PR Failure Analysis
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Lululemon Athletica Inc., also known as Lulu in NASDAQ, is a public athletic-apparel company offering athletic clothing made of synthetic fabrics. The company was established in 1998 by Chip Wilson. Besides Canada, Lulu operates in Australia, the United States, and New Zeeland. Lululemon is an apt example of crisis communication failure. The company had continued to fight bad publicity since March 2013, when it recalled over 17% of its new Luon yoga pants from its shop shelves. Chip Wilson appeared on Bloomberg television in an attempt to diffuse the crisis Lulu was facing, particularly customer complaints that the signature Luon yoga pants were of low substandard.
Unfortunately, Wilson’s efforts at crisis communication resulted in more negative discussions and headlines. Chip Wilson suggested that the company Yoga pants did not work for some women, because they lacked the model shape. This remark provoked outrage among the company’s customers. Online reputation management should be given support since the viral and anonymous nature of social networking sites increases the risk of communications that have the potential to dent the reputation of the company. Reputation management is a PR function cited in crisis management. Ronald Smith provides a nine-step model grouped in four-phases.
PR planning is typically broken down into four steps:
- planning (analysis);
- communication (implementation or execution);
In the modern-day highly competitive corporate environment, the application of technology in Public Relations has become the backbone of business operation in both the internal and the external environments of profit-oriented entities. Companies use social media platforms such as Facebook, Twitter, and websites in order to diffuse the PR crisis.
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To create and sustain a competitive advantage, businesses have migrated their critical management functions online. Advertisement media such as radio and television have also gone online. Equally, customers and other key stakeholders have moved online. The key business functional or management areas, particularly Public Relations (PR), have migrated online as well. With the growing popularity of the social media platforms, if a company messes up in its external environment, it risks massive disapproval from its customer base, especially the large portion operating online.
Lululemon Athletica Inc. is an apt example of a recent crisis communication failure in the cooperate world. When the founder and the then Chairman of Lululemon Athletica Inc., Chip Wilson, was interviewed on Bloomberg television about the company’s quality control issues that culminated to translucence on its innovative Luon yoga pants, he pointed out that the sheerness was an indirect problem caused by heavy women shape (Isidore, 2013).
This response augmented public outrage over the quality issue. Unquestionably, the chairman was insensitive to the issue and did not know the impact of his response to the image of the company. Therefore, it is arguable that an entity’s response to a crisis is more important than ever. This paper analyzes the public relations failure of Lululemon in 2013.
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The nine steps of PR planning, as theorized by Roland Smith, are categorized into the four major phases (Smith, 2009). Phase-one (formative research) entails analysis of the situation, organization, and public. The second-phase (strategy) establishes goals and objectives, formulates actions, and strategies using effective communication channels. The third phase is tactical and implements strategies. In the last phase, the strategic plan is evaluated. The research entails gathering information in order to understand and describe the scenario.
According to Stacks (2002), research helps PR professionals to define the publics and problems. Research can either be qualitative or quantitative. The planning phase involves the nine steps covering audience, goals, objectives, strategies, tactics, activities, evaluation, materials, budget, and schedule (Smith, 2009). Goals are longer desired statuses, whereas objectives are short-term achievements. Strategies are approaches or roadmaps in order to reach objectives. Tactics are aspects of a strategy including news releases and meetings (Smith, 2009).
To carry out strategies, specific activities are required under the defined tactics. Smith (2009) theorized that evaluation involves observation, measurement, and feedback on whether or not the objectives are met. Materials are the things needed to execute or implement tactics. The budget includes staff-time, materials, and costs. Lastly, the schedule outlines the activities that should be carried out against time from the start date to the deadline. Notably, the first step in the planning phase of PR involves identifying the publics or audiences.
According to Smith (2009), the public refers to the groups of people sharing a common interest; that is, people involved or interdependent with the company. Usually, the public is identified after the company has conducted research or situational analysis and formed a problem statement. With this research, the company can develop tangible goals, identify the audience to respond to, and outline measurable objectives for the identified public.
Lululemon, also referred to as Lulu in NASDAQ, is a company that designs and sells athletic apparel in North America. The company was subject to analysis because it falls among the top PR failures in 2013. On its website, the company points out that quality is the pillar of its operations. Unfortunately, the company’s reputation has been affected. In March 2013, Lulu recalled over 17% of its yoga pants from the shops following the problem of translucence (Isidore, 2013; Lululemon, 2014). In spite of the fact that durability and weight qualities remained the same, the level of translucence was short of the company’s standards (Isidore, 2013). The recall did not only affect the company’s reputation but has also impacted its financial health in a negative way.
According to Wilcox & Cameron (2005), public relations (PR) is a management function that initiates and maintains the mutually beneficial relationship between an entity and the public, where its success and failure rely on. PR forms and maintains a relationship between the Lululemon’s internal environment and the public by establishing a common interest. PR failures often root from communication breakdowns. In the context of Lululemon, external communication to the customers that build public trust and support failed. In other words, the failure was a communication crisis in an attempt to diffuse the existing crisis of poor quality.
Crisis communication is a PR function that protects or defends an entity facing reputational challenges (Wilcox & Cameron, 2005). Typically, these challenges include financial, legal, and ethical standing. In the context of Lululemon’s PR failure, the response to the crisis was reactive public relations rather than proactive public relations. Proactive public relations entail considering the initiative of developing and effecting PR plans in order to achieve measurable outcomes towards predefined goals and objectives (Smith, 2009).
On the other hand, reactive PR is a response to the crisis characterized by countering PR challenges defensively instead of initiating programs. Considering the degree of reactive PR in Lululemon’s scenario, an organization crisis plan was required to resolve the crisis. The organizational crisis management plan is used to manage a reputation.
How PR Issues Are Being Addressed and Resolved
Lululemon can recover from the adverse publicity but needs to formulate crisis management strategy in order to address the post-Wilson PR failure. In this instance, the key stakeholders are investors and consumers. Under such a PR crisis, companies strive to ensure that investors are convinced that the existing market share is maintained. This translates to the necessity that the new management team must uplift the retail experience and expand the growth of the company in the global landscape. As noted on the company’s website, the company should continue taking back any of its products in the event that they do not satisfy the customer’s expectations (Lululemon, 2014).
Advising the management on the issues pertaining to policies, communications, and relations, often referred to as counseling, is significant to the development of an efficient PR division or media relations (Smith, 2009). In this respect, a useful media relation is essential, because it ensures that mutually beneficial relationships between the publicist and the media fraternity reach the relevant audience with the messages of interest. Up-to-date knowledge of the media audience’s interests is essential to this PR function (Wilcox & Cameron, 2005). In essence, effective media relations deal with communication media in establishing promotion and responding to the public interest in the company (Wilcox & Cameron, 2005).
Ethics is of the essence to the profession of public relations. Ethical principles of PR and decision making are intended to help strategic managers and their managers to evaluate the ever-present ethical dilemmas and establish a rationale to support its response. Besides management, strategic managers focus on corporate structures, issues, and policies (Stacks, 2002). The general moral principles underlying strategic PR practices include acting in the public interest, ensuring accuracy, ensuring honesty and integrity, and dealing fairly with all publics (Wilcox & Cameron, 2005).
Given that there are many publics, which respond differently due to their different needs, it is advised that communication tactics or reputation management messages should be shaped in the way that they respond to the needs of each specific audience (Smith, 2009). Typically, the publics overlap and may be segmented in various ways. For example, customers can be segmented geographically (local, regional national, international) and functionally (retailers, consumers, and distributors). Despite the fact that communication is a complex process, it should be recognized as the central pillar of public relations (Wilcox & Cameron, 2005).
Some of the impending barriers to the communication process that should be addressed include the history of distrust, fuzzy language, unreliable media, and misalignment with corporate culture and values (Smith, 2009; Wilcox & Cameron, 2005). The ever-growing application of social network sites, such as Facebook and Twitter, has triggered urgency to reputation management because the viral and anonymous nature of these sites increases the risk of negative interactions that can damage an entity’s reputation. In the same context, these platforms serve as viral and useful avenues of diffusing dangerous publicity.
The Impact of the PR Failure on the Organization’s Image
Lululemon had a public relations failure because it failed to formulate a strategic crisis communication plan in time. Any entity, irrespective of the size and reputation, may find itself facing a major disaster. Companies that do not have or are not flexible to formulate a basic crisis communication plan are operating unhealthy. The company continues to fight negative publicity since March 2013. Instead of apologizing directly to the customers and other stakeholders, Wilson posted a video on YouTube saying that his concerns were on the fact that his statements had affected Lulu’s employees. Its stock has fallen following the adverse publicity.
In December 2013, Chip Wilson had to step down from his position following the crisis communication. Shares dropped by 11 % following the crisis and the reduction in sales. Consequentially, competitors such as Nike, Under Armour, and Gap continued scrambling for its existing market share. In other words, Lululemon keeps losing consumers since its competitors have managed to capitalize on Wilson’s remarks and exploit customer complaints about poor quality yoga pants. The new CEO, Laurent Potdevin, and the company as a whole had to address the communication crisis subject to Wilson’s comments on Bloomberg television.
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To resolve the PR issue, Chip Wilson or the company’s spokesperson would have apologized immediately for the ill-advised comments. The company should have stated categorically that Wilson’s comments were wrong, inappropriate, and out of line with the Lululemon’s culture and values. The sooner they would have done this, the better since strategic leaders and competitive companies would not have let this linger past the primary media. Additionally, the company should have asked its consumers and other key stakeholders including suppliers and distributors to give the company a second chance. Further, the new management team should have recreated or rebranded the company’s experience. This is in line with the rationale that customers should always be happy and confident about the product they purchase.
In other words, the retail experience should have been uplifted before the shop visits plunged. One of the fundamental lessons learned from the Lululemon public relations failure is that social media are viral and play a critical role in creating a good company image. Furthermore, the senior management team should be informed of the sensitive nature of their remarks on these media. Additionally, customers should not be blamed for business mistakes. Lastly, Lululemon’s recall outlines the significance of planning for potential risks, as well as the importance of managing the communication crisis in the public sphere.