The Importance of Managing Brand Equity and Company Reputation Well
There is no denying the value of a good brand and corporate reputation.
When we think back on the BP oil spill in the Gulf of Mexico on April 20th 2010, it took an agonizing 87 days for the leaking well to be capped. By then over 200 million gallons of oil had escaped into the Gulf, causing untold damage to the environment, coastal communities and shareholder confidence.
While BP paid over 20 billion dollars to claimants for their negligence in managing the well blow-out, the share price has not recovered from the BP655.40 it stood at just prior to the disaster. On July 2nd, 2014 the share price stood at BP518.85. The cost to BP ‘s reputation and brand is difficult to estimate, but it is clear it is factored into the current share price.
Looking at the food industry, well-known companies such as Unilever and Nestle are feeling tremendous pressure from a wide range of stakeholders on their role in procuring palm oil that comes from producers who are chopping down rainforests and creating monocultures.
Products have impacts
As we have seen from these two examples, brands and reputations are built on a range of activities. In the past slick advertising, public relations, CSR reports and product performance was what shaped consumer and stakeholder perceptions. Much of what went on behind the scenes such as where ingredients were purchased, what labor was employed and farming practices implemented remained hidden and did not factor into the buying decision.
With the arrival of smart phones and the ubiquitous nature of the internet, how people evaluate both brands and companies, has changed dramatically. People want to know a lot more about what their favorite brands or companies stand for. They want to be associated with products and entities that reflect positive values such as protecting the environment and ethical sourcing. This is particularly the case for Millenials who are entering the workforce in increasing numbers.
A good example of a company that understands this trend is Stoneyfield Farms who have an interactive map on their web site which shows where all the ingredients in their yogurt comes from.
New risks to consider
Custodians of brand equity and corporate reputation need to be aware of an increasing number of new risk factors that can be linked to either. These could include such things as packaging choice, labor practices, water and land utilization, waste management and energy supplies to mention just a few. Its all about understanding your supply chains!
For the most part, producers and produce retailers have a vague understand of the risks they need to manage in order to protect their brand(s)/reputation. This is not because they choose to do so, but rather because there are so many other competing priorities.
Building profits and a competitive advantage
Those companies that understand how best to manage risk will be the winners in the marketplace in future.
This means setting aside time to clearly identify those risks that your business currently faces as well as those you have no idea exist today.
Once you have a comprehensive list of risk factors that you need to manage, the next step is to develop a strategy to mitigate the impact of these risks on your business. If lack of time is an obstacle not to do so, FreshXperts would like to help you do so.
Latest posts by Andrew Southwood (see all)
- Unlocking Value in the Fresh Produce Industry - August 4, 2015
- Capturing Consumer Loyalty with Meaningful Brands - April 1, 2015
- Redefining Company and Brand Value - November 3, 2014
- The Importance of Managing Brand Equity and Company Reputation Well - July 22, 2014