Reputation vs. Brand

 

For many years companies have made the mistake of confusing their brands’ reputation with that of the organization.  As companies continue to grow in size and invest millions in R&D, it is fundamental that they begin to make a clear distinction between the two in order to be a major player in a global market.

 

Corporate scandals (Enron), white-collar crimes (Bernie Madoff) and executive payouts (Stan O’Neal) have truly had an impact on the way consumers purchase products and the way investors choose to invest in a company.  These types of activities have put corporate reputation at the very top of every CEOs agenda list.  With the current recession, executives are facing pressure from the media, politicians and the public to place a greater emphasis on company ethics and morale.  A good reputation will enable a company to increase revenue, productivity and attract and retain top talent.

 

But many executives speak of corporate and brand reputation as if they are the same.  This thought process alone can be costly to an organization.  The brand for example should be geared toward customers.  A brand should take into account a customer’s likes and dislikes and should have a unique differentiation that separates it from all of its competitors.  A reputation on the other hand should be company focused.  The company should focus on all the goodwill that it does for its employees, shareholders and stakeholders and for its customers and local communities.

 

A good reputation does not necessarily equal a good brand.  There are many companies that have faced lawsuits due to unjust practices in the workplace and yet have one of the most affordable and quality products on the shelf.  At the same time the role may be reversed and the reputation may be stronger than the brand.  Companies like Berkshire Hathaway, General Electric and Cisco have done a phenomenal job of displaying both corporate and brand reputation.  These companies however are the anomaly to the rule.  Better portraits to status quo are companies like Enron and WorldCom who were once global powerhouses until their indignities were brought to life.  Let’s take Nike for example, one of the worlds most recognized and distinguished brands that has always been synonymous with quality manufacturing and great athletes. When they were accused of running a sweatshop in low-cost countries they endured quite a bit of scrutiny from the media and public.  The company was forced to spend millions of dollars doing damage control to rebuild their reputation.

 

Ultimately, a company needs to make sure that they do not make the mistake of confusing their reputation and their brand.  At this point in time a company can not afford to make such a huge mistake with the multiple channels of sending news out to the world.  Doing so can cost the company billions in revenue, customer loyalty and shareholder confidence. 

 

 

 

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~ by brandonbrowe on March 2, 2009.