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Lululemon's Reaction to Yoga Pants Mishap: Brilliant Marketing

The response is a stark contrast to Toyota's (TM) PR nightmare when it responded poorly to the floor mats trapping foot pedals.

Toyota "denied it, never really communicated with its customers and then had to do a massive recall," notes Schroeder. "I think their brand is still hurting from that."

So what should you do if your business runs into a crisis?

"First step, breathe. Sounds silly but it's very important to relax and then evaluate the situation. As a small business owner, you must obtain a thorough understanding of what caused the negative event so that you can clearly articulate those issues to consumers as a means to keep their trust and, ultimately, their business long-term," NBG's Sozzi says. "Jumping to conclusions and putting out statements that will have to be revised repeatedly upon new information will only tarnish your reputation, despite the fact that you think you are offering help."

Sozzi added that he gives lululemon a "solid grade of B+" for its public relations response.

"They clearly articulated the issue to customers on the Lululemon blog and came off as they are hard at work behind the scenes trying to understand what went wrong ... but they were unable to advise the consumer when one of the most popular products in the stores will return, which underscores them missing the ball internally," he says.

Steven Raz, co-founder and managing partner of Cornerstone Search Group says being transparent doesn't just mean to customers. You need to make sure you are communicating to your investors and key stakeholders, suppliers, manufacturers and anyone else that helps the product or service along.

"Everybody is in this together," Raz says.

-- Written by Laurie Kulikowski in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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