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Samsung Recall Creates Firestorm for Electronics Giant

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快活app experts say damage to brand still remains uncertain

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If you鈥檙e the owner of Samsung鈥檚 new Galaxy Note 7 smartphone, then the old adage, 鈥渨here there鈥檚 smoke there鈥檚 fire,鈥 is more than a general truth 鈥 it鈥檚 become a frightening reality.

Since reports first surfaced about the devices overheating and catching fire, Samsung has recalled more than 2.5 million units 鈥 1.9 million in the U.S. alone. The South Korean manufacturer, which issued replacements for affected phones, realized quickly that the firestorm had also spread to the replacement devices. Samsung, which has attributed the issue to faulty batteries, announced Oct. 11 that it was ceasing production of the Note 7.

听(CPSC) says that Samsung has received 92 reports of the batteries overheating in the U.S., including 26 reports of burns and 55 reports of property damage, including fires in cars and a garage. One customer even reported that his Note 7 caught fire while aboard a Southwest Airlines flight. CPSC was able to seize the remains of the phone via a subpoena.

While Samsung has generally been quick to address the situation, the massive recall comes at a time when Apple, with the iPhone 7, and Google, with its new Pixel phone, are looking to gain ground with consumers via their latest smartphone rollouts. After all, Samsung鈥檚 smartphone business is the global leader, with a market share of 23 percent in the second quarter, according to the International Data Corporation (IDC).

The question now becomes: can the Samsung brand recover, and will consumers be hesitant to return to what may be a tarnished image?

, assistant professor of management in the听, says Samsung鈥檚 past record of manufacturing reliable devices that have generally been met with positive reviews from consumers may be its lifeline. Regardless, there will be some who approach Samsung鈥檚 future smartphones with caution and skepticism.

Galaxy Note with broken screen

鈥淭he Galaxy Note 7 recall is a critical moment in Samsung鈥檚 history. A big question is whether customers will judge this product failure to be in character for Samsung or not in character,鈥 says Hamilton.听鈥淪o far, customers seem to be viewing this as a one-off event, so the damage appears still to be limited and hasn鈥檛 spread much beyond the Note 7 product. Plus, Samsung鈥檚 other products, even other Galaxy phones, have been fairly reliable and have established some reputational goodwill that may help buffer the company from this current controversy.听But customers will now be watching closely and evaluating what comes next.鈥

Other factors that could affect the brand is how they handle this particular recall, as well as all communication surrounding it, according to听, professor of practice in the Daniels College of Business.

鈥淪amsung seems to be at a brand tipping point where they can emerge with some financial damage but with their brand intact,鈥 says Plemmons. 鈥淥r, if they screw up this recall, they may have severe brand as well as financial damage. I think they are on the right track right now and will need to over communicate as they move through the next few weeks.鈥

While some customers may switch to competitors, Samsung is hoping this recall is an isolated event. In an effort to retain as many customers as possible, the company announced it is offering a $100 credit to those who owned a Note 7. The credit can be used toward the purchase of any Samsung phone.

Fortunately for Samsung, sales of its Note line account for less than 10 percent of its smartphone sales, according to IDC. Ultimately, however, the future of Samsung鈥檚 image as it relates to smartphones rests with its biggest stakeholder 鈥 consumers.