Unfortunately for corporations perceived that way -- even when the entity in question has the name of its main consumer brand (à la Coca-Cola) -- their reputations can have a direct effect on product consideration. Conversely, the way consumers experience a company's products can have a direct effect on a company's corporate-brand reputation.
Market research firm CoreBrand says the bottom line is that when a corporation's favorability among consumers is wanting, so are its returns. Low favorability means lower value, and that includes stock value. A fourth-quarter update of the firm's most recent study of the least- and most-respected corporate brands takes a look at this issue, focusing on consumer staples, energy, finance, health care, technology and telecom, which the firm says are the categories with the strongest influence on the general population.
It surveyed business decision-makers, and included data from its 22-year quantitative Corporate Brand Index covering companies that have been traded for at least five years, and tracked by the firm for at least five years.
“They are people who are avid about corporate brands,” says Jim Gregory, CEO of CoreBrand. “They read a lot and pay attention to news. They look for good investments. They care about brands and best practices for building brands. These are high-end, well-educated consumers.” He tells Marketing Daily that the business investor cohort is relevant both as a barometer of investor behavior and of consumer perception. "They share with other business groups and with consumers and it does make a difference. We find across all the companies we track a 5% to 7% impact on market cap based on corporate brand.
The study found that over two-thirds of the most respected brands come from consumer staples: beverages, food, tobacco, and toiletries/household products. Companies at the bottom of the list tend to be viewed as more corporate and consumerist and are also frequently in the press in a bad way for business practices, philosophies, or financial performance.
The top five in the category are PepsiCo and Coca-Cola, Hershey, Kellogg and Campbell's Soup. The bottom are Altria, ConAgra, Archer Daniels Midland, Supervalu and Unilever, in descending order. "It all goes back to helping CEOs understand that brands have value and can be managed and leveraged and evaluated," says Gregory. "Unilever should be doing much better as a consumer staples company."
In health care, the top brands tend to be pharmaceutical brands with a long history (Johnson & Johnson, Lilly, Teva, and Pfizer among them), while the bottom ones are biotech brands like Amgen, Genzyme, Novartis, and Medtronic. Similarly, in technology, the consumer-brand companies like IBM, Apple, Microsoft, Yahoo and Texas Instruments (in that order) led, while back-end business tech companies most people haven't heard of were on the bottom.
"We say you always should stay focused on product branding first; that's where the majority of efforts should go. About 80% of stock value can be explained through that side of the equation. But the corporate brand also plays a role," says Gregory, who adds that clear communication and vision for the company is critical. "The CEO has to have a clear vision and can articulate it well. It's also how you treat employees, how you treat investors and are you forthcoming in terms of annual reports."