Peloton Interactive Inc
Peloton Interactive Inc is an organization based in New York City, specializing in media and exercise equipment. The company’s main products include treadmills and stationary bicycles. In November 2020, Peloton issued a recall for PR70P clip-in pedals used on its popular exercise bikes. This recall involved bikes sold between July 2013 and May 2016. Based on the Consumer Product Safety Commission (CPSC), the clip-in pedals break unexpectedly during use, resulting in laceration injuries. The company had received 120 cases of pedal breakages, which include sixteen cases of leg injuries, some of which required medical care. https://www.nytimes.com/2020/10/16/business/peloton-pedal-recall.html. The recall of PR70P has affected different Peloton stakeholders that include consumers, manufacturers as well as investors. Upon the recall, Peloton customers have been experiencing problems with pedal replacement, whereby they warned of terminating their use of Peloton bikes. CPSC warned consumers about using Peloton clip-in pedals, alerting them of possible dangers associated with the product that includes death (Thomas, 2020). On the other hand, the manufacturers are more likely to become vulnerable to product liability cases if the pedals are defectively manufactured. Furthermore, in April 2021, Peloton’s stock price fell by $16.28 per share, affecting investors. Peloton also failed to disclose that clip-in pedals caused serious threats to users, misleading investors on user safety.
Recommendations for managing product recall
A product recall can highly affect a company’s stakeholders as well as its image. PR70P clip-in pedals recall undermined Peloton’s trust, which can take a long time for the company to recover. Nonetheless, this cannot take the company a long time if it utilizes the ideal crisis management strategies, such as lowering the company’s period to recall the pedals can positively impact consumers’ willingness to buy the products. However, the company should ensure that all consumers are informed and reassured with sound evidence, if possible, by establishing injury data collection frameworks. This action can be done in the form of press releases with promotion determinations to relaunch the product. It is important to note that regardless of the existence of a sound relationship, consumers take time to forgive a company that is characterized by transgression (Smith, 1996). In a global reality, consumers’ expectations of a product recall are more effective actions by the organization. Also, a voluntary product recall cannot be sufficient to recover consumers’ trust. Managing recall communication is not similar to marketing communication. In this case, Peloton can utilize the existing communication platforms to acknowledge the recall publicly, apologize, and strengthen its adherence to consumer safety. For instance, placing notices can help get the word out. It is suggested that the media is an effective tool that can ensure the truth is spread out. It is also an effective platform to show the consumers that the company is immediately addressing the matter, and their primary concern is to get the defective product from the market. Also, the company can create a partnership with entities associated with the consumer base. This can help the company have transparent communication with consumers in order to regain its reputation. Keeping the consumers informed should focus on restoring and reinforcing the organization’s reputation as well as the product in the recall. For instance, Peloton can reach out to consumers waiting for pedal replacements to stop using their bikes until they can replace the pedals to prevent further injuries. This can also include details on how customers will get replacements or refunds if no replacement is done. Consumers who do not get enough answers on what they desire regarding a company are more likely to walk away with a negative perception long after the recall settles. This means that ensuring the consumers are adequately informed will help the company remain successful after the wave of the recall settles. Besides, investing in communication is essential in clarifying the corrective efforts as well as actions to prevent future challenges with the product.
PR70P clip-in pedals recall was characterized by impacting investors’ trust as well as market capitalization. Once these pedals become unmarketable, complaints rise, and the product’s demand falls significantly, shrinking the market share. This explains that investors are often subjected to financial harm after a product recall. Furthermore, a product recall can have a long-term effect on investors, including affecting the company’s market performance and financial profile. However, in typical securities action related to PR70P clip-in pedals recall, Proton can be accused of misleading investors about the safety of the pedals before the voluntary recall. Nevertheless, Proton can rebuild its reputation and investor’s trust by controlling the recall crisis. This can be done by acknowledging the product failure, address the issue, and assume responsibility. It would be essential for the company to evaluate the recall process in order to understand what contributed to the issue. On the basis of evaluation, the company can choose to implement moreBased onsures at the manufacturing level, such as implementing quality hazard checks and slowing down its production. Engaging investors in the evaluation process can help understand the root of the crisis and the company’s knowledge about legal and safety measures.
In most cases, organizations deny the existence of defective products, despite the evidence to the contrary. This denial led the companies to postpone addressing the issue, which results in significant impacts. However, depending on the intensity of the issue, Peloton’s response can prove its commitment to change. It is important to note that investors are individuals caring about their personal bonuses. Research shows that investors react strongly to recalls characterized by high risks of injury and financial loss. They are also are found to prefer more passive ways of handling crises. Therefore, controlling the crisis can prevent complex financial risks and mitigate harm from the company’s investors. It is suggested that being up-front on the corrective action is essential. Incorporating an open explanation about the issue with details of how the organization will mitigate the problem by assuring the investors that the product will be safe is crucial for the company’s survival and maintaining the stakeholders’ base.
Employees are a significant part of the organization, who ought to be enlightened about the link between recall and consumer safety. It is essential to let the workforce understand what is happening regarding the recall and the possible investigations carried out. This is one way to prevent low employee morale (Kiykioglu & Judge, 2018). This means that Peloton can assess how the recall impacted employee morale. It is suggested that a mobile fast HR management system provides frontline employees access to data that can assist them in identifying problems in a company’s product. Therefore, Peloton can engage its employees by helping them acknowledge the challenges of the recall. This way, employees can feel re-energized to work again as a team. During the recall, some members were possibly pulled off from organizational projects they considered essential. Helping them recognize that the timeline for such projects may be adjusted would rebuild employee confidence in the company. Accordingly, this would help Peloton create a collaborative workforce that connects the whole company across departments in order to solve consumer erupting challenges with services offered quickly. Furthermore, creating a workforce that is committed to safety can enhance core organizational values. This can help eradicate possible signs that can prevent news about the organization from reaching appropriate individuals. The overall responsibility to ensuring employees are engaged should be assigned to Peloton’s senior executives for marketing. By this, the management can design a resolution plan that brings employees’ effort to a satisfactory close. Studies explain that having a collaborative team can help a company in a reintroduction plan by selecting a team that can be designed to launch the product to reassert brand identity as well as rebuild the company’s reputation. Furthermore, ensuring all workers acknowledge the challenges facing the company can highly mobilize enthusiasm and enhance the loyalty of the staff to the firm to improve long-term organizational performance.
Product recalls are one of the hardest things for an organization to handle. However, being prepared is an essential way to deal with and manage a recall. Accordingly, ideas on dealing with similar crises should be documented by the management to enable corrective actions in the future.
Kiykioglu, D. & Judge, J. (2018). Managing Product Recalls: What to Do After a Recall. Retrieved from https://www.productliabilityandmasstorts.com/2018/02/managing-product-recalls-what-to-do-after-a-recall/
Smith, N.C, Thomas, R.J. & Quelch, J. (1996) A Strategic Approach to Managing Product Recalls. Retrieved from https://hbr.org/1996/09/a-strategic-approach-to-managing-product-recalls
Thomas, L. (2020). Peloton recalls pedals on 27,000 bikes after reports of injuries. Retrieved from https://www.cnbc.com/2020/10/15/peloton-recalls-pedals-on-27000-bikes-after-reports-of-injuries.html