CONSUMER GOODS SECTOR BOASTS STRONG REPUTATION IN 2014
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1 CONSUMER GOODS SECTOR BOASTS STRONG REPUTATION IN 2014 FMCG SEGMENT TOPS THE REPUTATION RANKING REPUTATION INDUSTRY BRIEF: CONSUMER GOODS - U.S. STAKEHOLDERS:GENERAL PUBLIC November, 2014 This brief takes a look at the recent business reputation trends in the consumer goods sector, highlighting reputation scores and drivers for fast-moving consumer goods (FMCG) and consumer durables industry segments. In this brief, the Consumer Goods sector encompasses fast-moving consumer goods (excluding food and beverage) and consumer durable goods (excluding automobiles). Relevant industry segments are highlighted in red in the 2014 U.S. RepTrak Pulse Industry Ranking chart below Reputation score of the FMCG industry segment Figure U.S. RepTrak Pulse Industry Ranking
2 The RepTrak Model The RepTrak model developed by Reputation Institute measures both the emotional perceptions and the rational explanations of a company's reputation. Rational explanations are captured within the seven dimensions (drivers) of reputation. Reputation Institute s generic model for reputation is structured around four core themes and seven reputation dimensions. Together, these elements explain a company s reputation. 1. Reputation RepTrak Pulse is the core of a company s reputation and shows how strong the emotional bond is between the company and the public. 2. Dimensions RI evaluates stakeholders' perceptions of company performance across seven reputation dimensions. The individual dimensions mean different things to people and are perceived differently in terms of weighted importance. Compared to the rest of the market, the consumer goods industry segments have earned some of the highest RepTrak Pulse scores in Reputation Institute s 2014 U.S. RepTrak Pulse study (please see sidebar for more details on the RepTrak methodology). Using Reputation Institute's normative scale for interpreting pulse scores, twenty-nine out of forty-three companies in the consumer goods sector have strong reputation scores (70-79), thirteen firms have average scores (60-69) and only one firm has a "weak" score (50-59). The FMCG segment (labeled "consumer products" in Figure 1) boasts a score of 72.5, consumer durables ("electrical and electronics" in Figure 1) 71.1 and the "computer" segment (which includes computer electronics) Compared to firms in other industries, consumer goods firms are more favorably perceived by the public for a variety of reasons, including stronger recognition of brands by consumers and the bigger role consumer products play in everyday lives. Emotional affinity with consumer goods brands and companies are also often reinforced by cultural traditions. Product Quality and Innovation Are the Top Two Reputation Drivers in Consumer Goods Figure 2 shows the relative weighted importance of the seven dimensions driving reputation of FMCG and consumer durables firms in the U.S. Figure 2. Reputation Drivers for FMCG and Consumer Durables 2 Consumer goods sector boasts strong reputation in 2014: FMCG segment tops the reputation ranking
3 The top driver of business reputation for the consumer goods sector is product quality. The second most important driver that is in the top three for both FMCG and consumer durables segments is innovation. Together, products and innovation comprise the product focused drivers of the reputation score (the rest of the drivers comprise the enterprise focused portion). In addition to these drivers, reputation of individual brands is essential to the overall perception of firms in the consumer goods space. Who Are the Most Reputable Consumer Goods Firms? Figure 3 depicts the most reputable consumer goods firms operating in the U.S. based on the results of Reputation Institute s annual RepTrak Pulse study that quantifies public perceptions of business reputation: Figure Reputation Leaders in Consumer Goods - U.S. The consumer goods sector's top performers have strong reputation Pulse scores compared to the overall market. The seven companies in this chart are the top performers, as Pulse score differences must be at least 3.1 points to be considered statistically significant. The top performers listed in Figure 3 have pulse scores in the range of 77.1 to 79.7, exhibiting very strong 2014 performance. The middle-range performers in the sector (see the full ranking at the end of this document) - Hewlett-Packard, Ralph Lauren Corporation, Rolex, Philips Electronics and 3 Consumer goods sector boasts strong reputation in 2014: FMCG segment tops the reputation ranking
4 Kimberly-Clark Corporation have scores between 72.7 and 72.9, which is significantly different from the range of the top performers. At the bottom of this industry s ranking are Unilever, Haier Group, Fujitsu, Hitachi and Amway: with scores ranging from 51.5 to 64.9, these companies have weak (Amway) to average reputations with a major reputation score gap between them and the middle and top performers. Spotlight on Clorox Clorox is one of the reputation leaders of the 2014 U.S. RepTrak Pulse ranking for the consumer goods sector. The company has taken the lead over such major industry giants as J&J and Colgate-Palmolive. Clorox is a company with highly popular consumer brands for all kinds of home cleaning. It has excellent reputation for its products with a score of 85.4 in the products and services dimension of business reputation the most important reputation driver for this industry. Clorox s brands enjoy excellent reputation among consumers and have earned high scores for being: 1. Reliable, secure, hardworking 67% of respondents strongly agree with this statement 2. Honest, sincere, trustworthy, socially responsible 55% 3. Ambitious, achievement oriented, leading 50% 4. Friendly, pleasant, open, straightforward 50% In addition, a majority of consumers strongly agree that Clorox meets the needs of its customers (78%), delivers a consistent experience (74%) and delivers on its promise (68%). Focusing on a narrower market niche (household cleaning) has allowed Clorox to develop a variety of targeted and well-liked products that achieve a high level of brand recognition and consumer loyalty. As a result, 71% of surveyed consumers strongly agree that they would recommend Clorox to others, and 74% would buy the products/services of Clorox. 4 Consumer goods sector boasts strong reputation in 2014: FMCG segment tops the reputation ranking
5 Overcoming Reputation Challenges Amway the firm at the bottom of the 2014 U.S. RepTrak Pulse Ranking for Consumer Goods is the only firm in the sector with a weak reputation score. Interestingly, Amway s overall reputation pulse score is weaker than any of its scores in seven reputation dimensions. This means that stakeholders have a poor emotional connection with the company despite the fact that it performs better across a number of operational areas, including products and services, leadership and citizenship. One of the reasons for the lack of emotional connection may be the fact that the company has poor communications ratings by the general public: only 22% of respondents strongly agree that Amway communicates often, and 32% agree that it appears genuine about what it says and what it stands for. Sometimes, companies struggle to establish a good reputation beyond their home countries. For instance, Unilever (64.9) has a significantly lower reputation score in the U.S. than overseas. Unilever s score in the U.K., where the firm is incorporated, is much higher (71.9) placing it in the strong reputation category. Unilever has an opportunity to better understand why consumers rank it lower in the U.S. and other countries outside of the UK, and work on better connecting with consumers globally. To improve reputation, consumer goods firms need to continue to focus on products and innovation, while paying attention to the rising importance of non-product related, enterprise-focused reputation dimensions (Reputation Institute's Consumer Goods Reputation Dimensions brief explores this trend in more detail). 5 Consumer goods sector boasts strong reputation in 2014: FMCG segment tops the reputation ranking
6 2014 U.S. RepTrak Ranking: Consumer Goods Company RepTrak Pulse Rank ABOUT THE AUTHOR Viktoria Sadlovska Research Director, Reputation Institute Clorox LEGO Group Colgate-Palmolive Johnson & Johnson Nike Whirlpool Nintendo Canon Procter & Gamble Sony Tupperware Stanley Black & Decker Panasonic Adidas Group Samsung Electronics Fujifilm Dell Hewlett-Packard Ralph Lauren Corporation Rolex Philips Electronics Kimberly-Clark Corporation L Oréal S.A LG Corporation General Electric The Estée Lauder Companies Robert Bosch Toshiba Apple Sharp Electrolux Swatch Group Energizer Holdings Mary Kay Nu Skin Lenovo Group ACER Church & Dwight Unilever Haier Group Fujitsu Hitachi Amway For more information, visit ReputationInstitute.com, and follow us on LinkedIn and Twitter. RepTrak is a registered trademark of Reputation Institute Reputation Institute, all rights reserved. 6 Consumer goods sector boasts strong reputation in 2014: FMCG segment tops the reputation ranking
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