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					Who’s in charge of the Brand?

- Reflections on Brand and Reputation




Stewart Lewis, Director, MORI




February 2002
Who’s in charge of the Brand?
A pertinent question for many organisations these days. Partly because it raises
another one : what is the brand?

Brands are managed and thought of in a different way from a few years ago. But
profound changes are happening in the mindset of consumers – and other audiences
– which perhaps call for a more radical reappraisal still.

The separation of brands from products has clearly accelerated in the past decade.
This is not to say that the quality or qualities of the product itself are ignored; I
believe that’s a myth. But major brands have increasingly focussed their efforts on
associating themselves with the promise of an experience or lifestyle - as Naomi
Klein describes it in No Logo: “creating a mythology powerful enough to infuse
meaning into these raw objects just by signing its name”. It’s an approach which has
had some spectacular successes.

That trend is fine as far as it goes, but still leaves “brand” squarely in the domain of
Marketing, with “reputation” equally pigeon-holed in Public Affairs. Just as
Generals tend still to be fighting the last war, so company structures and
demarcations sometimes do not keep pace with the outside world and its
expectations. The separation of internal and external communication functions
reflects the world of the past rather then the future, for instance. And the
separation of brand and reputation is one that, I’d argue, creates a likelihood
that companies will miss opportunities and run into threats.

Our research has borne witness to major changes in public attitudes towards, and
expectations of, big business. These trends raise fundamental questions about
businesses’ licence to operate, and have important implications for how brands and
company reputations need to be managed. The changes are exemplified in British
public attitudes to profits. In the late Seventies the public agreed, by two-to-one,
that company profits benefitted consumers. Now, by almost two-to-one, they
disagree:




                                           1
     “The profits of large companies help make things better for
           everyone who uses their products and services”
                          Agree                                               Disagree


           1976                                            56%               30%




           1999                     28%                       51%




Base: c. 2,000 general public across Britain                                          Source: MORI


As the deferential respect accorded to large companies – together with other major
institutions – has declined over the years, so business needs to find a new basis of
trust. Part of this lies in the role of the company as a corporate citizen. At the turn
of the Millennium, MORI research formed part of a global survey of public opinion.
Asked spontaneously what was important in their judgement of a company, more
people focussed on responsibilities than on the traditional priorities of product
quality/price/value:

Q What are the things that matter most to you in forming an impression of a
  particular company?
                            Spontaneous
   Responsibility (employee
   treatment, community                                                                   56%
   commitment, ethics,
   environment)


   Product/brand quality/                                                    40%
   value



   Business/financial                                                  34%
   performance


 Base: 25,000 adults in 23 countries, May 1999 (The Millennium Poll)     Source: MORI/Environics


This mirrors the priorities of other stakeholder groups such as legislators, media and
NGOs, for whom the crucial yardsticks for judging a company are trustworthiness,
integrity, fair treatment of employees and environmental responsibility, alongside
successful financial performance – in other words, a triple bottom line of social,
environmental and financial factors.


                                                    2
Even more interesting than the adaptation of the triple bottom line concept itself,
perhaps, is increasing recognition of the interaction between the three factors. This
is reflected in for instance Shell’s Statement of General Business Principles, which
outlines the five areas of responsibility it recognises: to shareholders, customers,
employers, business partners and society. These are not separate and conflicting
aims, in that “profitability is essential to discharging these responsibilities”.

There is widespread awareness of this kind of change, but scepticism about its
impact on consumer disposition to actual companies, brands and products. I first
became aware of the impact in the early Nineties, when a regional electricity
company – somewhat arrestingly – called to tell me my figures must be wrong. The
company had invested heavily in improving levels of service and communicating the
improvement. Customer satisfaction with service was duly increasing – yet
favourability towards the organisation was decreasing. Surely wrong.

Actually, it was right. Further analysis and some qualitative work produced a clear
diagnosis. The company was seen as failing to make the social contribution expected
of an organisation of its size and nature; as social responsibility increased in
importance to consumers, that failure dragged its favourability down more
powerfully than improved service delivery was pushing it up.

In that particular case, the company had a monopoly and was protected – at the time
– from immediate business damage. Most companies are less fortunate. If a factor
moves sharply up the decision-making agenda of consumers, companies and their
brand strategy need to adjust. This is plainly happening with corporate social
responsibility, not only at a broad level of disposition towards organisations but at
the sharp end of purchase decisions. The proportion of the British public for whom
it is “very important” has doubled over the past four years:

Q When forming a decision about a product or service from a particular
  company or organisation, how important is it to you that it shows a high
  degree of social responsibility?
                                  Very important
                   1997                               24%



                   1998                                     28%



                   1999                                                 41%



                   2000                                                 41%



                   2001                                                       46%


Base: 1,000 adults across Britain each Summer                           Source: MORI



                                                3
There are four (at least) major facets of a company’s consumer franchise - that is, the
total intellectual and emotional disposition of the consumer towards it.

One is the product category image: the associations of the product, or product
category perceived to be offered by the company. Semantics are important here and
can help companies, as long as their claims stand up to scrutiny: we may respond
differently to a pharmaceutical company than to a chemical company (or certainly a
drugs company), or to an energy company as opposed to an oil company.

Product and corporate brands are widely discussed, in this paper and others. A
possibly under-valued facet, though, is the brand user image – the connotations, in
his/her own mind or in the minds of others, of the person choosing that particular
brand. It features heavily in some advertising, of course – notably in the automotive
sector. But it takes on special significance as the basis for consumer trust broadens,
as corporate values increasingly bear on how we feel about using certain products
and brands. Trends in consumers’ self-image, such as the increasing weight they say
they put on social responsibility, are powerful indicators of changing priorities.
Companies ignore such trends at their peril.



                                 Product category
                                      image




      Brand
                                     Consumer                          Product
       user
                                     franchise                          brand
      image




                                 Corporate brand




                                          4
There remain vestiges of difference between product brand and corporate brand.
Both exist only as mental constructs, and evoke associations. The tendency has been
for product brands to be:

   •   more tangible and vivid

   •   more immediate

   •   more closely linked to consumers’ lifestyle

   •   more innovative and adventurous

The brand’s bond to the consumer has traditionally been more emotional, while
reputation has been more abstract and intellectual. However, the differences are
becoming blurred – witness the anger directed at Nike, McDonald’s, Exxon and
other corporations. Those who fire-bombed Shell’s petrol stations in Germany, after
the Brent Spar episode, were not angered by the ingredients of its fuel or the lifestyle
claims of its advertising, but by what they perceived as corporate irresponsibility.

In the changing world of stakeholder expectations, the differences between brand
and reputation – perhaps better described as differences between product and
corporate brand – are arguably becoming less important than their similarities. Both
influence, demonstrably, consumers’ disposition to purchase. Similarly, both
influence other attitudes among the public (interest in working for the company, for
instance) and the disposition of opinion formers.

Traditionally, corporate communications have been seen as appropriate for dealing
with opinion leader audiences such as legislators, investors and media, addressing the
particular interests of those groups. However, there is a change in process. Those
opinion leaders are having to broaden their own interests, while consumers are
becoming very interested in corporate issues. City analysts are judging companies by
the management of their brands (many of which promote lifestyles very different
from their own!). Meanwhile consumers, as we have seen, are increasingly
influenced by the values – in as far as they can ascertain them – of the company
behind the brand. As our disposable income and choices become greater, we are
more influenced by values : “am I comfortable giving my business to this company?”

When other factors are close to being equal, we want to do business with
organisations we feel good about. Increasingly, what drives reputation drives
business. This has led to some specific actions by companies – such as insisting that
suppliers sign up to their business principles – which will in themselves propel the
trend forward.




                                           5
A corporate brand, like a product brand, is essentially a promise. In the case of a
company, the promise is : “We’ll act according to these principles”, “We take these
responsibilities seriously”, “We have this vision of our purpose”. Such promises are centrally
relevant to the rising issues on the agendas of stakeholders, including consumers.

An argument against building such corporate brands is stakeholder (including
consumer) cynicism. It’s true that consumers have come a long way since the early
Eighties, when they looked to the Chairman of BT for guidance as to whether they
should buy the shares. But MORI’s research suggests a mood of scepticism rather
than cynicism, as exemplified in the public’s view of companies’ motivation for
socially responsible activities:


     Q Which of these comes closest to your view of why companies support society
       and the community?
                                                No opinion
                         Trying to cover up            Genuinely trying to
                         anti-social activities        help
                                                   3% 6%
                                             5%

                                                                    Giving real help,
                                                                    but expecting to
                                                                    benefit

            Giving little help,     39%
                                                              47%
          trying to get a lot of
                 benefit




Base: c. 1,000 British adults                                                    Source: MORI


Understanding this mood is crucial to a company such as BP with its corporate
proposition ‘Beyond Petroleum’. Though they may be vocal, few will be outright
cynics towards the proposition. Rather, there will be curiosity as long as its promises
are relevant to the audience’s feelings and concerns about that type of company – as
they clearly are in BP’s case. There is no longer a naïve acceptance of any corporate
claim, but an openness to BP putting flesh on the bones of its proposition and
demonstrating its translation into practice.

Clearly, there are different issues in all of this for brand-name companies (Tesco,
Heinz, BP, Philips etc) as against companies whose individual brands dominate
(Unilever, Procter & Gamble etc). There are, of course, gradations between these
extremes.




                                               6
For a brand-name company, the opportunities are clear. The trust engendered by
Tesco has enabled it successfully to enter new markets such as petrol retailing and
financial services. It is true that these companies’ investment in one name and brand
makes them potentially vulnerable – negative publicity will infect the entire brand.
But the investment also builds protection against such damage, and the opportunities
increasingly outweigh the threats.

Quite different challenges face a company such as Unilever. As consumers
increasingly ask : “What does the company behind these products stand for?”, the answer is
less and less satisfactory. Brands such as Ariel can sustain some, but only limited,
association with corporate values and responsibilities. On learning that the company
behind the brand is Unilever, for many consumers the response will be “So what?” –
or worse, “Why are they hiding themselves?”

The different standings of companies on the MORI familiarity/favourability chart
illustrate some of the opportunities, and challenges, facing them in corporate brand
strategy:

                     Company Familiarity and Favourability
                              - General Public
    Mean Favourability
      %
       1 .2                                                                  Cadbury
                                                                 Heinz
       1 .0                                                                    Tesco

       0 .8                                          Virgin
       0 .6                                        Philips           British Airways
                      Unilever
       0 .4
                                                      BP
       0 .2

       0 .0
              1 .0          1 .5              2 .0            2 .5          3 .0           3 .5

                                        Mean Familiarity

 Base: c. 1,000 adults across Britain, 1997-2000                                   Source: MORI


This is not to argue against the present big brands. Many have huge value and will
continue to do so. But there is a case for a broadening of those brands to
accommodate the corporate values which are becoming a more powerful element in
the consumer relationship. This is first a matter of corporate behaviour – if
corporation is not behaving in a manner consistent with its principles, or with the
expectations of its stakeholders, then communication which draws attention to its
behaviour will be fruitless, or worse. Second, it is a matter of communicating the
company’s values, with illustrations to back up the claims. David Grayson and


                                                       7
Adrian Hodges, in their excellent book Everybody’s Business, quote Jeffery Gartner,
Dean of Yale School of Management:

               They [corporate executives] understand that big corporations
               have to behave differently if they want to build a reputation that
               enhances their brand and makes them attractive not just to
               customers but to the best workers
Sustained business success requires customers who feel positive about doing
business with us, rather than doing it reluctantly or with pangs of conscience. We
want the relationship to be one which builds trust, commitment and advocacy.
These bring clear business benefits, as exemplified by (and measurable through) the
MORI Excellence Model developed by my colleague Peter Hutton:

                        MORI Excellence Model Chart



                                Would talk highly about, even if not asked
                  Advocacy

                                   Would talk highly about, if asked
                Commitment

                 Satisfaction          Satisfied with service(s) received

                                         Used products/services
                 Transaction

                   Trust                      Very or mainly favourable towards

                                                   Heard of
                 Awareness



For the brand-name companies, this extension may be relatively easy (as long as their
retail and marketing people are on board). It may push other companies in the
direction of becoming brand-name companies. For those at the other end of the
scale, with strong existing product brands, some form of dual branding may be
required. The ICI roundel for many years gave Dulux paint a competitive edge (and
the opportunity for premium pricing) by providing an extra guarantee, an extra level
of trust. Potentially the same advantage could be developed by Unilever or P&G,
though it would require substantial investment in building those associations with the
corporate name.

I do not propose a new name, such as Superbrand or Ultrabrand, for this concept of
a broader brand. It is not a novelty or gimmick. Rather, I believe it should be an up-
dated definition of the brand - the evolutionary development of the current brand in
the context of new relationships and expectations.




                                               8
So, who is in charge of the brand? The ultimate answer, surely, is the person at the
top. A range of disciplines and functions contribute to, and are affected by, the
brand. But no single one of them has the necessary overview. Given the strategic
importance of the brand to the business, and the holistic view required, it is the CEO
who should take leadership.

Is the CEO too removed from the ‘real world’ to understand the ramifications of the
brand? It is a concern that was recently expressed to us by an MP:

                These big companies get complacent because they spend most of
                their time with fellow chief executives and fellow people in the
                industry – they are not very sharp at confronting some of these
                myths which are pernicious and ultimately destructive to their
                companies’ well-being

I believe his concern is unfounded, at least in the case of many companies. Top
management of enlightened companies do get out into the world, developing
dialogue and meeting stakeholders with very different perspectives on their
companies (including Lord Browne of BP, who memorably began his address to an
NGO by saying it was the first time an oil company executive had occupied a
Greenpeace platform).

MORI’s Captains of Industry study at the end of 2001 showed a high proportion of
CEOs and Chairmen well aware of outside expectations, and prepared to
acknowledge that companies need to do more to address them. The balance of
opinion on this point has reversed since 1997, when Captains generally rejected the
criticism. Their views have come more into line with those of the public, Labour
MPs and other audiences.

              “Industry and commerce do not pay enough
                attention to their social responsibilities”
    %
    70

    60
                       Disagree
    50
                                                                                           45%
    40                                                                                     38%
    30

    20                     Agree
    10

     0
     1 9 95       1 9 96        1 9 97       1 9 98       1 9 99        2 0 00         2 0 01

Base: CEOs/MDs/Chairmen of Top 750 companies (c. 100)                              Source: MORI




                                               9
It is interesting to note that Finance Directors in these companies continue to take a
narrower view – by clear margins they reject the criticisms – and have clearly been
less affected by the concerns of the wider community of stakeholders.

In other words, many CEOs have the perspective, the business imperative, and
increasingly the sensitivity required to lead in the new and challenging world of the
21st Century Brand.

In summary:

   •   consumer values and expectations are in process of significant change,
       moving corporate themes (in particular responsibility) up the agenda

   •   the agendas of different stakeholder audiences (including employees) are
       converging

   •   these trends necessitate companies taking a broader and more holistic view of
       their brands and communications, in order to exploit opportunities and
       reduce threats

   •   different functions – notably Marketing and Public Affairs – have vital roles
       to play in the process, but they need the support and co-ordination of top
       management

   •   the processes are, as they should be, ultimately driven by consumers




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