Companies & Industries

How to Run a Recall


Yes, Mattel has problems that resulted in the recall of some 20 million toys. But the company has made some smart moves in dealing with this crisis

Posted on Marketing Know: How: August 22, 2007 at 2:04 PM

Mattel has been criticized heavily for having to recall not once but twice in as many weeks twenty million toys manufactured in China with lead paint and/or loose, potentially dangerous magnets.

Clearly Mattel did not have sufficiently tight quality control procedures in its supply chain to compensate for the extra risks of outsourcing to relatively new Chinese subcontractors. Clearly there were design flaws in the toys with the magnets that could come loose.

But Mattel deserves praise for now stepping up to its responsibilities as the leading brand in the toy industry.

What has Mattel done right?

The CEO has taken personal charge of the situation. He has apologized publicly and taken immediate steps to tighten quality assurance requirements on Mattel's suppliers. There has been no effort to duck behind blaming suppliers and distributors or, even worse, consumers—as Audi attempted to do in the famous unintended acceleration recall of the late 1980s.

Mattel is effectively getting the word out about the recall. Among other methods, the company is using bold red ads on high traffic Internet sites such as Yahoo.com to find owners of the affected products and drive them to the Mattel web site for more recall information. With this approach, consumers are being empowered to handle the problem themselves rather than clog customer service desks at Mattel's retail outlets, which would strain Mattel's dealer relations and cost the company extra dollars in processing fees.

Mattel's recall web site is a model of excellence. All the affected products are depicted and clear instructions are provided on how to return recalled product (including downloadable application forms and shipping mailers), which suggests strong contingency planning.

Where Mattel has fallen short so far is in compensation. Mattel is offering equivalent value coupons good for other Mattel products in exchange for recalled product. Given the inconvenience caused to consumers and the need to motivate them to return the affected products, this offer may not be sufficient.

As long as the two recalls represent the whole of the problem and not the tip of the iceberg, Mattel's brand reputation should survive. The CEO knows that Mattel’s brand trust—built up over 62 years—is at stake, just ahead of the holiday selling season. And with 80% of US toys sourced from China, other US toy marketers are under equal scrutiny; if similar problems surface at other companies, Mattel may earn some credit for getting out ahead of the problem.

Have you ever been involved in a product recall, either as consumer or as a marketer? What do you think is important for Mattel to find success in "reverse marketing" their recalled products?

HARVARD BUSINESS ONLINE RECOMMENDS:

A Strategic Approach to Managing Product Recalls (HBR Article)

Planning for the Inevitable Product Recall (Business Horizons Article)

Measuring Marketing Performance (CD-ROM)

A Strategic Approach to Managing Recalls

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