.

Exploratory Research

Harris and Smith (2002, p. C1) define a crisis as any newsworthy event that has happened or will happen in the near future that has the potential for adverse publicity. The sexual harassment event associated with the Restaurant X satisfies their definition of a crisis. In his section on public relations, Duncan (2005, p. 563) says that this type of incident should be treated as a crisis because of the extreme impact it poses to Restaurant X’s “reputation and brand relationships.”

Lichtenstein, et al (2004, p. 29) reinforce Duncan’s premise by noting that corporate social responsibility strengthens brand equity and say its impact goes beyond sales. This means that a consumer perception of Restaurant X as an environment that condones sexual harassment will have a negative effect not only on sales. A reduction of brand equity will also result and with it there will be a consequent loss of owner equity. It is vitally important for Restaurant X to verify through marketing research the attitudes its publics harbor about the incident.

What type of survey research should be initiated

Management should already understand that negative publicity in general affects customer retention. They will want to know if their specific sexual harassment publicity is reducing their customer retention and sales. The goal of this marketing research should be to “shed light on [this specific] association or relationship,” which is how McDaniel and Gates (2008, p. 49) characterize a descriptive research design.

The basic method of research should be survey. McDaniel and Gates (p. 50) inform us that experiments are typically used only for causal research designs. Observation would be an inefficient approach to determine opinions and attitudes on the restaurant’s sexual harassment case because there is no direct interaction with the customer. Surveys are “an orderly and structured approach” to understand “opinions and attitudes.”

This research should be quantitative. Qualitative research is “not necessarily representative of the population of interest,” (see McDaniel and Gates, 2008, p. 110). Surveys are a good tool to find out what factors influence consumers (p. 142); in this case, did the publicity influence customer retention and sales. Of the various types of surveys, I recommend Computer-Assisted Telephone Interviews (CATI).

Why CATI?

In this situation there is a tradeoff between turnaround speed, measurement error, and cost. CATI is the optimal strategy, with Internet Panels a close second. Johnson (2009, p. 2) notes that non-response bias is a significant source of measurement error. He also informs us that both telephone and mail surveys are subject to increasing non-response rates.

Thee (2007, p. 1) reports another problem with telephone surveys for the restaurant: because of the substantial use of cell phones, telephone sampling frames are no longer geographically based. On the other hand, the restaurant public is geographically bound. Thee goes on to say that households with only a cell phone numbered 16% in 2007 (p. 1) and this could grow to 25% by the end of 2008.

CATI can help here. McDaniel and Gates (p. 152) inform us that the computer can customize each questionnaire according to how the respondent answers previous questions. We could ask if they are currently in the metro area. If not and they have no intention of visiting the metro area, then we could close the interview.

McDaniel and Gates (p. 365) also report on a method for determining the extent of nonresponse bias. They cite two studies that suggest nonrespondents are not a clearly distinct subgroup from the general population. To find out for certain in this case, only a very small follow-up survey using nonrespondents as the sampling frame need be conducted.

Johnson (2009, p. 1) informs us that restaurants make frequent use of self-administered surveys. The reason they are not the best solution in this case, is that customers already lost to Restaurant X because of the lawsuit won’t be patronizing the restaurant anymore. In addition, a self-administered survey approach will not have the same quick turnaround as online techniques (see Johnson, 2009, p. 2).

Interviews such as door-to-door and executive would have little traction with the immediate needs of the restaurant. Mall intercept interviews would be too expensive, and in addition, McDaniel and Gates (2008, p. 172) say to avoid such an approach when the incidence rate is low because it will be too expensive. The number of patrons of Restaurant X is low compared to the total population in the metropolitan area.

Internet Panels have been used in other crisis management situations. Duncan (2005, p. 564) reports that McDonald’s setup a panel to protect its reputation from the fallout over a fraud perpetrated in its promotional games. McDaniel and Gates (p. 156) also discuss the advantages of panels. Johnson (p. 2) informs us that “companies like Survey Sampling” provide consulting expertise to “construct a sample to match the target population” and then rent a panel from their large database. Still, as Johnson (p. 2) observes “The internet population is not representative of the population as a whole,” and “Internet users are concerned with privacy and, thus, may refuse the survey.”

What topics should the survey cover?

First up is demographics such as gender, age, and race. The next topic would investigate level of awareness. It would be used to discover the news sources that informed the respondent about the lawsuit, as well as their knowledge about the particulars of the case, and knowledge about Restaurant X policies and training to prevent sexual harassment.

The third topic would be to determine their opinion about how Restaurant X handled the sexual harassment accusation. Duncan (2005, p. 563) says that for such a crisis it is a good idea to survey opinion about the company’s level of honesty, helpfulness, speed of response, clarity, and consistency of message.

The fourth topic would be to find out from patrons about their experience with the restaurant. Have they ever witnessed sexually harassing behavior at the restaurant? Has the staff been professional and courteous? The fifth topic would be to establish the factors that influence Restaurant X patron decisions to frequent a restaurant. An important aspect here is how did the sexual harassment lawsuit affect their opinion about Restaurant X and their willingness to be a customer? The sixth topic would be open-ended questions to find out their opinions about what further steps Restaurant X should take.

The survey population

The population is the existing, lost and potential customers of Restaurant X in the metropolitan area. With no further information from the restuarant advertising or news stories, I will assume that the entire metropolitan area should be viewed as potential customers. To focus only on existing customers would not discover the opinions of lost customers. Additionally it would exclude the only source of growth, new customers.

The sampling units and sampling frame

The sampling unit would be households because people tend to go to restaurants as a family or as a couple and not alone. The sampling frame should not be the telephone directory for the metropolitan area. McDaniel and Gates (pp 333-4) list the problems with the telephone directory including problems with unlisted numbers and their prevalence among non-whites and younger people. Instead random-digit dialing from phone exchanges in the metropolitan area will form our sampling frame.

Simple random sampling will be used to create our random-digit dialing frame. Johnson (2009, p. 3) notes that probability sampling, like simple random, gives the researcher a representative sample of the population. Specifically for simple random sampling, a computer can randomly select the sample and this is consistent with the CATI approach I recommend.

The sample size

The main difference between qualitative and quantitative research is sample size (see McDaniel and Gates, 2009, p.108). Managers are more “comfortable with marketing research based on large samples and high levels of statistical significance” (p. 109). Another factor that will affect our sample size is the required confidence level. Wilson and Ogden (2004, p. 56) say that

"Survey research requires at least a 95% confidence level and a margin of error of less than 5% to be actionable.”

Do we need to know the exact population size for the metropolitan area? Using a sample size calculator it quickly becomes apparent that after a certain point increasing population size by an order of magnitude does not increase sample size requirements by more than a single person or two. Creative Research Systems (2009, p. 1) provides a Sample Size Online Calculator that I used to calculate the following sample sizes:

(The calculator is at Creative Research Systems).

Given the gravity of sexual harassment allegations and the damage to brand equity, owner equity and ongoing sales, I recommend a sample size of 384.

References
Creative Research Systems (2009). Sample Size Calculator. Retrieved on June 17, 2009 from http://www.surveysystem.com/sscalc.htm

Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Harris and Smith Public Affairs (July 3, 2002). Public Relations Handbook. Retrieved on June 10, 2009 from http://www.awphd.org/PRhandbook/PRhandbook.pdf.

Johnson, E. (2009). Quantitative Research: Surveys & Sampling. Retrieved on June 11, 2009 from http://www.imc.wvu.edu/.

Lichtenstein, Donald R., Drumwright, Minette E. & Bridgette M. Braig (October 2004). The Effect of Corporate Social Responsibility on Customer Donations to Corporate-Supported Nonprofits. Retrieved on June 9, 2009 from http://www.imc.wvu.edu/.

McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

Thee, Megan (December 7, 2007). Cellphones Challenge Poll Sampling. NY Times. Retrieved on June 10, 2009 from www.imc.wvu.edu.

Wilson, Laurie and Ogden, Joseph (2004). Strategic Communications Planning, 4th Ed. Kendall/Hunt Publishing Company.

Data Warehouse Support in Crisis Management

Duncan (2005, pp 562-3) recommends a crisis management plan be in place before a critical event strikes so the company is not improvising while the media and public are expecting a well-reasoned response. He says the plan should address the following elements:

• Internal notification list
• Roles and responsibilities
• Who is assigned to address communications with each separate public
• Who is authorized to talk to the press
• General guidelines on what to say
• Examples of discussion that has legal implications
• General actions for different scenarios

Adelman (2003, p 16) describes the very beneficial use of data warehouses and business intelligence during crisis or issue management. Data warehouses can help upper management answer questions related to the crisis or issue. Too many times they are put on the spot, and end up doing a song-and-dance in front of the press instead of dealing with facts. Without a data warehouse it is more difficult to find information on the background and/or to justify a course of action.

It’s important to investors, to employees, to customers, and the other relevant publics that management acts in an informed manner. Too often they appear unaware of the situation. Here IT can help.

A prime example of successfully handling a crisis is the well-known Diet Pepsi case (see crisispublicrelations blog for background). Diet Pepsi ran into trouble when consumers began “finding” foreign objects in cans of Diet Pepsi. A variety of different objects were found including a syringe, a bullet, and even a crack cocaine vial. The corporation knew that there was no possible way for these objects to be inserted during the bottling process. As a result, Diet Pepsi used a defensive strategy claiming its innocence. They communicated openly with the public, attacked the accusers, and allowed their bottling process to be shown on the news. Temporary damage had been done to Diet Pepsi, but they quickly rebounded from the situation.

The high-speed nature of modern bottling plants makes such strange events almost impossible. Mansky (2003, pp1-3) explains Pepsi’s public relations strategy. Pepsi used a defensive strategy, touting its innocence. They attacked the questionable accusers, communicated openly and truthfully with the public, worked with the FDA (who later became an intervening public for them) and published a video news release of their bottling plants.

Many believe the “victims” tried hoodwinking their way to prosperity.

According to Mansky,

“Because Pepsi took immediate action to create a crisis communications plan that involved several departments and focused on four key principles, it was able to resolve the crisis while defending its position and upholding its reputation. Pepsi’s plan included specific goals and objectives, targeted four precise publics and was the result of valuable research, all which helped it to be successful. The support of the FDA as an intervening public was also crucial for Pepsi’s success in this case.”

References

Adelman, Sid (2003). Measuring Data Warehouse Return on Investment. Retrieved on April 16, 2008 from http://www.teradata.com/t/pdf.aspx?a=83673&b=86833

Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Mansky, Amy (2003). There’s a Syringe in my Pepsi Can. Retrieved on April 17, 2008 from http://www.unc.edu/~mansky/J131casebrief2.pdf

A Public Relations Plan for Microsoft

Microsoft must respond to the open source movement, both the formal initiative and the growing number of adherents in the corporate and government worlds. Open Source Software is the most serious threat to current and future Microsoft revenues and is the theme for this proposed public relations campaign. Open Source Linux and Apache are taking leadership positions in computer centers. What is more worrisome is that Linux may become the operating system of choice in corporate client devices in the near future. If certain publics become strategic buyers of Linux, it is probable that Windows will be driven from the market. This is the conclusion of Casadesus-Masanell and Ghemawat (2005, p 3), two Harvard Business School professors.

Microsoft must establish effective communication channels with key publics to exchange understandings about Windows and Open Source. It must make sure, in honest discussion, that those publics are aware of the capability of both Windows and Open Source to fulfill needs and interests. If Microsoft does not do this, misconceptions or mistrust may influence decisions that result in the disastrous scenario of that Harvard study.

The main barrier to Microsoft for effectively communicating messages about open source, and managing the growing crisis is the lack of integration across the different public relations firms and 5,000 bloggers. Additionally, it is not apparent that Microsoft has organized its thinking about open source according to integrated marketing communication principles. The result is isolated messages about open source that are not targeted to specific publics. The isolated message do not use a strategy and tactics appropriate for each public. Wilson and Ogden (2004, p 138) say that targeting specific publics, and using a strategy and tactics appropriate for each public is the hallmark of strategic public relations planning.

Here is a link to the proposed PR plan: Microsoft Public Relations Plan

References
Casadesus-Masanell, R. and P. Ghemawat (June 6, 2005). Microsoft vs. Open Source: Who Will Win? Retrieved on March 31, 2008 from http://hbswk.hbs.edu/item/4834.html

Wilson, Laurie and Ogden, Joseph (2004). Strategic Communications Planning, 4th Ed. Kendall/Hunt Publishing Company.

Ethos, Themes and Values

Understanding our target audiences and targeting content to them is a fundamental aspect of web design. Scott (2007, p 33) advises us to identify and articulate each target audience and develop content specific to each. He recommends creating a persona for each target audience.

What information do we need for content to appeal to each persona? In his book, Culture and Persoanlity, Wallace (1963, p 101) recommends knowing the themes, values and ethos of a group to prepare appealing content. A theme is how the group sees the world. Wallace suggests a good way of discerning this is a review of the literature or theatre the group patronizes. What books or movies are their favorites?

He catalogs several themes in literature:

• The “western” – hard to find good people must fight tirelessly to bring order to a chaotic world


• The “detective” – idealists disillusioned with the existing order do the right thing for the wrong reason


• The “mystery” – clever and logical heroes politely work to maintain what they believe is a righteous order


• The “action” – well intentioned brutality


• The “drama” – heroes not concerned with social welfare, seek gratification of private desire.
  

Ethos is a style or form of emotional experience. Ruth Benedict, the grand dame of the cultural and social study of groups and a professor to Margaret Mead (see Wallace, 1963, p 103), distinguishes two type of ethos for groups: Dionysian and Apollonian. The desire for the Dionysian is personal experience, while that of the Apollonian is moderation.

Finally values (p 101) are concepts or mental images that motivate a group to action. They are either positive or negative, moving a group towards or repelling them away from some idea. Health, membership in a prestigious group, leisure, and affluence are examples of such motivational food pellets.

This type of information should be stored in our customer database in addition to the raw data on demographics, and so on to help formulate a meaningful appeal after we have segmented target audiences.

References
Scott, D (2007). The New Rules of Marketing and PR. Wiley.

Spiller, L. and M. Baier (2005). Contemporary Direct Marketing. Pearson/Prentice-Hall.

Wallace, AFC (1963). Culture and Personality. Random House.

Sa Ne Faire Rien? Public Relations and the New Media.

The old image of public relations as bar flies with delusions of being puppet masters came a cropper. The public became cynical of public relations as in CYNICAL. The nature of public relations is coming full circle, according to David Scott (New Rules of Marketing and PR), Paul Gillan (The New Influencers), and Lauri Wilson and Joe Ogden (Strategic Communication Planning).

Wilson and Ogden trace the creation of public relations as strategic advisor to the CEO in the early 20th century and its quick fall to a staff function considered a luxury. Inger Stole tells us the dark purpose of public relations, after the tragic fall and before its current resurrection, was to “resist and co-opt the consumer movement” and buttress slick advertising (see University of Illinois Books).

Innovative forces have been unleashed by the new social media and they are working utter destruction on the old PR. The value of the new public relations is honest and open content that is readily available to searchers when they need it. “Content drives action.”


The Public Relations Society of America defines public relations in its Official Statement on Public Relations(see PRSA Mission), and it is consistent with the new PR described by Scott. The essence is that it fosters mutually beneficial relationships.

Redmond Review has a complete analysis at Redmond Review Sanna Fairy Anne

References
Wilson, Laurie and Ogden, Joseph (2004). Strategic Communications Planning, 4th Ed. Kendall/Hunt Publishing Company.

Phaeton: New Media IMC

Although VW had a highly successful marketing campaign for their New Beetle, there is another VW brand that did not fair so well, the Phaeton. Still sold in the rest of the world, it was withdrawn from the U.S. in 2007 after three years. Although VW seemed to hit, mechanically at least, all the IMC tactics and tools that made the New Beetle a success, there was not much buzz for the Phaeton.

This should not have surprised VW. The iconic Beetle still had traction a generation later, a part of our retro-chic culture today. The New Beetle IMC job was to reacquaint old friends for $16,000, the Phaeton IMC job was orders of magnitude harder, to turn strangers into friends, and charge them $74,000.

The VW corporate theme is advanced and innovative transportation solutions. They used the new media in the Phaeton rollout to the U.S., including short film. Here is their introduction to the Phaeton.

VW worked with new media such as RoadandTrack.com during the introduction of the car through traditional press releases given to interested magazines. What's new Volkswagen.

Why didn't the new media rally behind this introduction like they did the New beetle? A critical news value is impact - what is the magnitude of the news event. Also is there a human interest angle? Not much with these - no nostalgia, no fond memories, no traction from clever old ad campaigns that revolutionized IMC as did the Beetle.

One wonders why, since VW already owns Audi, Bugatti and Bentley, they would want to also make the VW brand name synonymous with high end luxury cars. Nevertheless, their chief engineer thought it a good idea, and here they are sponsoring golf tournaments with the new VW Phaeton brand name, trying to make it a high-end marque. Miami sponsorship.

They did a good job with these. They had Indy 500 champ drivers taking the golfers for test drives. This would seem to be opportunities for local media to cover the story but not many takers. Early on there was incredulity about the price tag for the "people's car."

They do have video news releases (VNRs). There are also short film documentaries about the Phaeton on youTube that make it look exciting. Here is an example: Utube.

Steve Parker at Automotive news pretty well sums up the attitude from the press about the Phaeton: "It's a fantastic, fun car --- But VW has a division named Audi to sell cars in this price class" (seeBrand issue - AUDI not VW division).

The car is a wonderful machine. It is the only car to win the International Forum for Design. It has input from the Bugatti, Bently and Audi divisions of VW. It is the only car to win the gold award at the Iternational Forum for Design (see DesignWinner).

I think this was a failure because they should not have spent so much on a good car to put it in an odd market niche. How consistent is the Phaeton with target segment for VW?