A HIDDEN HARMONY Documenting the Connection between Brand and Corporate Reputation A hidden connection is stronger than an obvious one, taught the Greek philosopher Heraclitus. The great painter Pablo Picasso asserted, the hidden harmony is better than the obvious. New analysis of data from 50,000 consumers has documented a powerful hidden harmony in the business world: That between brand and corporate reputation. Most corporate leaders today regard brand and corporate reputation as two different beasts. Marketing holds sway over the brand budget, the C-suite controls corporate reputation, and the two usually fail to come together in a common strategy. The inadequacy of this approach has become apparent thanks to new research analysis undertaken jointly by the Council of Public Relations Firms and Harris Interactive, a leading research-based consultancy specializing in brand and corporate reputation measurement and modeling. As the analysis suggests, companies would achieve better results by adopting a new paradigm that takes product brand efforts and corporate reputation efforts out of their silos and deploys them jointly in pursuit of common objectives such as purchase consideration and recommendation. Studying Brand and Reputation in Three Industries Using results from the 2012 Harris Poll Equitrend (EQ ) survey, which measures brand equity and associated attributes of over 1,000 product brands, and the 2012 Harris Poll Reputation Quotient (RQ ) survey, which measures the corporate reputation of nearly 100 companies, we applied statistical methods to analyze how the convergence of brand equity and corporate reputation drove purchase consideration and recommendation in three industries automotive, B2B, and food and beverage. 1 Was it brand, reputation, or a combination of the two that most moved the more than 50,000 consumers queried in the studies to act? Figure 1 conveys the specific brand and reputational attributes measured in the EQ and RQ studies, while Appendix 1 gives a fuller description of the EQ and RQ methodologies. 1 The Council chose these industries given the large number of companies measured in RQ and the equally large number of product brands associated with these companies that were measured in EQ. Copyright 2012 Council of PR Firms/Harris Interactive, A Hidden Harmony. 1
Figure 1. EQ and RQ measure the same behavioral outcomes EQ Attributes (Brand/Product Focused) See the brand everywhere Overall brand quality Fits how I see myself Brand is exciting Brand outperforms my expectations Leader in its category Bright future Trust the brand to fulfill its promises Purchase Consideration Recommendation RQ Attributes (Company Focused) Emotional Appeal Takes advantage of Record of profitability Good investment Innovation Supports good causes Rewards employees fairly Environmentally responsible Outperforms competition High value Clear vision Has good employees Strong growth potential High quality Stands behind products and services Excellent leadership Good company to work for Community responsibility We also sought to identify the specific combination of brand and reputation attributes that most drove purchase consideration and recommendation in each industry. We analyzed the EQ and RQ datasets in three ways: First, we identified what attributes of brand and reputation most influenced consumers across industries to recommend products and consider them for purchase. Next, looking at specific industries, we identified attributes that influenced purchase consideration and recommendation more in absolute terms as compared with other industries. Finally, going industry by industry, we identified specific attributes that influenced consumer behavior in that industry more dramatically than they did among industries overall. Most modeling only incorporates one mode of analysis. By bringing these three analytic techniques together, we could discern how managers within each industry category might best encourage consumers to consider their products for purchase and recommend them to others (Figure 2). 2
Figure 2. Integrated analysis and modeling Attributes of high relative impact Attributes with high impact relative to other categories Attributes with high impact relative to baseline Drivers of purchase consideration Drivers of recommendation The Results In each industry, we found that a unique and combined set of product brand and reputation attributes maximized both purchase consideration and recommendation. Positive brand equity and positive corporate reputation individually drove greater purchase consideration and recommendation, but combining the two produced even stronger effects. For B2B companies and their product brands, brand equity and corporate reputation played an equal role in driving purchase consideration and recommendation. For automotive companies and their brands, corporate reputation influenced consumer behavior slightly more than brand equity, having a greater effect on recommendation than on purchase consideration. In the food and beverage category, reputation mattered more than brand equity, impacting recommendation more strongly than purchase consideration. Positive brand equity and positive Let s take a closer look at how brand and reputation corporate reputation individually drove worked together in one industry, automotive. As the greater purchase consideration and analysis showed, brand equity attributes such as fits with recommendation, but combining the how I think of myself, brand has an excitement surrounding two produced even stronger effects. it, and trust the brand to fulfill its promises proved most important in generating purchase consideration when coupled with the reputational attributes like rewards employees fairly, offers high quality, and offers that are a good value for the money. Chief drivers of recommendation likewise spanned both brand and reputation, including brand attributes such as fits with how I think of myself and this brand has a bright future as well as reputational attributes like has excellent leadership and has good employees. 3
Different combinations of the specific brand and reputational attributes drove consumer behavior in the other two industries. Appendix 2 lists the most important brand and reputational drivers of purchase consideration and recommendation for the three industries. Appendix 3 shows the overall weight of brand vs. reputation on drivers. Toward A More Integrated Approach Our research does not offer a paint-by-numbers formula that an individual company can adopt to achieve greater purchase consideration or recommendation. What it does offer is powerful quantitative evidence that a traditional silo-ed approach to product brand and corporate reputation management and communication will not drive a business forward most effectively. Harris Interactive Executive Vice President Robert Fronk explains: Given the incredibly large number of respondents we had to work with, and the number of companies and brands we could include in the analysis, the impact levels we see and the validation of the drivers unique to each industry make this a valuable and important research analysis. We believe that this relationship carries forth to all the industries that were included in the EQ and RQ studies. Individual companies will need to measure and analyze their unique product brand and corporate reputation drivers to find their maximized model. Marketing and communication practitioners need to rethink their approaches and processes when it comes to serving their companies and clients. Marketers might profitably think of themselves as operating in the corporate reputation business, while corporate communicators might think of themselves as operating more deeply in the product marketing business. In particular, leaders on both sides of the divide should do the following: Address reputation more strategically. In forming marketing strategies, leaders should consider both brand building and reputation together. Leaders have long understood the importance of cultivating a strong corporate reputation. Yet all too often, Chief Marketing Officers and others regard corporate reputation in a limited sense, doing what it takes to prevent damaging crises and to recover from crises once they have occurred, but not treating it as a key marketing lever and funding it commensurately. This needs to change. Address neglected areas of reputation management. In addressing reputation more strategically, leaders can venture into relatively uncharted areas of reputation. For instance, although many companies have deployed employee communications programs, employees still seem to go underappreciated as a marketing lever, affording an important opportunity to leaders who think across the brand-reputation divide. Pursue research across the brand-reputation divide. Currently, most companies run separate loyalty, brand, and reputation studies without linking the survey content. Given the joint importance of brand and reputation, companies would gain better, more actionable research results by studying the two together. Allocate more dollars to corporate reputation. Currently most executives believe that brand drives purchase and reputation drives advocacy or permission, when in reality reputation drives purchase just as strongly than brand if not more so. Studies like this one prove that reputation will actually drive sales, and it can show the specific dimensions of reputation that are worth developing. 4
Pay more attention to reputation in your day-to-day conduct. Senior leaders carry an especially great reputational burden these days, making awareness of communications strategy a much more important part of their jobs. Monitor the brand s behavior, not merely its communications. Stewards of brand equity (i.e. marketers and their agency partners) can borrow a page from the corporate reputation playbook and watch carefully what brands actually do. In an environment defined by social media and transparency, with consumers purchasing from brands based on shared values, actions speak just as loud, if not louder, than words. Transparency of information and the proliferation of communications channels enable today s consumers to learn about matters that formerly would have been kept secret. Numerous case studies suggest that brand management alone can no longer move the needle for companies among consumers. At one famous global technology company, for instance, leadership and ethical issues have affected reputation, making the marketing job more difficult, no matter how many dollars are put into brand management. As our research suggests, CMOs who manage brands do indeed have their hands tied unless and until they can also put a strong corporate reputation in front of consumers. Mark Pritchard, Procter and Gamble s global marketing and brand building officer, recently noted, Companies are judged on the basis of whether they are a good company or not, whether their values are in the right places are they doing it in a responsible way for the environment, for the community, do they treat their employees well. Part of the purchase decision is based on the quality of the company. That s a big part of my job to enhance the image and the trustworthiness of our company, ensure people are not just familiar but feel favourable towards it. 2 Summing Up Brand and reputation building work best in harmony with one another a harmony all the more powerful, potentially, because it is largely invisible (even, as we have seen, to corporate leaders). But documenting and understanding this harmony is not enough. Clients and firms also have to do their part to cultivate and sustain it. A beautiful violin solo can move its audience, and so can a pianist striking all of the chords with a deft touch. When they share the same concert hall and are asked to play simultaneously, great things happen. But their notes, movements, and timing need to be integrated and synchronized. Likewise, marketers and communicators were once thought to play in different concert halls. Today, no matter the company brand architecture, companies need a corporate sheet music that allows for variation of intent, variation of stakeholder, and variation of circumstance, but that still yields a pitch perfect symphony that builds business value and positive public image. Let s work together to help companies weave together brand and reputation. By crossing traditional disciplinary boundaries, we can allow organizations to create a thing of beauty and elicit what all leaders want: the heartfelt applause of all stakeholders. 2 http://www.holmesreport.com/people-info/12484/the-pr-industry-needs-to-come-up-with-big-ideas.aspx 5
Appendix 1: The EQ and RQ Methodologies EquiTrend (EQ ) Methodology 2012 marks the eighth wave of the enhanced EquiTrend program. The enhanced program builds on 22 years of normative measurements of over 1,500 brands in 127 categories, while allowing for more comprehensive, diagnostic results. A sample of 38,500 U.S. consumers ages 15 and over were surveyed online by Harris Interactive in January and February 2012 and the survey took an average of 40 minutes to complete. The sample was from the Harris Interactive online panel of respondents, one of the largest, fully owned and managed panels comprised of respondents who have double-opted in to be randomly invited by Harris Interactive to take part in online surveys. The total number of brands rated was 1,523. Each respondent was asked to rate a total of 40 brands, which were randomly selected brands. Each brand received approximately 1,000 ratings. Data were weighted to be representative of the entire U.S. population of consumers ages 15 and over on the basis of age by sex, education, race/ethnicity, region, income, and data from respondents ages 18 and over were also weighted for their propensity to be online. The survey concluded with questions regarding Internet usage and demographics. Reputation Quotient (RQ ) Methodology Nominations Section Summary of Specifications Nomination Interviewing Dates Number of Nomination Interviews Method of Interviewing Number of Most Visible Companies Identified United States October 18th October 20th October 29th October 31st 4,594 Online 60 Who Rates the Most Visible Companies in the United States? The RQ Ratings phase takes place among the general public. As part of the ratings section, respondents are randomly assigned to rate two of the companies with which they are very or somewhat familiar. After the first company rating is completed, the respondent is given the option to rate the second company. Each interview lasts approximately 17 minutes. Outlined in the table below is the method of data collection for this phase, as well as the dates of interview, total number of interviews, number of companies measured, and average number of ratings per company. RQ Ratings Section Summary of Specifications Rating Interviewing Dates Number of Rating Interviews Method of Interviewing Number of Companies Measured Average Number of Ratings per Company United States December 2nd December 19th 12,961 Online 74 300 6
Appendix 2: Brand and Reputational Drivers of Purchase Consideration and Recommendation for the Auto, B2B, and Food and Beverage Industries Drivers of Purchase Consideration Drivers of Recommendation Brand Reputation Brand Reputation Auto Fits with how I think of myself Brand has an excitement surrounding it Trust the brand to fulfill its promises I see this brand everywhere I go Emotional appeal trust admiration and respect Rewards its employees fairly Offers high quality Offers products and services that are a good value for the money This brand is the leader within its category Brand has an excitement surrounding it Fits with how I see myself This brand has a bright future Offers high quality Has good employees Has excellent leadership Emotional appeal trust, admiration, respect Looks like a low risk investment B2B High performance compared to my expectations I see this brand everywhere I go Trust the brand to fulfill its promises Offers high quality Emotional appeal trust admiration and respect Recognizes and takes advantage of market Rewards its employees fairly Has excellent leadership Offers products and services that are a good value for the money Fits with how I see myself This brand is a leader within its category Brand has an excitement surrounding it Develops innovative Recognizes and takes advantage of market Emotional appeal trust, respect, and admiration Looks like a low risk investment Looks like a good company to work for Food and Beverage Overall quality Trust the brand to fulfill its promises Brand is a leader within its category Fits with how I see myself Looks like a company with strong growth prospects Looks like a good company to work for Emotional appeal trust, respect, admiration Recognizes and takes advantage of market Outperforms the competition Fits with how I see myself Overall quality Brand has an excitement surrounding it I see this brand everywhere I go Develops innovative Emotional appeal trust, respect, and admiration Looks like a company with strong growth prospects Looks like a good company to work for Recognizes and takes advantage of market 7
Appendix 3: Overall Weight of Brand vs. Reputation on Drivers Auto B2B Food and Beverage Purchase Driven slightly higher by reputation Recommendation Reputation has even greater influence Purchase Brand and reputation have equal impact Recommendation Reputation has greater influence Purchase Reputation has greater influence than brand Recommendation Reputation has significantly greater influence About the Council of Public Relations Firms The Council of Public Relations Firms the U.S. trade association, represents America s leading public relations firms. Its members are the premier global, mid-size, regional and specialty firms across every discipline and practice area. The Council s mission is to advocate for and advance the business of public relations firms by building the market and the value of firms as strategic business partners. For more information about the Council, visit www.prfirms.org. Phone: 877-773-4767 Twitter: @councilprfirms 8 Copyright 2012 Council of PR Firms/Harris Interactive, A Hidden Harmony.