One of the biggest product fiascos of recent times has been the Maggi ban. Check this Quora page to know why Maggi was banned if you don’t know. The impact of this ban is such that the entire Instant noodles market got shrunk by half. Check out this report on EconomicTimes for details. Analysts, it will take Nestle 3 years to recover the losses due to this ban. Maggi is a known name and Nestle is a big company. Hence the company and the market have spent the time to understand the impact of the ban. But such cases keep happening in other sectors too. Non-hygienic food joints and their stories are not uncommon. The focus of this post is to analyze and understand the impact of SMEs hurting the customer trust and its impact on the market.
How the Risks for big brands are different?
When customers buy your products and services. They invest their trust in you in the form of money. By continuously striving to keep quality standards high, over a period of time, you create a brand for your business. Once you are a brand, people know the product or service by your brand. iPhone, Nike, Google, Mercedez, Ferrari are some examples of iconic brands.
For a brand, by any chance, if the customer is not happy with the product or service, it hurts the business. But often only theirs and helps the competition. This article shows how ITC gained due to Maggi ban.
What is the risk if you are an SME?
But you if are an SME and/or if your business is in the unorganized sector, the risk to your business is not only from your quality misses but also from your peers. When you are not a brand and customers invest their trust, they are taking a leap of faith as they need the product. And incidentally, you are their best bet at that moment. If the customer lands on the wrong side by taking this leap of faith, the entire industry is hurt.
Let's take an example, you are traveling on a train and you are hungry. You saw a Bhel wala and bought it. But it turned out to be bad. The next time you travel and you hungry and see a bhel wala, Your mind will be flashed with the bad experience and you will check if there is any other alternative. You will think of avoiding the bhel. Though it is quite possible that this vendor makes extraordinary Bhel. But you want to play safe, you don’t want to stay hungry and lose money. So you are looking for options and avoid the Bhel.
What is the risk mitigation plan?
Often focus on short term goals results in quality being ignored. A bhel wala wants to make the maximum possible money during the train trip and is not worried about customer loyalty. He neither expects to see you again nor he cares about customer experience. But by doing so the Bhel wala has hurt the business of his peers too. This analogy is applicable everywhere. One seller hurts the customer's trust and the future prospects of the entire industry are dented. So when businesses form unions to protect their interests, they should also fight for maintaining basic quality standards within the fraternity. They have to set a basic datum and ensure everybody sticks to the benchmark.
Share your thoughts
Are you an SME and have experienced a negative business due to a peer hurting customer sentiments? are you a customer who avoided certain services or products due to a bad experience? Do share your thoughts and let us mitigate the risk together...
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