Managing the Corporate Brand - a Reputation Perspective
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Adored, respected and coveted by customers and organisations alike, corporate brands represent one of the most fascinating phenomena of the business environment in the 21st century. Their importance is unquestionable. Brands, in their various forms, are integral to our everyday existence. This is particularly the case at the organisational level where the concept of the corporate brand now enjoys wide currency in business parlance. There is an increasing realisation that corporate brands serve as a powerful navigational tool to a variety of stakeholders for a lot of purposes, including employment, investment and, most importantly, consumer buying behaviour.
Corporate branding has been defined by Van Riel (2001, p. 12) as:
“a systematically planned and implemented process of creating and maintaining a favourable reputation of the company with its constituent elements, by sending signals to stakeholders using the corporate brand.”
Creating a coherent perception of a company in the minds of its various stakeholders is a major challenge faced by many companies. Particularly in large multinational corporations speaking with one voice is a challenging task. Especially when grown through extensive merger and acquisition activities, large companies often comprise multiple subsidiaries and subsequently multiple brands and cultures. Managing the signals these diverse corporate subsets send out to their stakeholders is often impeded by various aspects such as historic turf wars between divisions, cultural and language differences, deficient management structures and unclear responsibilities, or simply by spatial separation. Furthermore, incoherence in messages and difficulties in coordination are often fostered by communication representatives’ narrow focus on their particular stakeholder groups.
For example, investor relations representatives only have a small community of investors in mind. Those responsible for a certain product brand focus on their particular customer base and the internal communicators primarily see their recipients, the employees. Such thinking in a box and acting in narrow realms of stakeholder groups often leads to the communication of messages that might be suitable for each individual stakeholder group, yet all in all the picture drawn of the company as a whole is blurred or even contradictory.
This article asserts that a stronger integration of the different internal units responsible for stakeholder relations is needed in order to foster more coherencies in messaging and to eventually generate a coherent corporate brand image and favourable corporate reputation. The management process of creating and maintaining a coherent corporate brand image in the minds of each individual stakeholder which is the basis for a favourable overall corporate reputation shall be labelled corporate branding.
The importance of corporate brands has been ignored in the literature for a very long time. It was only during the 1990’s when branding and communications consultants went on to assess what is called as a ‘corporate brand’ (King, 1991). Writers about a few decades ago always focused on the importance of a ‘company brand’ rather than a ‘corporate brand’. However, there is an overarching explanation as to why there has been a growth in the importance of studying a ‘corporate’ rather than a ‘company’ brand. Some of the early academic work in the area of corporate brands reached a broadly similar set of beliefs. The importance of staff in corporate brand building was emphasised, as was culture. The role of the chief executive as brand manager was also stressed. Balmer (1995) also said that the new millennium would witness increased importance being assigned to the corporate brand. It can also be found in academic literature that marketing scholars have largely ignored the challenges presented by corporate brand management.
The reasons for this short sightedness can be seen in a lot of branding and marketing textbooks, which though acknowledge the importance of corporate brands but fail to highlight the following attributes:
* corporate brands have a wider scope and management as compared to product brands;
* corporate brands have multi-stakeholders rather than customer orientation and
* the traditional marketing framework is not sufficient when one is studying a brand at a corporate level
Most of us today fail to understand the difference between what is and what is not a corporate brand. Brands such as McDonalds, British Airways, Vodafone, Virgin and Manchester United are examples of organisations with clear corporate brands. However, in the case of Procter & Gamble, Unilever and Diageo, it is more the product brands that have a clear recognition as compared to the corporate brand. In such cases organisations face a lot of difficulties in building their corporate brand because of their stronger focus on building their product brand portfolio. A corporate brand may be viewed as a contract in that the company needs to articulate its accord with its key stakeholders by demonstrating, unceasingly and over time that it has kept true to its corporate branding pledge. As such, the brand name and/or logo play an important part in creating awareness and recognition but also as ‘signs’ of assurance. However, a number of authorities have cautioned against seeing branding as a one-way process that affects the image of those engaged in some form of branding partnership such as customers and employees. This is because these groups also have a key role in defining a brand’s image (Johansson and Hirano, 1999).
The relationship of corporate reputation to the success of a brand
Corporate Reputation has never been considered so important than it is today. In the recent years it is not just the markets which have nose dived in the corporate world but it is the corporations themselves. Scandals such as that of Enron and WorldCom have seriously hampered the trust among stakeholder groups and widespread public scepticism about company ethics. If we look at the case of Andersen, the major reason why the company ceases to exist is because of the negative reputation that built up over a short period of time. Since the mid-1980s senior managers have recognised the strategic necessity of building and sustaining a favourable corporate reputation to create corporate competitive advantage. This recognition has been reflected by a wealth of academic publications that have highlighted the value of a favourable corporate reputation as a means of enhancing an organisation’s financial value, influencing intention to buy, acting as a mechanism for assuring product/ service quality, influencing customer and employee loyalty, and offering inimitability to the organisation. Authors over the years have also recognised that an organisation’s corporate reputation is affected by the actions of every business unit, department and employee that comes into contact with another stakeholder.
Reputation is a concept more generally known to us as how an organisation lives up to the expectations of its stakeholders. A firm with a good overall reputation owns a valuable asset ‘goodwill’: brand names, corporate logos and customer loyalty. Brands in general are used by the consumers as a symbolic meaning in their recognition and decision making process. Often brands develop a ‘personality’ of their own that has an effect on whether users decide the product’s image is consistent with their needs. With this ‘personality’ often goes a reputation as well. Brand names can often be repositories for a firm’s reputation: high quality performance on one product can often be transferred to another product via the brand name.
For a firm expanding its product line, a well-known brand name can be advantageous in facilitating user acceptance of the new product because of its existing brand reputation. Family branding, that is a company placing the same brand name on all products in a product line, enjoys the distinct advantage of instant recognition, benefiting from the “halo effect” of the brand’s established reputation. This leveraging effect has led some firms to enter new fields under the same name – brand franchise extension. The advantages of such an approach are the facilitation of the adoption process and acceptance of new products, since users assume new products have the same quality level as existing ones; a minimal cost of branding to the manufacturer, extensive advertising for brand name awareness and preference will not be necessary; and user response will tend to be faster, thereby reducing the introduction stage in the product life cycle where profits are negative.
In addition, another advantage often obtained is the greater ease in gaining distribution (particularly shelf space) due to its familiar name. While the reputation of the established brand name can facilitate the introduction of a new product, any problems with the new product can, conversely, affect the saleability of all items bearing the same name. If consistency in new product quality is not maintained, user dissatisfaction may result which may carry over to older, successful brands in the line. Family branding, therefore, places high demands on quality control because every single item is considered representative of the entire line. A lower quality item may hurt sales of the better quality products. Promotion of a better quality product may result in credibility gaps among potential buyers. A new product failure may well tarnish the reputation of sister products carrying the same brand name. One bad egg may well spoil the entire basket.
Reputation is thus the assessment of the continuous sustainability over time of an attribute of an entity. This assessment is based on the entity’s willingness and ability to perform repeatedly an activity in a similar fashion. Reputation is an aggregate composite of all previous transactions over the life of the entity, a historical notion, and requires consistency of an entity’s actions over a prolonged time for its formation. A firm will lose its reputation if it repeatedly fails to fulfil its stated intentions. Having a good reputation also insures high quality firms will be larger and have more customers since fewer customers will depart from high quality firms in the long run and more will arrive because of word-of mouth activity from other customers. Thus, to become successful and hence profitable, brands must develop a positive reputation.
MBus.(UK,2004), MSc.(UK,2003), BMS.(INDIA,2002)
About the AuthorGaurav Bahirvani is a Corporate Brand Development Analyst living in Manchester, England. For any further queries or discussions on issues related to branding and marketing, please feel free to get in touch with him on firstname.lastname@example.org.
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Article Published/Sorted/Amended on Scopulus 2006-10-06 17:52:50 in Marketing Articles