Why Today's Consumer Cares About Corporate Reputation

It used to be so easy.

Consumers did largely what they were told. Even when there was a choice, it was probably between two competing brands. And the way to get one's message across was similarly focused: one or two or three TV channels, a couple of newspapers, drive-time radio.

But then things got complicated. Better data allowed manufacturers and their marketers to profitably target ever smaller slices of humanity. And communications? Do you have to ask?

But eventually the costs of global competition limited pricing flexibility. Perhaps most significantly - and subversively - in a bid to save money and margins, companies began demanding that consumers do more work: figure out treacherous voicemail customer service trees, bag their own groceries, manage their own accounts online or elsewhere. And business derived some advantage from this originally. People were confused, or short on time or lazy, so they did what came easiest, which generally redounded to companies' benefit. Homo Sapiens, however, did not win the evolutionary battle by being stupid. They figured out how to make this new system work for them, or at least not so well against them.

One of the things they learned was the relationship between the brands they bought and the companies that owned them. And they began to figure out which brand conglomerations represented what they wanted and who they wanted to be. Suddenly, companies found themselves being judged on a whole range of attributes they didnt realize they had to have, let alone master. Ethics, environment, employee treatment. The list is as long as the internet allows it to be.

Consumers are not making these judgments solely on emotional bases. They get that mores and values and ethics impact the quality of the goods and services they purchase, the prices they pay, the speed of the wait times they must endure, the ease of interacting with the company that sold them whatever they bought. In other words, the stuff that matters to them and that will influence their purchase decisions. Because they get that attitudes and behaviors in one realm probably reflect those in many others.

And since corporations have fought for the controversial right to be recognized as 'individuals' under law, consumers want to be treated like individuals by them. Corporations demanded that consumers take more responsibility for themselves. So they have. Even though it's not really clear to anyone what they were getting in return. But people want to know - and everyone is watching. JL

Richard Warnica and Tim Shufelt report in Canadian Business:

The commercial has no products, no voice-over, no sign at all of what’s being sold. Just images of athletes and their mothers. A quick flash of brands follows—Tide, Pampers, Gillette, Duracell—then a slogan: “P&G, proud sponsor of moms.”

Procter & Gamble’s “Thank you, Mom” campaign, rolled out at the London Olympics, is the most ambitious in its history. It’s also part of a growing trend that sees parent companies promoting their overall corporate brands rather than just those of products.
Traditionally, P&G’s customers have been the retailers that, in turn, sell its brands to consumers. But in the new campaign, P&G is pitching the parent company directly to shoppers. It’s not alone. “The first inkling of this that we noticed was in 2005, when Unilever came out with a new logo,” says Nick Parish, North American editor of marketing magazine Contagious. A stylized blue “U” made up of 24 symbols, the logo soon appeared on Unilever brands, from Dove soap to Vaseline lotion, that consumers might not otherwise have known were made by the company.

The idea is, to some extent, a reaction to a new kind of consumer. Shoppers know more than ever about where products come from. As a result, their expectations of the provider have risen dramatically. Today, consumers want to know what a company stands for, what its values are and why. “One argument is that product quality is now just a point of parity, that all organizations have the ability to produce quality product,” says Darren Dahl, a marketing professor at the University of British Columbia. In that environment, the corporate reputation becomes a competitive tool—an emotional bond that ties the consumer to the marketer.

Reputation Institute’s survey of Canada’s largest companies reinforces the power of this emotional appeal, which proved almost twice as important as rational considerations like product quality and innovation in determining consumers’ opinion. A cautionary case in point is Research In Motion. (The company saw the largest drop among Canadian brands, from the 5th spot to 38th.) “They focused all of their attention on the product itself and the engineering, rather than what the experience is like for their core audience,” says Rob Jekielek, a director at the institute. Even when RIM’s products dominated the smartphone market, the company ranked relatively low in so-called enterprise factors, such as corporate citizenship.

Consumers today care about what a company is doing, not just what it’s selling. A rash of corporate scandals over the past decade, from the sub-prime mortgage crisis to the BP oil spill, has produced a default skepticism, Jekielek notes. Consumers now expect companies to really earn their good reputation.

Still, some worry that the pendulum has swung too far in favour of reputational marketing. Kenneth Wong, a professor at Queen’s University, says marketers have become consumed with corporate image. But when every company is trying to develop deeper bonds with the consumer, consumers’ attention is distracted and diluted. Diminishing returns will in time undercut this phenomenon, he says, but for now, “I don’t think you’re going to see anybody let up because nobody has proven there’s a downside to spending on this.”