The fall and rise of Volkswagen

In late September of 2015, news sources all over the world were reporting on a scandal surrounding one of the most successful car manufacturers in the world, Volkswagen. A company that had spent years cultivating a solid public image with memorable publicity campaigns and solid, reliable cars that claimed to run on “clean diesel” had all of this quickly torn down. Researchers had discovered that their cars were actively and significantly cheating with the emissions they claimed to produce, performing dangerously over the limits set by regulations and putting an excessive strain on our air quality.

Advertising done right

In the past, Volkswagen had been known for their stellar advertising materials, using wit and simple messages in a way that ensures their salience in the public. Goldenberg, Mazursky & Solomon (1999) conducted a study that claimed to identify 6 “creativity templates” that all successful ads would fit into. Volkswagen have released a variety of adverts in the past that fit into these and help encourage interest in the brand. For example, one consisted of a billboard claiming you could park their Polo anywhere, with said car parked on top of it. This would fall into the “Extreme situation template”, wherein an attribute of a product (in this case, the ease of parking the car) is exaggerated to an extreme. Another of their ads, picturing a man leaning against their car with the tagline “Smoke less” would fall into the “Pictorial analogy template”, wherein a symbol is used to push a message (In this case, showing a car instead of a cigarette). These ads all contributed to building a positive view of the company by the general public.

The barrage of bad news

When the news broke, the car company’s stocks plummeted, and the public seemed outraged. The news consistently spoke about it for several days. Everybody that paid attention kept hearing about how Volkswagen had deceived them, with people choosing to protest and many selling their cars back to the company, now aware of the levels of emissions they produced. People clearly felt strongly about this. This is a good example of the “availability heuristic” (Tversky & Kahneman, 1973), which states that the ease of retrieval of an event influences how frequent and important people perceive it to be. The “agenda-setting theory” (McCombs & Shaw, 1972) describes this effect when the information is coming from the news media. In this case, the “BREAKING NEWS” labels and repetitive aspect of the reporting meant that the public were more likely to feel passionately about the deceit, and thus change their behaviour, at least in the short term. The company made sure to apologise for their mistakes, promising the public transparency from this point onwards.

Two and a half years later…

Recent news articles describe how Volkswagen’s sales have begun improving again, breaking records for the company in 2017 (McGee, 2018), and their stocks recently returning to their level before the scandal broke.  On first glance, this would seem to suggest that people’s behaviour wasn’t changed in the long term by the negative news broadcasts, however it would be possible that those buying their cars aren’t the same people that criticised the company back in 2015. Regardless, research has shown a lack of long term effects when people are exposed to information that would likely cause a change in behaviour. For example, Jacobsen (2011) found that in the few months following the airing of a famous Al Gore documentary about climate change, an increase in the purchase of voluntary carbon offsets was observed in the area around where the film was shown, suggesting a short term change on people’s behaviour, however this effect wasn’t observed a year later (Figure 1). A similar effect was found in a study by Nolan (2010), where changes were observed immediately after watching a documentary, but none observed a month later. 

Figure 1: Estimates of individuals changing their behaviour after the release of a documentary

Volkswagen’s case seems to reflect this finding, with sins past seemingly forgotten by the general public. It raises the question, how much does it take to permanently change people’s opinions towards a company that has built such a strong public image over time as Volkswagen? What does it take to permanently change their opinion and behaviour?

References:

Goldenberg, J., Mazursky, D., & Solomon, S. (1999). The fundamental templates of quality ads. Marketing Science, 18, 333-351.

Jacobsen, G. D. (2011). The Al Gore effect: an inconvenient truth and voluntary carbon offsets. Journal of Environmental Economics and Management, 61, 67-78.

McCombs, M. E., & Shaw, D. L. (1972). The agenda-setting function of mass media. Public Opinion Quarterly, 36, 176-187.

McGee, P. (2018, January 17). Volkswagen see 4% sales increase in 2017. Financial Times, Retrieved from https://www.ft.com/content/2f16801d-a244-3b61-a967-4eec5c665861

Nolan, J. M. (2010). “An Inconvenient Truth” increases knowledge, concern, and willingness to reduce greenhouse gases. Environment and Behavior, 42, 643-658.

Tversky, A., & Kahneman, D. (1973). Availability: A heuristic for judging frequency and probability. Cognitive Psychology, 5, 207-232.