Question

1. Company: Vix Records: "Fidelity Freefall" Case: Our international record company distributed millions of CD's with a new type of copy protection software on them to prevent piracy. After a short time there was a deluge of very public complaints that the 'protected' CD's were "spying" on the consumer's internet use, left them vulnerable to computer viruses, and did not provide any warning that such software would be installed automatically. After consumer and legal uproar, we have been forced to recall over two million CD's from retailers around the world, and are facing an ever-growing class action lawsuit. Consumers contend that beyond the illegality of the way the software behaved, that it also caused numerous security and virus risks that damaged their machines. Strategy Issues: • What strategies would you employ to regain the loyalty of these customers and contain the incident? • Continue combating the enormous piracy problem? This could go as it is more of a management issue. • Reassert your reputation as an ethical and consumer-friendly company?

Answer 1

Q. What strategies would you employ to regain the loyalty of these customers and contain the incident?

Ans.:

• Acknowledge the error. It is very important to understand and realize the problem right away.
• The company must also set up an independent investigation of the issue and look for unbiased report with public availability of results.
• Create empathy and react in favor of the consumer by offering feasible compensations
• Create a task force to launch a new product with sole purpose of stopping the bleeding and beat comptition by offering discount and winnning price wars.
• Offer additional warranties and leverage the allies

Q. Continue combating the enormous piracy problem

Ans. Yes. Put the blame on piracy and start a campaign to fight aganist it. This will also create empathy. Try to create a new and secured product that can deal wiith piracy or atleats alert user of any data theft.

Q. This could go as it is more of a management issue.

A. Yes. The management needs to publically appologize and convince the audience about their truthfullness about the incident. The board might need to remove a few members of the management for their negligence and show to the consumers that they are serious about the incident.

Q. Reassert your reputation as an ethical and consumer-friendly company?

A. Well this is very hard. A few options:

1. Start a consumer loyalty program and offer hefty discount initially
2. Fix mistakes by additionally secured CD, repair relationships by offering additional value and build trust providing more than desired by the consumer in a CD.
3. Make agreements with data security companies and make them public so that they can see that you are making an effort to kill the problem.
4. Improve customer experience by showing commitment to the product
5. Create and popularize your mission, vision and objective as an organization while moving out of myopic business goals