Automobiles are marketed along two major dimensions: structural quality and consumer image. How these variables interact raises interesting issues concerning theory vis-à-vis consumer psychology and markets. When corporate messages of quality and image are asymmetric – and possibly disparate – a psychological syndrome can develop among various players that is adverse to the market. This syndrome is called Toxic Product Syndrome (TPS).
The notion of a syndrome derives from ancient Greek; the term literally means ‘running together’. This refers to an easily recognizable set of characteristics or symptoms seen in association with each other: the presence of one feature alerts the observer to the presence of others.
TPS is a psychological construct describing the interaction that develops between a vendor (company employee) and a buyer (customer) when a product is defective. When required to sell and then service a poor product, a complex set of symptoms can be created and characterized as follows: the employee can display defensiveness, (fleeting) guilt, poor morale, and decreased productivity. The customer can experience frustration, disappointment, aggravation and shaken faith in the vendor. Workers can be corrupted, but in order to survive, they must sell and service an inherently defective product, which may even be detrimental to the buyer.
The idea for the development of the concept of TPS is based on a single case study. The writer developed the TPS construct after making continual visits to Land Rover dealerships over a five-year period. After some time, he started to study his experience from the viewpoint of a professional psychologist. According to behavioral researcher Murray Sidman, the intensive study of a single case can reveal the lawfulness of behavior. Interestingly, a trained mind can make split-second decisions without seemingly thinking – or, in other words, by using instinct. Most people have this capacity, which can be honed over time and with life experience. Malcolm Gladwell has popularized the notion of blinking a situation or a person, and thin slicing: people can experience the essence of an event in an instant, and gauge what is truly important based on a narrow slice of information.
Specifically, the writer leased or owned three Land Rover vehicles over a five-year period. Land Rover USA was then owned by Ford Motor Company. After the transmission on the first Range Rover failed, the car was traded for a later model. Over a subsequent two-year period, myriad failures occurred involving the ball joint, drive shaft/differential, rack and pinion system, GPS, radiator, steering column motor (twice), alternator, battery (and cables), leaky rear doors, soft paint, faulty parking brake, and many fit-and-finish infelicities. The vehicles had to be flat-bedded to dealers four times. In addition, trust and confidence were violated, to such an extent that the writer was forced to travel to an elite, corporate-owned dealership far from his home base.
It seemed that Land Rover’s quality had dissipated so severely that reliability, and consequently safety, was compromised. If a vehicle is not reliable, then how can it be safe? Trust is essential in a business relationship – trust in the product and trust in the people who maintain it. Consumers are entitled to be treated with dignity and respect, and the consumer needs to be satisfied.
Based on the above experiences, the writer became intrigued by the concept of the market for lemons. George Akerlof, a Nobel Laureate (2001), established asymmetrical information theory, in which he discusses the market for lemons as related to quality uncertainty in the marketplace. Adverse markets are created when there is an imbalance of information between seller and buyer. (‘Let the buyer beware’ has long been the zeitgeist of the day.) John Nash, another Nobel Laureate in Economics (1994), established game theory principles that studied rivalries among competitors with different interests. According to Nash, equilibrium (balance) is achieved when no player (seller or buyer) has anything to gain by changing their strategy unilaterally. The essence of this theory, relevant to TPS, contends that the best results (in business) are achieved when everyone does what is best for themselves and for the group. So, if Land Rover builds a quality SUV that is reliable and safe, everyone is ultimately happy: the buyer, the employee, and the manufacturer. If not, TPS is created, which can sabotage a company.
TPS is created when a product is defective and people sell it, purchase it, and service it. An inherent lack of product quality usually pervades all aspects of business associated with the product, and it can result in product recalls, consumer complaints, warranty disputes, liability cases, lowered productivity, poor morale, and general frustration. Clearly, the aftermath of this situation is not good for the individual (customer and employee), or the group (the company and the individuals therein).
When TPS infects a corporation’s culture, companies can lose huge sums of money, the value of company stock can plummet, and adverse market conditions can be created. It is fascinating that manufacturers can actually be aware of their product’s toxicity, and yet be unable (or unwilling) to modify their behavior. In such cases, a disregard for quality becomes blatant. Ironically, a company can be aware of its product’s lack of integrity, but still market its goods successfully and creatively. The question then becomes: what sells the product? Is it the structural quality of the product or its image?
An intriguing question presents itself: why do consumers repeatedly purchase unreliable and ultimately unsafe products? For example, people continue to smoke even though they know smoking is unhealthy and possibly lethal. Leon Festinger’s Cognitive Dissonance Theory (CDT) provides an interpretation of this behavior. CDT describes the tension that results from holding conflicting thoughts simultaneously. At some level, we recognize an inherent incompatibility, but we hold the thoughts together anyway, in order to achieve some sort of emotional balance. We know we shouldn’t smoke, but we minimize the health hazard and we feel entitled to pursue our pleasures. Similarly, we know we shouldn’t keep purchasing lemons, but we like the SUV’s image and the way it makes us feel. Is this obsessive behavior or brand loyalty? Or does the power of the Range Rover’s image blur one’s thinking so effectively so as to create an experience of cognitive dissonance? The fact that the Range Rover is so expensive makes it very difficult to digest the fact that it is actually defective. We naturally want to believe that expensive products are quality products.
Despite Range Rover’s reliability issues, the product has been marketed and sold successfully. But again, what is the actual product? It is contended that the true profit-worthy product of Range Rover is the image, not the vehicle. The quality of Land Rover’s image is excellent because of creative advertising and marketing. Land Rovers look good, are stylish and expensive. They symbolize a certain lifestyle, success, prestige. The company’s marketing captures and caters to the consumers’ elitism, Anglophilia, outdoorsy self-identification, and a sense of seeking adventure. The quality (i.e., reliability and safety) of the actual vehicle is secondary, because the quality of the marketing-created image is so superb. It’s almost as if marketing replaced the SUV’s value as a vehicle for transportation.
Indeed, it seems that the consumer actually pays to embrace the Land Rover/Range Rover image, rather than the vehicle’s structural integrity. The emotional need for image, together with cognitive dissonance, drives repeat purchases. Ultimately, a sort of addiction cycle develops, which thrives in spite of the car’s qualitative deficits. (It is well known that addictions are paradoxical, in that they seemingly soothe one, but then rear their ugly heads in the form of frenzied, self-destructive cycles.)
It is remarkable that the need for image can surpass the need for reliable and safe transportation. Cars are intended for transportation, but image gratifies an emotional need and, as Land Rover knows, is much more important to achieving a healthy bottom line. Perhaps the most successful example of image as product is the Marlboro Man. If one smokes Marlboros, then one can feel like, and carry oneself as, a real man. Similarly, if one drives a Range Rover, then one can feel good, look good, feel superior, and be perceived as adventurous.
Land Rover buyers have a right to expect both quality and image. However, Land Rover the company has learned that image is more valuable than product quality, proven by the customers’ willingness to pay a premium price. But what is the price in terms of loss of reputation, and a breakdown in customer loyalty when distrust and disappointment occur? Ford ended up selling its Land Rover Group. Corporations generally do not sell worthy old brands unless they’re in trouble.
Recently, Dan Lienert, Senior editor at Forbes, addressed Range Rover’s reliability issues. He posed the question as follows: “When you spend $76,000 for a car, you expect it to be bulletproof. What you don’t expect is for Consumer Reports to call it ‘unreliable,’ and for J.D. Power and Associates to give it below-average ratings across a range of manufacturing quality measures.” At what cost, financial and otherwise, does the consumer have to feel good? Does Land Rover compromise reliability and, in turn, safety to satisfy its customers’ need to conform to some vaunted, vapid image of exclusivity?
After coming out of a period of heavy losses, Ford reported 2015 per-vehicle earnings just shy of a thousand dollars, whereas, Toyota Motor Corporation, having recently surpassed General Motors as the world’s leading automobile manufacturer, posted earnings of $2 726 per vehicle. The differences between Ford and Toyota are startling. Key to Toyota’s success is the philosophy of kaizen – never being satisfied with the status quo.
Toyota constantly strives for improvement. Unlike Land Rover’s, Toyota’s business culture does not appear to be infected with TPS: the company respects its customers and acts responsibly, both to them and its own employees. Japanese culture is very sensitive to humiliation, shame and reputation, and so quality is paramount in Japanese manufacturing. A simple trend analysis reveals that Range Rovers have not been improving consistently over time; they continue to receive poor Consumer Reports and J.D. Power ratings. It is fair to say that those who build and sell Land Rover products are aware of the reliability data, and yet the quality of the vehicles does not improve. Clearly, companies of Land Rover’s stature have sophisticated internal think tanks; however, Land Rover’s marketing acumen is both ingenious and highly effective. Clearly, there is a disconnect between R&D and marketing in the Land Rover Group’s culture.
Such disparities in the marketplace create problems. TPS, in particular, is fueled by asymmetric corporate messages. Land Rover’s corporate message is confusing: what is the product? Is it the SUV, the Land Rover owner/image, or some combination of the two? The consumer is unwittingly confronted by the asymmetry of the company’s message. Land Rover employees are also challenged: are they working to sell and service a vehicle, or are they working to soothe the malcontentment that TPS generates as a function of their product? Dealership service people know all too well that they are on the front line, and are therefore responsible for managing customer anger and frustration. They are also burdened with behind-the-scenes knowledge of the product’s deficits. As previously mentioned, both types of knowledge create challenges of their own.
TPS ultimately harms the market and the economy; it can also destroy a company. It can result in financial losses, decreased productivity, erosion of morale, and wasted employee and consumer time. How is the impact of TPS measured? How do we more precisely define harm to the consumer or to the worker? Research paradigms and protocols need to be designed to measure identifiable harm vis-à-vis consumers and workers, in addition to that experienced by the financial institutions and investors who back these companies. Cost analyses of warranty claims and lost time, as well as studies of the emotional damage to customers and employees, are variables and parameters that should be defined and studied in MBA programs. Everyone suffers when a product is defective. The true Land Rover product (i.e., image) is eventually tarnished after customers no longer feel good about their purchases and can no longer enjoy and/or rationalize their alleged status. At that point, the customer feels betrayed, foolish, and financially manipulated.
As Akerlof originally pointed out, the cost of dishonesty adversely impacts the market. In this case study, a defective, unreliable vehicle created a Toxic Product Syndrome that is damaging a corporate entity via asymmetric messages to a loyal and prosperous client base. Again, as Nash points out, a successful (business) interaction must be beneficial for each party involved, as well as the group; when this prerequisite is satisfied, companies and economies can truly survive and prosper.
Boeing recently revealed its 787 Dreamliner, and a significant part of the company’s mission involved partnering with its customer base, passengers, and other stakeholders. Boeing’s corporate attitude is expansive and enlightened; they honor, value and respect their customers’ needs and opinions. They realize that everyone is in it together, and that transactions must be good for customers, the company and the world.
There is a biological imperative at work here. Here is how it works. Oxytocin is a chemical active in the brain, mediating attachment and trust between people. Elevated oxytocin levels encourage people to trust strangers and, in turn, to believe what they are told. Talented salespeople and marketers are all too aware of this fact. When a consumer’s oxytocin levels are manipulated in the process of creating dubious or misplaced trust, the market is adversely impacted in the end. Of course, the customer has a right to trust a product, as well as the people who sell and service it. Consumers continually make leaps of faith, and when TPS infects a company, the human costs can be staggering. They can be defined in terms of frustration, poor morale, employee guilt and under-performance, resentment and anger, and myriad other negative impacts.
When asymmetric corporate messages color a corporation’s culture, an environment may arise in which deception and dishonesty can corrupt and derail a company’s mission. This condition is adverse to the market at large. The intelligence of the consumer should never be underestimated, nor should the consumer’s need and right to constructively partner with the corporation be underrated. A lack of respect for the consumer and company’s employees is also bad for everyone.
This writer’s bottom line is that quality, trust, reliability, and safety are truly and genuinely priceless, and that maintaining them is surely cost-effective over time. Without these virtues, a company is at great risk of failure.