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Volkswagen, Oh Volkswagen

September 26, 2015

When it turned out Lance Armstrong had been lying about his use of performance enhancing drugs, it seemed to me as if he was the only person ever to deliberately build a fraudulent brand. Let this be a lesson to all owners of brand assets, I and others wrote, fraudulent brands – those that deliberately lie to their markets – are always eventually exposed and the harm done will always outweigh any earlier benefit gained by telling the lie in the first place. It seemed impossible that anyone else would ever make that same mistake, much less a sophisticated brand and marketer. But then along comes Volkswagen.

The whole world knows, now, that, starting in 2009, Volkswagen installed software in some of its diesel engines that could detect when their emission levels were being tested. During tests, the software activated a “defeat device” that lowered emissions to legal standards. When back on the road, the software deactivates, and emissions jump up to 40 times the legal limit, spewing tons of nasty, cancer-causing stuff into the air. What makes it worse is the people most directly affected are VW’s loyal customers … er, victims. These are consumers who thought they were doing right by the environment by purchasing a brand that was famous for its fuel efficiency and low emissions. Now they have to continue driving cars that are basically trying to kill them, remembering, with every passing mile, that the company has made them patsies. And good luck trying to sell these things.

This was not an Armstrong-like self delusion that got out of control. This was a conspiracy. And I don’t use that word lightly. Experts have said that, although the circle of conspirators might be fairly small, maybe three or four people, there is no doubt this was a concerted, sophisticated effort and at least one of the conspirators had to have been in senior management. It took time to plan, engineer and execute this thing. People had meetings!

Others will write about the legal ramifications of all this, the ethical issues, the economic fallout. But this is a blog about branding. Let’s look at what VW, the company, has done to VW, the brand

A brand begins when a company makes a brand promise to the market. It says we’re going to deliver value proposition X and that will be a benefit to you. The market, quite rightly, is skeptical at first. After all, until the company proves itself, its just another outstretched hand, grasping for money. But as the company delivers on its brand promise, consistently and over time, the market gradually begins to reward it with brand loyalty. They establish a quid pro quo relationship. And it’s in that covenant that the brand takes seed and begins to grow. The longer you maintain the covenant, the stronger grows the brand. VW has been keeping it up since the 1940s.

But now VW has shockingly betrayed the enormous trust the market has placed in them. They failed to deliver X. What’s worse, they delivered the opposite of X, and they did it deliberately and in secret. The revelation of all this has basically set their brand on fire. The market has reacted like the betrayed party that it is. Sales are plummeting. The stock is down 19% and still falling. VW’s CEO who, for all we know is totally innocent, has been forced to resign.

Consumers will now be hard-put to believe any future sales claim from Volkswagen. That distrust will extend to Audi, which is owned by VW and which has at least one criminal diesel engine in its line. It’s likely the market will regard all German car manufacturers and, perhaps to a lesser degree, the whole auto industry, worldwide, with suspicion. After all, if the business is so stressed that VW was tempted to do this, why not BMW? Why not General Motors or Toyota?

When Lance Armstrong blew up his brand, sure, he disappointed a lot of people but, in the end, he only really damaged himself. And his fans had to ask themselves how they could believe the only “clean” cyclist in a dirty, dirty sport could win the Tour de France seven times. Perhaps we were all a little complicit in believing such an impossible claim? What’s more, any discussion of Armstrong’s legacy has to include the millions he raised for cancer research.

When Lululemon betrayed their market – you’ll remember they shipped yoga pants that were unflattering to women’s rear ends, quite the opposite of their brand promise – it was only an accidental byproduct of the company’s greed. They merely tried to increase their margins by switching to a cheaper source of fabric. They miscalculated.

But Volkswagen, oh Volkswagen. Somebody there tried to profit by deliberately causing harm to the environment, to society and, specifically, to their very own loyal customers. (Heavy sigh.)

Will the company survive? Probably. Most of their vehicles are still perfectly fine automobiles. And they have many die-hard fans. Actually, we should all want them to pull through because, if they don’t, a lot of innocent people will lose their jobs. Half of Tennessee would be out of work. 

We should be able to hold shareholders responsible for pressuring management to such a degree they would commit such an act. But they’ve all already bailed out of the market and can’t be touched. Still, somebody’s got to pay for this. Germany has to put somebody in jail. If not for their actual crimes, then at least for the damage they did to branding, by turning one of the world’s most beloved brands into the most fraudulent one.

This week’s best branding reads

VW Risks its $31 billion Brand and Germany’s National Reputation
First, VW. Who’s next? BMW? General Motors?

How B2B CMOs Can Make the Business Case for Branding
Branding can help B2B firms from becoming commoditized. 

How Brands Make Emotional Connections
Can we talk about our feelings?

How Intuition Fuels Business Agility
While I agree with most of this article, it’s hard to persuade the C-suite to act just on one person’s intuition.

6 Ways To Link Brand, Reputation And Products
Volkswagen should read this article

Brussels Apple Store Turns Retail Design on Its Head Again
Apple brand continues to wow us.

New Name, Logo, and Identity for eir
Really wonderful evolutionary step for an Irish telcom brand

 

Tags communication, Positioning, Identity, Smarter Decisions, Devoted Customers

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