STATE OF MIND

Edited by MARY McNAMARA

Pssst. Did you hear about the fast-food franchise that puts worms in its hamburgers? Did you know that the sign of the beast, 666, is in the Procter & Gamble logo? That Corona Beer is mostly urine?

No? Well, that was the rumor. And those odd whispering campaigns can, unchecked, ruin a business. Take the recent case of San-Martin International Bridals. The Glendale-based manufacturer of bridal gowns grossed $10 million last year, but out of nowhere came a rumor that it was going out of business. Suddenly, suppliers were reluctant to extend credit and retailers shied away. Owners Twyla Martin and Sandy Kravitz called Frederick Koenig of Tulane University in New Orleans, author of "Rumor in the Marketplace: The Social Psychology of Commercial Hearsay." The 64-year-old social psychology professor earns $200 an hour helping companies like San-Martin fight back.

First, on Koenig's advice, Martin and Kravitz did what every PR expert says not to do--they went public with the rumor, and presented the real facts and figures of their business. "At first I suggested that they make a videocassette about the problem (to show to retailers and suppliers)," says Koenig, "but then Sandy had the idea of creating a little cartoon booklet, which they mailed to anyone who mentioned the rumors and gave out at bridal shows." The rumors quieted down, and business is back to normal.

"Once you go public with these rumors," says Koenig, "anyone who repeats them runs the risk of being ridiculed. If you keep quiet, the rumors keep growing."

Koenig got into the rumor biz by chance. "I was sitting around one afternoon about 10 years ago, trying to avoid work as usual, when I read about the trouble McDonald's was having with rumors that (founder) Ray Kroc was a satanist. I thought that was the craziest thing. On impulse, I called the company in San Diego and spoke with their PR man for about half an hour." Koenig wrote a case study about the McDonald's rumor, and soon other companies started calling him. After his book came out in 1985, he found himself advising about six companies, all on the Fortune 500, a year. It's easy to tell whether Koenig's methods are working. "When people stop mentioning the rumor, that's usually the end of it," he says. "When Procter & Gamble had the logo problem, there were seven people on the switchboard answering nothing but those calls. When the calls stopped, you know the rumor has died."

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