Tuesday, July 22, 2014

The New Brand Management – Corporate Reputation

Today, brand-building is often less about commercialization tactics, and more about building corporate and brand reputation and organizational integrity.

Corporate branding is moving beyond its concern with consumers alone, to become increasingly concerned with inspiring confidence among investors, creating a positive work environment for employees, and protecting the communities and the environment within which an enterprise operates. This shift to a brand strategy of social responsibility is a brand management strategy for attracting and retaining customers by building corporate reputation through the practice of corporate social responsibility.

Corporate responsibility is where brand management and corporate strategy cross-over each other, and become indistinguishable. Corporate responsibility refers to a corporate strategy that asserts that financial performance is connected in today’s global world to responsible business practices that address the impact of business on society and the environment. Thus, in socially responsible businesses, business decisions are connected to their ethical, social, and environmental impacts. In this sense corporate social responsibility, is the sine qua non of brand strategies, and the brand strategy du jour.

GlaxoSmithKline, the $35 billion British pharmaceutical giant, publishes a traditional financial and managerial annual report, and a separate annual report on their social responsibility, entitled Corporate Social Responsibility. This annual report on social responsibility goes a long way toward showing how they are fulfilling their corporate mission of “… improving the quality of human life….”

Many financial services firms have come forth since the dot com bust at the end of the 1990s in support of such social responsibility practices because they enhance stakeholder relations generally and have a real impact on the market capitalization of those companies who are consistently serious in their endeavors. Recently published studies suggest that corporate responsibility practices greatly improve morale among employees, corporate reputation, and the perception of the brand.

Thus, being socially responsible is becoming the expected behavior for famous brand companies. This behavior, assuming social and cultural responsibility, marks a rite of passage into a new stage of brand maturity.

How does an enterprise deploy a corporate social responsibility brand strategy? Companies like GSK in the U.K. and Unilever in the Netherlands monitor their global environmental and social impacts, report on their annual progress, and try to demonstrate how responsible they are by improving their social responsibility metrics. GSK annually reports their progress against metrics such as: (i) the adoption of corporate responsibility principles, (ii) training and certifying their managers in compliance with their Code of Conduct, (iii) the value of their product donation activities and community investments, and (iv) their reductions in greenhouse gas emissions.

-Others, enhance their brand under a social responsibility brand strategy by obtaining certification from impartial international bodies regarding their products or services and their enterprise character. For example, Fair Trade coffee products obtain their certifications by complying with a set of best trade practices such as paying a “living wage” irrespective of commodity market prices and donating a certain percentage of revenues to third-world community building initiatives.

Some, who have been accused or found guilty of egregious business practices, partner with non-profits or environmental watchdogs to establish programs that rectify environmental wrong-doing. Unilever was cited during the mid-1990s by environmental groups for over-fishing the seas. Unilever, realizing the wisdom of properly managing ocean fishing, quickly partnered with the World Wide Fund to form a governing body to set and monitor fishing quotas in certain heavily fished areas, by which they now comply.

Most practitioners of corporate social responsibility, begin by managing their impacts closest to home or wherever they have their greatest impact. Consider De Beers, the world‘s largest diamond mining operation, and their swift and responsible response to the upsurge in terrorism and terrorist financing by “blood diamonds,” condemning them and working to keep them out of the market. While De Beers was already known for “branding” their diamonds as an anti-commodification brand strategy, it gave a socially responsibility finish and raison d’etre to their ongoing activities which made them a more trusted company.

Corporate social responsibility reflects a recognition by an enterprise of its interdependence with its surrounding world. And while it certainly reinforces brand preferences for its products and services, and is increasingly a precondition for profitable growth, it is first and foremost an expression of corporate maturity. Branded enterprises need to be well-known, but they also must be well regarded to win in the marketplace.

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