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“Undesirable” would be an understatement for the situation Samsung finds itself in after the cancellation of production on its Galaxy Note7 phone. The phone has endured a disastrous lifespan since its launch in late August, with users across several countries reporting that the phone was bursting into flames. The problem only worsened when replacement models sent out to replace faulty phones were also found to have identical issues.
“For the benefit of consumers’ safety, we stopped sales and exchanges of the Galaxy Note7 and have consequently decided to stop production,” the company said in a statement.
The hit to the company’s value in the wake of the announcement was substantial—$19 billion, to be exact—but considering the size and revenue of the technology giant, Samsung will undoubtedly recover financially. The most significant effect of all, however, may not be immediately apparent. This is because recalls, especially due to safety concerns, almost always result in a huge loss of brand trust. This kind of situation is far from unprecedented: Chipotle is still trying to overcome its own struggles with brand trust after food safety concerns earlier this year.
Among the most important factors for smartphone shoppers is brand loyalty. The evidence of this can be found in any number of “Apple vs. Android” message boards, but much of this discourse comes down to reliability: Which manufacturer is able to provide a device that works efficiently, effectively, and above all else, safely.
The Note7’s initial recall was damaging enough, but the company’s quick response and commitment to immediate correction quelled concerns. These concerns returned stronger than ever, however, due to the botched replacement of these phones with more faulty models. Thanks to this repeated failure to keep customer safety at the forefront of its products, Samsung now has a long road ahead in catching up with fellow brands Google and Apple.
This is, of course, not the end for Samsung. The company has plenty of other phones available (the Galaxy S7 Edge is still one of the most respected phones on the market), not to mention its massive lines of TVs, tablets, and other technology. What the Note7 episode does do, however, is create doubt in the minds of consumers about whether their loyalty would be better served at a competitor. Often, that doubt is enough to create customer loyalty ripples for years to come.
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