managing
reputation
DR BERND SCHMITT
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Brand Consultant and best Selling Author

brand protection is often viewed as a legal issue. Names or marks that function to identify a product are used as trademarks to protect the brand. In many countries, trademark and copyright law governs this protection. Legal brand protection creates a monopoly, which is usually unlimited in time as long as the product is sold. Trademark law prohibits another company from using the same or similar names, logos or marks if these brand identity elements are already in use and if such use would be likely to cause confusion in the marketplace. Legal brand protection is thus an attractive way of securing long-term competitive advantage.
However, a brand is, of course, much more than a name and a logo. Today's brand strategists say brands evoke distinct associations; they ascribe human personality traits to brands; they speak of "long-term relationships with customers" rather than transactional exchanges. Brands carry emotional attachments; brands are your neighbours, your colleagues and your friends. In short, brands have the potential of providing customers with a variety of pleasant, or unpleasant, experiences.
Given this new complex understanding of the brand, brand protection now has to extend far beyond the legal arena. Brand experiences can be damaged not only by "copycats" or counterfeiters so simply protecting brands from aggressive competitors is no longer sufficient.
Instead, companies must actively manage the brand-customer "relationship". Brand protection extends to the entire company. It has become a matter of managing the company's reputation in the eyes of its various stakeholders - including its customers, suppliers, trade partners and employees. Anything a company does or says can add to - or destroy - brand value.
Consider the Italian clothing group Benetton. In 2000, Benetton launched its Spring/Summer 2000 advertising campaign in Europe, America and Asia - "We, On Death Row." The campaign is the work of Italian photographer and advertising guru Oliviero Toscani who, for more than two years, visited death rows in several US prisons, photographing and interviewing condemned inmates.
The campaign is intended to be an innovative form of corporate communication, in the tradition of earlier Benetton campaigns focusing on war, Aids, discrimination and racism. A press release on the company's website (at www.benetton.com) said: "Leaving aside any social, political, judicial or moral consideration, this project aims at showing to the public the reality of capital punishment, so that no one around the world will consider the death penalty either as a distant problem or as news that occasionally appear on TV. Toscani's images aim at giving back a human face to the prisoners on death row."

A decent reputation helps to sell goods and services, recruit new talent and attract desirable business partners. Done poorly, it destroys shareholder value

Benetton backfire
Even for Benetton, it was a daring campaign and it appears to have backfired in some markets. In protest, victims' rights activists and family members of crime victims picketed Benetton's New York office. Jerry Della Femina, chairman and creative director of advertising agency Della Femina/Jerry and Partners, wrote a Wall Street Journal article criticising the campaign as tasteless and destructive of brand value. The campaign also caused the US retailer Sears Roebuck to cancel its contract with Benetton. This hit the company hard: Benetton had designed an exclusive clothing range for Sears intended to boost declining clothing sales in the US.
The consequences of the latest Benetton campaign underscore the need for companies to view brand protection broadly. To be sure, not many companies are as provocative as Benetton. However, all companies are increasingly held accountable and responsible for an assortment of actions by a variety of stakeholder groups. Consumer activism is not limited just to advertising messages. More and more, consumers are interested in anything related to the brand: the ingredients of its products; the company's history; the company's attitude and behaviour toward environmental issues; its work policy; and its stance on a range of other economic, social and political issues. Today's companies and their brands are being scrutinised as never before.
Even seemingly benign corporate actions can attract criticism. Nike, the world's biggest sportswear manufacturer, for example, has been supporting basketball culture in China by building and maintaining basketball courts in major cities. The courts themselves are decorated with its ubiquitous logo, so are the clothes worn by coaches and t-shirts, caps and other promotional items.
None of this sounds unusual until one considers that the price of a pair of Nike shoes is far beyond the reach of most Chinese consumers. Are Nike's activities in China really a community service? Do they simply represent an investment in a future market or are they perhaps a new form of corporate imperialism for manipulating consumers in an emerging market? When such questions are taken together with criticism once levelled at Nike for its alleged use of sweatshop labour in emerging markets, it is easy to see how quickly such an issue can explode into a real threat to a company.
Reputation management is thus a natural extension of brand management. Done well, reputation management can bring considerable benefit to a company. A decent reputation helps to sell goods and services, recruit new talent and attract desirable business partners. Done poorly, it destroys shareholder value. A bad reputation is an obstacle in selling to outlets and consumers, and in recruiting new talent.
Consequently, reputation management is quickly becoming a popular boardroom analysis and review topic. According to a survey of almost 600 chief executive officers and senior managers conducted by global public relations agency Hill & Knowlton and Chief Executive magazine, 43 per cent of respondents said that the ability to manage reputation would carry "a great deal of weight" in the choice of a successor.
Reputation management also plays a role in such tactical decisions as recruitment. Research indicates that many companies try to enhance their reputations by sending the right sales staff into the field. A company's human face can make all the difference to corporate reputation.

Many companies that have traditionally focused on the branding of their individual products have discovered the corporate brand as an essential new marketing initiative

Brand reputation management
To practice effective reputation management, managers need to consider five interrelated aspects. First, reputation management must be broadly conceived. Because almost anything may be viewed as a brand, all companies in all industries must consider reputation management. Over the last decade, the concept of branding has been gradually broadened from its origins in the consumer-packaged goods industry into many other forms of commercial - and even non-commercial - offers. Nowadays, everything is viewed as a brand, not just the cereal boxes in the supermarkets and the clothes in the designer boutiques. Examples include universities (Oxford, Harvard, Columbia), museums (the Guggenheim in New York and Bilbao, Spain), medical practices, nursing homes, TV stations and even people, living or dead (Virgin Group's Richard Branson, the late Princess Diana, British prime minister Tony Blair). Consequently, any organisation or individual needs to be concerned with reputation.
Furthermore, reputation management is relevant for both old and new brands - older established brands will be held to the same standards as newer trendy ones, and if their managers neglect corporate reputation they may find themselves out in the cold.
Second, modern corporations consider brands as intangible assets. Thus, reputation management must be viewed as a way to protect the long-term value of the brand. In many cases, the intangible value of brands exceeds the value of a corporation's tangible assets. Interbrand, the New York-based brand valuation consultants, have estimated the value of the Coca-Cola brand to be more than 95 per cent of all its corporate assets.
To be sure brand value depends on the nature of the product category and industry: it is higher for luxury goods than for utilities, for instance. Yet Interbrand also found that brand value is growing in practically every single industry. Therefore, brand reputation management must be conceived as an ongoing long-term undertaking; it is not to be confused with short-term crisis management.
Third, branding techniques can be found throughout the corporation. Of course, products are branded, but so are the promotional campaigns related to these products, and so in fact is the corporation as a whole. Indeed, many companies that have traditionally focused on the branding of their individual products have discovered the corporate brand as an essential new marketing initiative.
For example, the formerly faceless product-driven companies in the pharmaceutical industries have recently emerged with branded personalities as life sciences companies. The music-to-airlines group, Virgin or the online retailer, Amazon.com are examples of brands that cut across many different categories.
Because branding can apply to entire organisations, everybody in the organisation has a role to play in reputation management. To represent the brand in the right way, all employees need to know the brand and live it. In a wide variety of situations - when meeting customers, when communicating to the public and at trade shows and conferences, for example - employees are representing the corporate brand, and should thus be prepared to engage in behaviour that is consistent with it.
It follows that reputation management cannot be delegated to any single department or function. Inside the organisation, reputation management involves marketing,communications, public relations, various information technology functions and even the chairman's office. Outside, it involves corporate identity companies, PR operations and advertising agencies. In addition, companies ignore customer service at their peril.
The often-neglected "human interface" between the company and its customers can be enough to undo the best internal efforts at reputation management. It is critical to implement a unified reputation approach that covers all these aspects. Branding succeeds if it is coherent and consistent; the same applies to reputation management.
Finally, markets become real-time exchanges and conversations among consumers on the internet. Brand information - in all different forms and media - is available instantly and globally on the web. The internet empowers consumers, allowing them to post their views about a brand to a worldwide audience. Companies need to be able to deal with this new form of brand scrutiny, protect their brands and manage their reputation online. This requires effective management of the corporate website and links to other sites; selective presence on other websites; fast and adequate response to electronic inquiries; and the ability to deal with chat rooms and virtual communities.
Moreover, there are now numerous websites (epinions.com, feedbackdirect.com and eComplaints.com, for example) that organise public concerns and allow customers to express their opinions, make suggestions and post their complaints online. Neatly sorted into categories we all recognise from the big search engines, these websites allow customers very easily to convey their concerns to a broad audience.
These internet operations promise to help people make better decisions, but they also empower customers to shape corporate reputations. As one such web enterprise declares on its home page: "eComplaints.com is your chance to fight back. It's your chance to be heard by the company at fault and more importantly, by your fellow consumer". In the future, many companies may find it necessary to create and staff positions for online reputation management.
Reputation management is important in protecting the long-term value of a brand. It is not a cosmetic image management device, nor is it a mere strategy to sell more products. Reputation management speaks to the very heart of an organization. Just as it is difficult for an individual to put on a false face without being found out, so it is difficult for a company to espouse values that its actions do not support. On the web, it is easy to find out about a company's true nature.
Therefore, a company that is committed to providing "answers that matter" (the brand slogan of US pharmaceutical company Eli Lilly) needs to involve all its employees in providing relevant and vital answers about its activities. In Eli Lilly's case this means medicine, life sciences and health care to all the company's key constituents such as doctors, hospitals, insurers and regulators.
Similarly, a company that renames itself Clarica (formerly The Mutual Life Insurance Company of Canada), thus promising clarity in communications, needs to align the entire organisation and its personnel around such corporate positioning.
From an ethical perspective, reputation management thus requires a consideration of values and competencies that are shared throughout the organisation, and is best practiced with reflection and honesty.

Just as it is difficult for an individual to put on a false face without being found out, so it is difficult for a company to espouse values that its actions do not support

turning point

"I hear and I forget. I see and I remember. I experience and I understand."

Confucius, Legendary Chinese Philosopher

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Dr Bernd Schmitt is the father of Experiential Marketing, renowned brand consultant, a best-selling author, director of Center on Global Brand Management and professor at Columbia Business School, NY. He has associated with Innovative Media for consulting in the Asia Pacific region including India. He may be reached at Schmitt@imgyan.com.

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