10 Nov 2015

Cheating tests: The woes of VW

When a trusted brand’s reputation is tarnished, it leaves those once-loyal customers questioning the premium they pay and the value of that business.

Cheating scandals have rocked the nation these past few months. We’ve witnessed corruption deep in the ranks of FIFA, Samsung has been exposed for faking energy tests, even our sporting heroes haven’t been immune from scrutiny recently – guilty or not.

VW has been caught with its pants down. Ever since admitting to using an illegal piece of software in its diesel engines to cheat US emissions, it’s been all over the news. Peter Spence, The Telegraph’s economics correspondent said the VW emissions tale is likely to be the greatest corporate scandal since the global financial crisis, and that includes the BP oil spill of 2010.

The ramifications for VW have been severe: 11m cars have been recalled, the company faces legal action with drivers and dealerships looking for compensation. And that’s not to mention pollution liabilities – Houston alone is claiming £66m. Estimated costs to VW could reach £30bn, and some estimates put them as high as £100bn. That’s two and a half times the total value of the VW group!

And the exposure of cheating scandals continues. Dyson is currently taking legal action against Bosch and Siemens for shady efficiency testing; Wall Street bankers are being fired for cheating in internal exams; and the BBC caught Construction Skills Certification Scheme (CSCS) test centres rigging construction safety exams.

Should we be surprised? It’s an open secret that companies in construction cheat in tests too. Some cheat by testing one product and selling another. Does it matter? It does where safety depends on it. It does when a builder, social housing provider or homeowner paid for performance they didn’t get. Whether energy savings, security, fire protection or safety training, it’s fraudulent. The excuse that ‘everyone does it’ has seduced some companies into doing it. But as VW is finding out, repercussions are severe. VW’s share price has plummeted as the speculation continues to grow.

It’s easy to think that VW’s woes are a million miles away from our industry. They cheated. They got caught. So what? But there’s a lesson to be learned. When a trusted brand’s reputation is tarnished, it leaves those once-loyal customers questioning the premium they pay and the value of that business.

Branding is about integrity and authenticity. Real world solutions for the real world. Promises fulfilled, not games played to acquire meaningless badges.

Marketing risks becoming detached from its roots. Customers who have been promised one thing and sold another have long memories. As VW is demonstrating, the cost of cheating can be way out of proportion to the benefits in the short term.

Need to refresh your marketing or business model, build or rebuild your brand? Talk to MRA Marketing. Call Tom Rigby, Business Development Manager, on 01453 521621 or email tom@mra-marketing.com and follow @MRAMarketing

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