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Examples of Breached Promises Leading to Relevant Inconsistencies

Case Studies. United Airlines and LIDL

Hausarbeit 2015 23 Seiten

BWL - Unternehmensethik, Wirtschaftsethik

Leseprobe

Table of Content

Table of Figures

List of Abbreviations

1 “United Breaks Guitars”
1.1 Introduction
1.2 Dave Carroll’s expectations as customer of United Airlines
1.3 Actual behavior of United Airlines
1.4 Measures to prevent relevant inconsistencies at United Airlines with regard to customer expectations
1.5 Excursus: therapy of the “United Breaks Guitars” incident

2 Lidl’s quality offensive in 2015
2.1 Introduction
2.2 Expectations as customer of Lidl
2.3 Actual behavior of LIDL
2.4 Measures to prevent relevant inconsistencies at LIDL with regard to customer expectations

List of Appendices

Appendix I: Songtext of “United Breaks Guitars” by Sons of Maxwell

Appendix II: Social media exposure of the hashtag #lidllohntnicht

Bibliography

Table of Figures

Fig. 1: The practical syllogism

Fig. 2: Screenshots of Lidl's kick-off TV spot for its quality offensive 2015

Fig. 3: Home page of the internet presence for Lidl's quality offensive 2015

Fig. 4: Information about meat from the internet presence for Lidl’s quality offensive 2015

Fig. 5: Impressions of Lidl stores

List of Abbreviations

Abbildung in dieer Leseprobe nicht enthalten

1 “United Breaks Guitars”

1.1 Introduction

In 2008, the musician Dave Carroll, member of the Canadian band “Sons of Maxwell”, observed how baggage handlers carelessly tossed around his guitar shortly before his flight from Halifax to Chicago on United Airlines. After the flight, he discovered a severe damage to his musical instrument and declared it at the customer service desk of United Airlines. After nine months of purposeless complaints, he still had not received any reparations from the airline, so that he turned his discontent into a song called “United breaks guitars”[1], which he uploaded on the online video platform Youtube. Just two weeks later, the music videos had already been accessed 2.5 million times and produced an immense reaction in social media. Due to the social pressure, United Airlines finally offered Carroll to pay for his broken guitar. However, the musician denied the remuneration, so that United Airlines donated the outstanding amount of 3,000 US-Dollar to the Thelonious Monk Institute of Jazz (PR News, 2010).

As of May 17, 2015, the video was viewed nearly 15 million times (Youtube, 2009), and strongly demonstrates how a breached promise of a company can lead to a relevant inconsistency[2]. In this case, the relevant inconsistency arises from the discrepancy between United Airlines’s promise to safely deliver passengers and their luggage from A to B (cf. section 1.2) and its actual behavior (cf. section 1.3). From the perspective of an impartial spectator (cf. Suchanek, 2015a, pp. 33-34), the airline has not only broken its promise to customers, but also violated company-internal rules and values by carelessly dealing with the property of a customer. Moreover, the incident shows that in times of social media, corporations have to invest in prevention (cf. section 1.4) and therapy mechanisms (cf. section 1.5) with regard to such inconsistencies, since even single customers can raise global awareness about ethical breaches (Faber-Wiener, 2015, p. 751; Wagner, 2015, p. 815).

1.2 Dave Carroll’s expectations as customer of United Airlines

As described by Suchanek (2015b), the practical syllogism provides a framework to form expectations with regard to the behavior of others (p. 45):

Abbildung in dieser Leseprobe nicht enthalten

Fig. 1 : The practical syllogism

Source: Suchanek, (2015b), p. 45.

Conducting this scheme from the perspective of Dave Carroll towards United Airlines leads to the following insights: Firstly, Carroll most likely assumed that United Airlines’s primary goal is a safe and customer-oriented air transportation service. The 2008/2009 Corporate Responsibility Report of United Airlines confirms this assumption: It is titled with the claim “Every Action Counts” and names “(…) business discipline and leadership, safety, customer satisfaction, employee development and opportunity, community engagement, and environmental stewardship” as primary goals of United Airlines’s business operations (United Airlines, 2009). Secondly, since there were no exceptional situational conditions, such as a short connection time, adverse weather conditions, or rotational delays, the perceived situational condition of United Airlines did not justify any deviations from their proclaimed goals. Carroll therefore expected United Airlines to act according to its goals, so that he expected a safe and punctual flight from Halifax to Chicago as well as a reliable dealing with his personal belongings. Furthermore, Carroll’s song text also reveals that he expected United Airlines to act responsibly in case of a faulty behavior: “(…) you broke it, you should fix it; you're liable, just admit it (…)” (cf. Appendix I).

1.3 Actual behavior of United Airlines

Applying Suchanek’s (2015a) diagnostic framework (p. 50) to the incident of the broken guitar reveals that the irresponsible behavior of United Airlines mainly roots in the airline’s competencies: First, the baggage handlers disregarded the abovementioned goals of business discipline and safety when they tossed around Carroll’s guitar on the tarmac. Second, various employees, such as flight attendants, lead agents, and customer service agents, acted against the aim of customer satisfaction, as they all stated multiple times that they were not liable for the damage (Carroll, 2012). Reflecting the intentions of the corporations, one can suspect that the management of United Airlines most likely did not intend to damage the guitar by reckless behavior from baggage handlers. However, customer service agents must have acted intentionally, since Carroll contacted United Airlines multiple times and finally received a denial of his compensation request (Roseman, 2012).

As the conditions of actions did not provide a plausible framework for such a behavior (c.f. section 1.2), the assertion that the reasons for this mischief majorly root in the competencies of United Airlines corroborates. Hinton (2009), president and chief executive officer of the American Consumer Council[3] and frequent air traveler, attests United Airlines a lacking “(…) spirit of service (…)”, both from an organizational and cultural perspective. He reports that, based on interviews with passengers of United Airlines, a growing number of employees exposed an attitude of indifference towards customer issues. Furthermore, he analyzed the mission statement of the airline, which proved to be fuzzy and barely recognized. Moreover, the Customer Commitment Document of United Airlines at that time clearly shows that guidelines for employees with regard to customers were disregarded regularly, such as in Dave Carroll’s situation.

1.4 Measures to prevent relevant inconsistencies at United Airlines with regard to customer expectations

To prevent relevant inconsistencies, corporations should invest in credible self-commitments in times of situational conflicts to signalize trustworthiness (Suchanek, 2015b, p. 304). In the case of United Airlines, prevention measures target both intentions as well as virtues of the corporation that later translate in competencies.

Firstly, to bring back the “spirit of service”, United Airlines should elaborate and implement clear mission and vision statements that credibly show their self-commitment to excellence in customer service, to both employees and customers. Especially from the internal perspective of the company, such an initiative has the power to shape the corporate culture in a beneficial way (Sutter, 2015, p. 652), thereby forming the basis for improving the virtues of employees with regard to customer centricity.

Secondly, to easen the practical application of such virtues in day-to-day business, United Airlines should invest in conducive situational conditions that (1) improve customer-service procedures and (2) provide a physical environment to increase employee motivation to work for the proclaimed mission of the airline. In case (1), the airline could, for instance, implement a feedback system that tracks customer complaints directly from the point where they arise, for instance, by providing flight attendants with electronic feedback devices that transmit customer complaints to customer service agents who may be able to provide a solution before the customer actually files his claim. A concrete example for case (2) could be a constant performance dialogue with operational employees, such as baggage handlers, flight attendants, or check-in agents, where, for example, employees reflect upon customer service issues and superiors can award customer-oriented behavior. This might raise situational awareness of operational employees with regard to the proclaimed virtues of the corporation and help them to avoid relevant inconsistencies. From the perspective of the customer, those measures could increase the credibility of United Airlines and restore trust in the airline’s commitment to customer service.

1.5 Excursus: therapy of the “United Breaks Guitars” incident

As shortly mentioned in the introduction, United Airlines reacted late and, from the perspective of the media, in an inadequate manner. While Suchanek (2015b) recommends to openly admit the inconsistency, compensate the victim, and excuse in a credible way (pp. 317-318), United Airlines firstly did not react at all and then only released a short notification on the social media platform Twitter, in which the airline stated that it would contact Carroll and clarify the issue (Perkins, 2009). Compared to the medial outrage provoked by Carroll’s song “United Breaks Guitars”, the statement neither was positioned on the channel on which Carroll had uttered his complaint (Youtube), nor did it answer his complaint directly. This behavior even worsened the perception of the breached promise and impeded the restoration of trust in United Airlines.

On the contrary, the subsequently released 2009/2010 Corporate Responsibility Report of United Airlines states that the airline “(...) strive to minimize inconvenience [in case of disruptions] by treating our passengers with courtesy, fairness and utmost honesty” (United Airlines, 2010, p. 12). As an example, the airline mentions their Proactive Recovery team (PROTeam) that “(…) monitors customer interaction 24 hours a day and steps in to proactively resolve any issues”.

Still, airline rankings show that United Airlines cannot fulfill its promise of a leading position with regard to customer commitment (United Airlines, 2012), but rather resides in the midfield of US-American airlines with regard to mishandled baggage and customer complaints (Forbes, 2013).

2 Lidl’s quality offensive in 2015

2.1 Introduction

The second breached promise leading to a relevant inconsistency that will be discussed in this paper is the quality offensive of the German discounter Lidl, started in February 2015. The image campaign touts with the claim “Good quality is recognized by good quality”[4] and is endorsed by multi-channel promotion activities, ranging from TV and radio spots via print advertisements in nationwide newspapers to dedicated printed publications and a webpage[5] (Campillo-Lundbeck, 2015b).

From the view of the impartial spectator, the inconsistency arises from the expectations customers derive from the image campaign (cf. section 2.2) in comparison to the actual delivery of this quality promise (cf. section 2.3). Therefore, consumer protectionists, marketing experts, and associations of craftsmen strongly criticize Lidl’s promises as delusions and exaggerations.

Interestingly, in 2007, Lidl was confronted with comparable accusations when the discounter planned to acquire an interest in the organic grocery chain “Basic”. The public outrage about the synthesis of the differing business models became so large that Lidl finally resigned from its acquisition plans (Knoppe, 2015, p. 892), clearly showing the economic impact of ethical inconsistencies.

2.2 Expectations as customer of Lidl

The first TV spot of Lidl’s quality offensive aired on February 20, 2015, and only shows its relation to Lidl during the last four seconds of the 89-seconds long spot (Zimmer, 2015). The majority of time, it creates a scenic “premium” flair by showing everyday situations and reflecting about quality in a rather philosophical way (Campillo-Lundbeck, 2015a), as shown in figure 2 on the next page:

Abbildung in dieer Leseprobe nicht enthalten

Fig. 2 : Screenshots of Lidl's kick-off TV spot for its quality offensive 2015

Source: Zimmer, (2015).

Accessing the indicated webpage “Lidl-lohnt-sich.de”, which signifies “Lidl is worth it”, leads to the starting page displayed in figure 3 below:

How can you actually recognize good quality?

Good quality is recognized from taste. Or from freshness. Or from the fact that the product is good for us. And from a good price.”

Abbildung in dieser Leseprobe nicht enthalten

Fig. 3 : Home page of the internet presence for Lidl's quality offensive 2015

Source: Lidl, (2015a).

The images do not contain any specific product or price communication; instead, they strongly appeal to the consumers’ emotions and create a high-quality image. The internet presence “Lidl-lohnt-sich.de” lists seven product categories, such as meat, coffee, or chocolate, and provides detailed information about the product quality, such as in the example of meat displayed in figure 4 below:

Abbildung in dieser Leseprobe nicht enthalten

Fig. 4 : Information about meat from the internet presence for Lidl’s quality offensive 2015

Source: Lidl, (2015b).

Applying the concept of the practical syllogism (cf. section 1.2) to Lidl’s image campaign creates the following expectations towards Lidl’s selling proposition: Firstly, the customer suspects that Lidl pursues providing quality as main goal of its business. Secondly, based on the upscale media campaign, the consumer perceives Lidl as caring, quality-oriented business partner. The buyer assumes that Lidl’s positively displayed situational condition allows the discounter to care for respectable conditions for its suppliers, employees, and other stakeholders. Hence, Lidl caters for the idealized expectations that customers have towards a seller: attaining high-value products and services at low prices (Suchanek, 2015b, p. 303). Lidl therewith follows the trend that consumers increasingly pay attention to quality aspects even in the case of price-aggressive products and services in the retail segment (Knoppe, 2015, p. 898).

2.3 Actual behavior of LIDL

Based on Suchanek’s (2015a) diagnostic framework (p. 50), the following issues form the basis of the inconsistency between Lidl’s marketing message and its actual realization: Firstly, the given conditions of Lidl’s business operations have not changed. The company remains a low-price discounter that exerts pressure on suppliers and employees, which stands in sharp contrast to the thoughtful and caring image created in the advertisements, as pointed out by Wachter (2015). Secondly, she criticizes the intentions of Lidl, since she regards the discounter as capitalizing on the “craft movement” (i.e., customers increasingly demanding handmade reliable products) despite not offering hand-made products (Wachter, 2015). However, Söllner (2014) remarks that consumers themselves foster such double standards by a so-called “clean in my back yard” behavior: “They demand pleasant and healthy living conditions in their neighborhood. At the same time, most of them purchase low-priced products and do not really care or do not have the information about where the products come from and how they were produced. (…) A company that cannot meet the low-price expectation will soon have to leave the market in many market segments” (p. 1216).

[...]


[1] The songtext can be found in Appendix I.

[2] In this paper, relevant inconsistencies are viewed from an ethical perspective and are defined as “(...) perceived contradiction[s] between stakeholders’ (trust) expectations about others’ behavior (or its consequences) and the actual behavior (or its consequences)” (Suchanek, 2015a, p. 47).

[3] The American Consumer Council is a non-profit consumer education organization with nearly 90,000 members in 34 states.

[4] translated from the original German claim „Gute Qualität erkennt man an guter Qualität“

[5] https://www.lidl-lohnt-sich.de/

Details

Seiten
23
Jahr
2015
ISBN (eBook)
9783668845688
ISBN (Buch)
9783668845695
Sprache
Englisch
Katalognummer
v448552
Institution / Hochschule
Handelshochschule Leipzig gGmbH
Note
1,0
Schlagworte
Business Ethics; Inconsistencies; Case Study

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Titel: Examples of Breached Promises Leading to Relevant Inconsistencies