Netflix stock has tumbled again to an 18-month low of $75 a share based on, among other things, trust. Think about it… the company’s value has erased about $12 billion in just 104 days. Yes the company has see-sawed on promises of splitting apart services, then relenting and bringing them back together… but what they have really undone is the consumer trust and loyalty they had worked so hard to achieve.

One of the fundamental values of a brand is to earn loyalty that results in the security of future earnings. In other words, consumers will come back time and time again to both purchase your products, and also allow them to expand their relationship with you. But the moment a company breaks that trust, it is very hard for consumers to stay on board. [Read more →]

A feature in the Sunday New York Times about Johnson & Johnson struggling with many of it’s consumer brands raises a much bigger issue… when you lose trust in a brand name. The specific manufacturing problems and recalls for J&J open up consideration of less marketed store brands. In that moment where value intersects with (brand) price, it will be interesting to see how consumers shift shopping behaviors over the near to longer term.

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The FDA recently released a report chastising a McNeil Consumer Healthcare factory for poor conditions where Children’s Tylenol, Motrin, Benadryl and other products are produced. This will be another test to see how McNeil will behave, and whether they will act as responsibly as when Tylenol was pulled off the market decades ago.

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