Recode: Samsung Now Has To Save Its Reputation

SAMSUNG ELECTRONIC KRW5000 (OTC: SSNLF) failed to save its flagship Galaxy Note 7 smartphone, so now the executive team needs to save its reputation.

According to Recode, for every day that Samsung's Note 7 woes remain in the headline, the damage to Samsung's brand grows. Unfortunately for Samsung, many of the headlines include warnings from the company not to use or plug in their device out of concern it will catch on fire.

Jan Dawson of Jackdaw Research told Recode that Samsung's blunder will cost it a few billion dollars in lost profit and around $10 billion in lost revenue, not to mention the costly cost of the worldwide recall.

It is not yet clear how major retailers or carriers would react if given the opportunity to sell a similar Note 7 product. As such, the South Korea-based company needs to focus on fixing its reputation.

Related Link: Samsung's AI Strategy Poses Problems For Google

"Samsung needs to make sure that the perception consumers have remains on ‘there is something wrong with the Note 7' and does not become ‘there is something wrong with Samsung,'" Recode quoted Creative Strategies analyst Carolina Milanesi as saying. "Unfortunately, the messier this whole thing gets, the more consumers will start to question Samsung."

Milanesi added that Samsung appeared to be "clueless" about what is actually wrong with its own devices and was even "weak and unclear" in communicating with owners of the device.

Samsung has spent billions of dollars in building its brand and advertising initiatives to win over customers. The bigger problem stems from the fact that Samsung is far from the only manufacturer of Android devices so customers who lost faith in the company but don't want to switch to Apple Inc. (NASDAQ: AAPL)'s iPhone still have many other options available.

"The perception will be that Samsung is not just the victim of a bit of bad luck but actually has faulty quality control processes, which is a lot more damaging," Jan Dawson of Jackdaw Research also told Recode. "That, in turn, could spill over into how people view future devices, which could be a lot more damaging. Samsung is going to have to do a lot of work between now and the spring to ensure that the next Galaxy S phones aren't hampered by lingering concerns about quality and safety."

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