LULU STEPS IN DOODOO: QUALITY CONTROL VS BRAND LOYALTY

LULU STEPS IN DOODOO: QUALITY CONTROL VS BRAND LOYALTY -- Lululemon Athletica achieves what Nike hasn't been able to do in 20 years.  Both companies mix styling and advanced fabrics but lululemon lives and dies by yoga just as Nike did with runners for the inital years of their business until the realities of stock price and global markets expanded their focus.

The Vancouver, BC-based yoga apparel company announced yesterday that they were recalling 17% of bottoms on their sales floors due to a fabric issue that created an excessive "level of sheerness in some of our women's black Luon bottoms that fall short of our very high standards."  Lululemon's stock price plummeted almost six percent Tuesday morning to $62.30.  This situation has long-lasting implications for the reputation of the brand.

Lululemon relies on the devotion of its legions of committed yoga practitioners who are the foundation of the business.  However, according to the Financial Post, this is the fourth quality control issue at Lululemon in the last year.  When quality suffers, customers flee.  Passion is the glue that links a target market to a specific brand.  When Phil Knight was building Nike in the 1970s and created the waffle sole, runners knew Nike was as passionate about making their shoes as serious runners were about running.  That link was the catalyst that created a brand/customer partnership that lasted for decades.

Salespeople at Lululemon are called 'Educators' because they are promoted as people who are as in touch with their bodies and yoga as they are with the product on the shelves.  Although at this moment, Lululemon is looking into the cause of the latest problem, it is clear that a serious quality control issue must be addressed.  The fabric issue apparently went undetected all the way through the manufacturing and distribution process and was first recognized with returns or comments from end-users.

Nike has had controversy as well over product origins and manufacturing, however most of these issues occurred after Nike established itself in the market with it's core constituency of runners.  Nike promoted itself as the 'authentic' shoes for serious runners and the running establishment embraced Nike.  This bond helped to keep the reputation of the company intact for decades.

The problems with Lululemon are different because they come at a time when the firm is still building its reputation and also because these issues are about product quality compared with Nike that had to deal instead with product origin and child labor issues.

To appease their loyal customers, Lululemon must announce immediately the factors that caused the problem and announce new quality control procedures to guarantee future quality of all products.  Product displays in-store to demonstrate the integrity of the pants they produce will also help repair the damage.

Another looming issue - according to the company's annual report, the Luon fabric in question is provided by a single manufacturer in Taiwan.  The explanation from Lululemon should also address the single-source issue and the reasons for the business having too much reliance on a single manufacturer.

This is the moment where Lululemon can take a short-term stock hit and repair long-term customer loyalty with a full, honest and introspective assessment of the entire business with concrete steps to redeem trust.  Otherwise, these Lululemons may not so easily be made into Lululemonade.

WHEN BAD NEWS IS GOOD PUBLICITY

This is a nutty story with a real lesson about how brands capitalize on unanticipated media coverage.

The New York Times Wednesday featured a story that originally broke in the Columbia Daily Spectator, the daily newspaper of Columbia University.  It seems that chocolate hazelnut spread Nutella was disappearing from campus dining rooms at an alarming rate.  Actual figures are sketchy, but the story reports that around 100 pounds of the product are consumed each day at the school.  Eyewitnesses report that students brazenly take jars of the stuff out of the dining halls, deftly hide extra portions in coffee cups and other containers and at times take enough rations out of the cafeteria to last a hungry co-ed an entire day.

When first contacted by The New York Times, Vicki Dunn, the executive director of Dining Services at Columbia refused to comment and became defensive before hanging up on the reporter.  Wow!  If there's one way to get a reporter to keep digging, hang up on them.  Ms. Dunn is an administrator, not a communications professional, but a huge opportunity was lost at that moment to turn an oddball humor story into a positive promotion for the school.

• First, Dining Services introduced Nutella as an additional option at Columbia just last week after receiving requests from students.  That's a chance to dispel common perceptions about school administrators who don't listen or act on student demands.

• Second, the administration was reported to be alarmed at the cost that Nutella was adding to their food expenditures due to unanticipated demand.  What!?  With annual tuition at Columbia reaching $61,500 with room and board last year, enterprising students blogged that the cost of 100 pounds of Nutella at Costco was a paltry sum indeed.  A quick check at Walmart reveals that 100 pounds of Nutella would cost $427.

Yesterday, Columbia seemed to have an emergency meeting and came up with an appropriate response that ran in The New York Times blog.  Finally taking the weight of the academic world off their shoulders, the official school statement said that “media attention to Nutella-gate has cut down on the amount people have been taking in recent days.”  So, the school picked up the ball they dropped and recovered slightly but not completely.

Now, the ball is in the hands of Ferrero USA,  Inc., the US manufacturer of Nutella.  This story is a rare example of unanticipated news coverage, even with it's negative undertone (stealing) becoming a huge opportunity for brand promotion.

• How about Nutella scheduling a press conference with Columbia to announce they are making up the estimated amount of product lost each week through pilferage.  
• Or make it a teaching moment to endow a chair at Columbia Law School concentrating on consumer products, popular culture and law.  
• The students themselves are a great resource for consumer feedback about their preference of Nutella over peanut butter.  
• Can a real-time chart on the Nutella website tracking Nutella consumed against timing of tests and final exams be far behind?

A single day's consumption of Nutella around the world represents over 70 million hazelnuts.
Columbia and Nutella would have to be just as nuts if they let this story die without converting it to their mutual benefit.

MCILROY SHOULD LOOK BEYOND 'HORIZON' FOR PR EXPERTISE

Rory McIlroy, the top-ranked golfer in the world, yesterday withdrew from the Honda Classic tournament in Palm Beach Gardens, FL, halfway through his second round.  

Approached in the parking lot before leaving the golf course, the 23-year old McIlroy told the media that "I'm not in a great place mentally.  I can't really say much, guys. I'm just in a bad place mentally."

Speculation concerning McIlroy's sudden departure is widespread, ranging from problems related to his new Nike golf clubs (as part of his new endorsement deal) to romantic troubles with his girlfriend Caroline Wozniaki, the tenth-ranked women's tennis player in the world, to personality issues.  He must also now contain anger amongst fans who paid handsomely for tickets and were deprived of seeing him play.  TItle sponsor Honda and other advertisers also were left in the cold after their #1 television draw vanished from the scene.

Whatever the reasons for his decision, the blame for the withdrawal belongs with McIlroy.  However the blame for the widening fallout from the episode rests squarely with Conor Ridge and Colin Morrissey, who founded Horizon Sports Management, the Dublin-based company that has represented McIlroy since 2011.

After McIlroy left the course, it was reported that a Horizon spokesperson told the Golf Channel: “He’s not hurt. He’s not sick. And he won’t answer his phone. I don’t know.”  Then, an hour later, the PGA, the organization that runs the tournament, issued a written statement from McIlroy that blamed a toothache for loss of concentration that prompted him to withdraw.

The first rule of celebrity PR is to control the message.  In this regard, Horizon has failed their client miserably.  Controlling the message demands that the message be clear and singular.  Unfortunately, instead of a single message, Horizon is responsible for six separate messages.  

1. First, McIlroy's initial explanation about mental concentration.  
2. Second, the Horizon representative discounting any illness or equipment issue.  
3. Third, the same Horizon representative heightening tension and intrigue by stating he couldn't reach Rory on the phone.  
4. Again, the Horizon rep making a fatal error saying "I don't know."  In any PR professional's lexicon, before digging your own grave by stating 'I don't know,' say 'No comment' instead.
5. Fifth, the seemingly back-pedaling and self-serving statement from the PGA revealing a toothache.  
6. The real reason, which the previous reasons 1-5 make doubtful will ever be known.

Golf's poster-boy for negative publicity, Tiger Woods, said after the incident about McIlroy, "He's just got to be more – just got to think about it a little bit more before you say something or do something."

Unlike McIlroy, Woods is not universally liked.  Although appreciated for his skill, Woods is a polarizing figure. McIlroy enjoys a pristine reputation among golfers and the public.   I would hope that his stellar conduct up to this point in time would provide McIlroy some measure of understanding amongst the media and the public.  Consider that, in a little over a year and a half, McIlroy embarked on a very public romance with Wozniacki, changed agents, relocated to the U.S. and remade his image with the biggest golf-equipment deal of this century with Nike worth hundreds of millions of dollars.  

Not likely.  And unfortunate, since given how events have played out with Horizon in McIlroy's corner, it's more likely the damage to his reputation will take a lot longer to improve than his golf scores.