Marketing

5 costly brand marketing scandals

Scandals are one of the most popular topics of all time. People love them. Two celebrities were caught on a date, politicians commit corrupt deals, athletes evade taxes – all of this attracts the attention of the audience.

Big brands are also not immune from scandalous stories. The most common marketing scandal is fake advertising, leading to huge fines and long-term damage to the brand.

Label Insight conducted research that showed that 94% of consumers would be loyal to a brand that is completely transparent. They also learned that 73% of consumers are willing to pay more for such a brand.

Despite this, some brands try to grab the attention of users with false and misleading information. Consider five major marketing scandals.

Volkswagen

The German car brand was caught in a scandal that became known as Dieselgate. In 2015, the Environmental Protection Agency discovered that Volkswagen had cheated emission tests for its diesel vehicles for the past seven years. The EPA found that Volkswagen vehicles have a “kill device” – or software – in diesel engines that alters the performance of the vehicle during testing to improve results.

Ultimately, engines emit 40 times more nitrogen oxides into the atmosphere than is allowed in the United States. This is in stark contrast to their entire campaign promoting “Clean Diesel” vehicles.

More than 550,000 US customers have been deceived by these fake claims into thinking they are buying an environmentally friendly, low-emission vehicle, even though they were not.

The Federal Trade Commission has filed a lawsuit against Volkswagen. As a result, the companies were awarded about $ 15 billion in fines. In addition to huge fines, Volkswagen’s share price dropped 30% amid the news.

Yogurt Activia

Danone also leaked false information when promoting its Activia yoghurt. The product has been marketed as scientifically proven to strengthen the immune system and regulate digestion. A product designed to prevent colds and flu received a 30% mark-up over competitors. The TV ad campaign kicked off with actress Jamie Lee Curtis offering yogurt.

But one day, a woman sued the company over their marketing claims. She claimed that she bought the yogurt after watching the ad because she had stomach problems. After eating the yogurt, she did not notice any difference in her condition. As a result, several more people joined the lawsuit and they received $ 35 million from the company.

The FTC soon opened a case and eventually fined Danone $ 21 million and ordered them to remove the words “clinically” and “scientifically proven” from labels.

Hyundai

Following the rise in gasoline prices, Hyundai began promoting its vehicles based on their superior fuel efficiency. They manipulated the data to their advantage and claimed to increase fuel economy from one to six miles per gallon. They also underestimated the greenhouse gas emissions of their vehicles in advertising campaigns.

After a 2014 investigation, the Environmental Protection Agency stated, “Hyundai and Kia have provided consumers with inaccurate information about the actual fuel economy of many of their vehicles.”

As a result, Hyundai was fined $ 100 million for fake statements, and also stripped of carbon credits in the amount of $ 200 million.

Reebok

In 2008, the shoe giant launched the EasyTone line of footwear, which the company says tightened and strengthened muscles when walking or running.

The Reebok ad claimed their shoes were proven to provide 28% more glute strength and tone, 11% more hamstring strength and tone, and 11% more calf strength and tone than regular walking shoes.

There was no evidence to back these claims, and the Federal Trade Commission fined Reebok $ 25 million.

Airborne

The herbal supplement company Airborne claimed its formula – the result of research by second grade teacher Victoria Knight-McDowell – could prevent colds and flu.

In its advertising campaigns, the brand has argued that it can “strengthen your immune system to help your body fight germs.” He also advised people to “take it at the first sign of a cold symptom or before entering a crowded, potentially microbial environment.”

The ad worked well. People were buying the product in droves, especially since it was sold in pharmacies alongside approved flu medications. Victoria was even asked to appear and promote the product on the Oprah Winfrey Show.

However, there was no scientific evidence to support these claims. The Center for Science in the Public Interest was asked to conduct research and test product marketing claims. It turned out that they were false and unfounded.

Airborne was forced to pay $ 23.2 million in damages.

conclusions

All of these examples resulted in huge fines and damage to the brand. In many cases, overly ambitious claims exaggerate the benefits of a product.

Products are now being tested more thoroughly. Especially if they make statements in their advertisements that can be easily refuted. Therefore, marketers should remember the words of the founder of the global agency DDB, William Bernbach: “The most powerful element of advertising is truth.”