Strategic Brand Management

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Brand Equity In Question/Corporate Reputation And The Corporate Brand

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Corporate reputation and the corporate brand

In 2003 Velux, which had become known as the number one brand for roof windows in the world, realized it needed to create acorporate brand. It felt that merely to compete through its product brand was not enough to protect it against the growing number of me toosmall over the world. In addition, its brand equity was stagnating.

When any brand reaches a level of 80 per cent of top-of-mind awareness in its category, part of its ‘stagnation’is certainly due to a ceiling effect:there is not much room for improvement . However, the company felt that emotional bonding with its brand was not strong enough. Could the product brand alone improve the bond? The diagnosis was that it was high time to reveal ‘the brand behind the brand’ (Kapferer, 2000) and start building acorporate brand.

In fact many companies that based their success on product brands have now decided to create a corporate brand in order to make company actions, values and missions more salient and to diffuse specific added values. Uni lever should soon develop some kind of corporate visibility, as Procter & Gamble does in Asia at this time and will probably do everywhere soon.

There is another reason that corporate brands are a new hot managerial topic: the defence of reputation. Companies have become very sensitive about their reputation . Formerly they used to be sensitive about their image. Why this change? Isn’t image(perception) the basis on which global evaluations are formed (and thus reputation)? It is likely that the term ‘image’ has lost its glamour.

It seems to have fallen into disrepute precisely because there was too much publicity about ‘image maker’s, as if image was an artificial construction. Reputation has more depth, is more involving: it is judgment from the market which needs to be preserved. In any case reputation has become byword, as witnessed by the annual survey son the most respected companies that are now made in almost all countries, modeled on Fortune’s ‘America’s most admired companie’s.

Reputation signals that although the company has many different stakeholders, each one reacting to a specific facet of the company (as employee, as supplier, as financial investor, as client), in fact they are all sensitive to the global ability of the company to meet the expectations of all its stakeholders. Reputation takes the company as a whole. It reunifies all stakeholders and all functions of the corporation.

Because changes in reputation affect all stakeholders, companies monitor and manage their reputation closely. Fombrun has diagnosed that global reputation is based on six factors or ‘pillar’s (Fombrun, Gardberg andSever, 2000):

emotional appeal (trust, admiration and respect);products and services (quality, innovativeness, value for money and so on);vision and leadership;workplace quality (well-managed, appealing workplace; employee talent);financial performance;social responsibility.

Since companies cannot grow without advocates and the support of their many stakeholders, they need to build a reputationalcapital among all of them; plus a global reputation, because even specialized stakeholder swish the company to be responsive to all stakeholders. There is a link between reputation and share performance.

As a consequence of this growth of temptation concept, companies have realised they cannot stay mute, invisible, opaque. They must manage their visibility and that of their actions in order to maximize their reputational capital – in fact their goodwill, to speak like financiers. The corporate brand will be more and more present and visible: through art sponsorship, foundations, charities, advertising.

As such it addresses global targets. The corporate brand speaks on behalf of the company, signals the company’s presence. Now companies are also developing specialized corporate brands such as ‘You’ (the recruiting brand of Unleveled), horsetails campaigns (such as semi-annual financial road shows).

Corporate brands have therefore taken anew importance since they speak on behalf of the company, signal its presence and actions:in fact they draw the company’s profile in the eyes of all those who do not have direct interactions with it. In our world people react more and more to names and reputations, torumours and word of mouth. They do not seethe headquarters or the factories any more.

Often delocalised, corporations appear through the press, publicity, PR, advertising, financial reports, trade union reports, all sorts of communications, and of course their products and services. Managing the corporate brand and its communication means managing this profile. The methods to do so are not specific: they rely as do all brands on identity. They also rely on the markets.

What then is the difference between corporate brand methods and the product brand methods developed here? Companies do have an internal identity, core values that bear on the profile they wish to, or can, express outwardly. Companies and corporations are bodies with a soul (from the Latin, corpus). (The yare enacted by people. ) Product brands are more imaginary constructions, relying on intangible values which have been invented to fulfil the needs of clients. Ralph Lauren’s or Marlboro’sintangible values are pure constructions. It cannot be the same for companies. Reality leaves fewer degrees of freedom.

Second, since brand management is both identity and market oriented, corporate brands must tailor their profile to meet the expectations of multiple publics. The core value must be tailored for this global audience, which symbolically has to ‘buy’ the company, as a supplier, an employee or an investor. Managing the reputation of the name, through (among other methods) the communication of the corporate brand, is aimed at making the company their first choice.

As to the very hot topic of the financial value of reputation, a conceptual distinction must be made: at the corporate level, this miscalled goodwill (the excess of stock value overbook value). Now, the larger part of this goodwill is attributable to the financial value of the brand as commercial brand. This financial value is usually measured by the discounted cash flow method. This shows that the financial value of the brand, be it product brand or corporate brand, can only be traced through prospective sales.