Some Marketing Wisdom I: It is the Corporate Brand that matters!

This post was written by Charlotte Kräft, Head of International Marketing

I happened to find a very interesting study in the internet http://www.webershandwick.com/resources/ws/flash/InRepWeTrust.pdf. It is a study conducted by Weber Shandwick in 2011. They asked 1,375 consumers and 575 Senior Executives of Companies beyond 500 MUSD revenue in the US, UK, Brazil and China about the importance of company reputation next to product brands.

The findings caught my attention and although the survey is focused on the consumer goods industry it gives a lot of valuable results I would like to share in this post with you. But just to clarify, corporate brand is the parent company brand that produces the good. Product brand refers to an individual product name itself. An example is Procter & Gamble (corporate brand) and Gillette (product brand) or Unilever (corporate brand) and Dove (product name). I think this is clear now.

As a result of the survey, Weber Shandwick listed 6 new realities of corporate reputation:

1.       Corporate brand is as important as product brand.

87% of the respondents agree to this statement. Consumers do go shopping by corporate brand reputation and not just by the product brand itself. Additional, an interesting finding here is that the corporate brand brings halo to the product brand not the other way around. I find this quite surprising since usually the product brand has a bigger exposure to consumers and can be accessed by consumer experience. The corporate brand is usually more in the background and not “tangible” for consumers.   

2.       Corporate reputation provides product quality assurance

This is not surprising indeed. Consumers consider themselves as investors of a company and require some information like where and under which conditions the product was manufactured etc. The corporate brand serves as assurance, or as the study calls it “virtual stamp of approval”. Credibility is king.

3.       Any disconnect between corporate & product brand   reputation triggers sharp consumer reaction

For sure, consumers change their behavior once they find out that there is a mismatch between product and brand reputation. Most dominantly, in a world with redundant choices consumers just stop buying that product and purchase an alternative one (40% of the respondents in the study said so). “For companies in the spotlight, there is nowhere to hide from a smartphone or click of the computer.” (See p.11) Or as the techjournal is commenting on this as a “new see-thru, nowhere-to-hide global marketplace” http://www.techjournal.org/tag/the-company-behind-the-brand-in-reputation-we-trust/.

4.       Products drive discussion with reputation right behind

Consumers frequently talk about the purchased good itself not that much about the company. When they do talk about the company it is about employment facts like working conditions and culture as well as corporate scandals. Interestingly, these contents are less intensely communicated ones by business leaders. In order to have a customer-centric communication strategy, business leaders should adapt.

5.       Consumers shape reputation instantly

Via the internet and its countless possibilities to engage millions of people all around the world consumers nowadays have the power to impact corporate reputation. ‘Word of mouth’ was ranked as leading influence on buying behavior while online reviews are of equal importance and have a remarkable bandwidth. Leadership communication is also ranked highly. Interestingly, social networks are not stated as top influencers. However, the authors of the study believe that this is due to the fact that most companies have not expose themselves systematically and strategically to social networks yet. They believe that this is going to change soon and rapidly.

6.       Company reputation contributes to company market value

People see financial information, volatile stock markets and banks that struggle every day. They see that this information is periodic, short-term and they cannot impact. The corporate reputation is seen as long-term and therefore, preferred over financial information.

In a nutshell, we saw a new dynamic where the company behind the brand is becoming as essential as the product brand itself. Also Forbes is referring to the study’s results as a new “era of marketing communications” (http://www.forbes.com/sites/chrisperry/2012/01/18/study-the-company-behind-the-brand-more-important-than-ever/2/). Consumers have more power in their consuming behavior. They debate openly about companies and are keen to boycott them if they find a reason to do so.

It definitely gives a vision for the CEOs, Communication Officers et al. of the companies in this world how to communicate the voice of the enterprise. Also from efficiency reasons it makes sense to start merging Communication and Marketing departments and align these. There will be further changes for sure. Let’s prepare for them!

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