Ipsos Corporate Reputation

The ins-and-outs of equity flow

Equity flow is an important way to leverage value from a strong reputation.
It can be used to build business when market opportunities arise, or as a defence when reputation turbulence hits.
Above all, the management of equity flow should be seen as a strategic process that brings together people across the marketing, communications and leadership spectrum.

We live in a world where corporate behaviour has never been under greater scrutiny and where judgement of a company can be transmitted around the world at a touch of a button. This reality presents both a threat and an opportunity from a corporate perspective.

Companies that are seen to do the right thing and imbue their corporate brand with positive equity can harness that very same equity to endorse the products they deliver. Indeed, equity flow can work both ways and a corporate brand can also receive equity from its product brands as long as they are meeting or exceeding customer needs.

Equity flow is therefore the extent to which stakeholders understand and value the connection between the corporate brand and subsidiary or product brands.

While nearly all of our Reputation Council members (80%) find equity flow to be important, the reasons for this importance are nearly as varied as the number of companies represented in the Council.

However, a careful analysis of the responses points to three main concepts when it comes to equity flow:

 

The Golden Thread – equity that entwines itself between the corporate and product brands. This equity can flow up from the product brands as well as flowing down from the corporate brand. Reputation Council members who espouse this concept tend to come from companies with a very strong and visible corporate mission. Achieving a golden thread requires strong alignment between corporate brand communications and product marketing.

"Given the interdependence, I think that you want to manage them all in the right way. There should be a golden thread that runs through them and that reflects your values, even if they serve different parts of the market with slightly different propositions or price points."
"WE’RE A BRAND THAT HAS A LOT OF BRANDS. OUR PURPOSE IS TO CONTRIBUTE TO HEALTHIER LIFESTYLES, TO A BETTER FUTURE. ALL OF OUR BRANDS NEED TO POINT TO THIS BESIDES BEING DELICIOUS, CLOSE TO OUR CONSUMER, MAINTAIN A FUNCTIONAL GOAL… THEY NEED TO BE COMPLETELY ALIGNED TO THE ‘MEGA’ BRAND."

Seal of Approval – the corporate brand acts as a quality mark for sub-brands or sub-categories. This concept is similar to the golden thread, but is specifically focused on leveraging equity around the key themes of quality and reliability. The seal of approval is particularly useful when expanding into new categories or geographies. In fact, some companies that may not display their corporate brand prominently in their home markets will place the corporate brand front and centre on products in developing markets, in order to draw upon the reputation for quality and reliability that is associated with products from developed markets.

"IN A CATEGORY LIKE OURS, WHERE TRUST IS VERY IMPORTANT, WE WANT TO BE IN A SITUATION OF PEOPLE GOING TO OUR PRODUCT BECAUSE IT CAN BE TRUSTED. YOU SHOULD NOT HAVE TO START FROM SCRATCH, BUILD UP THAT TRUST FROM ZERO EACH TIME. HAVING THE HALO OF THE BRAND IS VERY IMPORTANT."

Transparency Agenda – in last year’s Reputation Council report, members were urging their organisations to be transparent in order to meet the information needs of stakeholders in the interest of promoting open and honest communications. This transparency agenda unfolds when discussing equity flow as well. Stakeholders want to know more about the companies they interact with and part of this understanding is knowing all of the brands and categories that are present.

"WITH THE WORLD BECOMING A GLOBAL VILLAGE, CONSUMERS — AS NEVER BEFORE — CARE ABOUT THE CORPORATION BEHIND THE PRODUCT.

THEY DO NOT SEPARATE THEIR OPINIONS ABOUT THE COMPANY FROM THEIR OPINIONS OF THAT COMPANY’S PRODUCTS OR SERVICES.

THIS BLENDING OF CORPORATE AND PRODUCT/SERVICE OPINIONS IS DUE TO INCREASING CORPORATE TRANSPARENCY, WHICH GIVES STAKEHOLDERS A DEEPER AND CLEARER VIEW INTO A CORPORATION’S ACTUAL BEHAVIOUR AND ACTUAL PERFORMANCE."
"EXPECTATIONS OF TRANSPARENCY FOR ANY BRAND OR SERVICE PEOPLE BUY IS INCREASING. WE ARE EXPERIENCING A GREATER LEVEL OF EXPECTATIONS WITH REGARD TO HOW PRODUCTS ARE MADE, INGREDIENTS AND VALUES OF THE CORPORATE PARENT."

Other applications of equity flow – entering new markets can be challenging for companies on a number of levels, and establishing equity flow can ease entry among both regulators and consumers. Many companies who do not prominently display their corporate brand on product brands within their home market may do so in new/developing markets in order to provide a seal of approval to their product brands. Knowing that a global company stands behind a brand gives regulators and consumers the confidence that products are of high quality.

"WE KNOW THAT THERE IS DEFINITE COMMERCIAL BENEFIT FROM OUR REPUTATION, PARTICULARLY IN EMERGING MARKETS… THAT THEN FEEDS INTO BUYING SPECIFIC CONSUMER PRODUCTS."

Council members are divided on the effects of equity flow in crisis management situations. Some members worry that strong equity flow could have an adverse impact during a crisis, as brands that may have escaped negativity could be drawn in or contaminated. However, other members argue that a strong corporate brand can help a product brand recover from a crisis more quickly and that a broader awareness of a company’s categories helps to insulate the company as a whole from isolated incidents.

"WHEN THERE ARE INCIDENTS THAT OCCUR IN ONE PART OF THE BUSINESS OR ANOTHER, THEN OF COURSE YOU WISH THAT NOBODY KNEW, BUT YOU CAN’T HAVE YOUR CAKE AND EAT IT TOO. AGAIN THE UPSIDE WITH STAKEHOLDERS IS BETTER THAN THE DOWNSIDE."
"EVERY TIME THIS ASSOCIATION BETWEEN THE CORPORATE BRAND AND THE SUBSIDIARY BRANDS IS STRONG, IT IS IMPORTANT TO STRESS IT. INDEED, IN OUR CASE THIS ASSOCIATION HAS HELPED SUPPORT LOCAL BRANDS DURING THE CRISIS PERIOD. THE GOOD REPUTATION OF THE HOLDING COMPANY SUPPORTS AND INCREASES THE REPUTATION OF ALL ITS BRANDS."

For many companies, one of the roles of the corporate brand is to carry the company’s sustainability message. The sustainability message has more impact, though, if there is strong equity flow – otherwise the benefit for the product brands is minimal.

"IT IS ESSENTIAL THAT WE ALWAYS WORK ACCORDING TO OUR BRAND VALUES. EVERYTHING IS ABOUT CREDIBILITY AND TRUST. FOR EXAMPLE, SUSTAINABILITY IS A BRAND VALUE BENEFITING OUR CORPORATE BRAND. THEN WE NEED TO WORK ACCORDING TO THIS WHEN WE SET UP OUR PRODUCTS. THE PRODUCTS HAVE A POSITIVE IMPACT ON THE CORPORATE BRAND AND VICE VERSA."

Methodology: 127 interviews conducted with Reputation Council members between April and August 2017.

Final thoughts

Equity flow is important across companies and industries. The way that importance is gauged varies by company and industry. The concepts we have identified should provide corporate communicators with a way to understand their own equity situation, helping facilitate discussions with internal stakeholders. The benefits we have identified can provide communicators with avenues for improving or directing their equity flow, leading to improved brand and business performance.

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The Reputation Council Report 2020: Full Report

Welcome to the latest edition from the Ipsos Reputation Council.

Our fourteenth sitting involves 150 senior communicators from 19 countries - making this a truly international view.

In this report, our Council members explore the newest thinking and practice in corporate reputation management and tell us how they are responding to a changing communications landscape. In a world of constant disruption there has never been a greater need for companies to actively engage with their stakeholders and wider civil society. For many, issues such as climate change, sustainability and social cohesion are no longer climbing the corporate agenda - they have reached its summit.

Indeed, it seems that even ‘hard-headed’ stakeholders such as investors no longer assess the reputation and investment appeal of a company solely through key financial ratios. They want to see evidence of a company’s broader role in society, not least because it is seen as an essential part of any sustainable business model.

We therefore took this opportunity to explore the degree to which Council members felt that the escalation in the importance of sustainability was becoming more pervasive in the corporate environment. We also asked them to highlight industries that were under the sustainability spotlight the most – as well as examples of companies that stood out as being at the cutting edge of best practice.

Many Council members asked us to include a section on communications planning in this year’s report and we were happy to oblige. Our article ‘Communications planning in a disruptive environment’ explores the major elements of the planning process, including timing, key inputs, the degree of distinction between internal and external communications and major challenges the communicator faces – now and in the future.

Part of communications planning is of course setting goals, and the management maxim that if you can’t measure it you can’t manage it, which quickly leads us to the topic of data. We were not only interested in the types of data sources Council members used, but also the way in which they integrated their data sources to provide strategic reputation insights.

We also wanted to understand the range of stakeholders Council members engaged with – if they prioritised distinctive groups, created tailored messaging and whether they were specifically targeting social media influencers: and if so, what techniques they used.

Finally, we decided to retain our popular quick-fire section from last year’s report. We asked Council members questions on a variety of subjects, such as the role businesses play, relative to the government, in fixing society’s problems and whether fake news and disinformation pose a material threat to business.

Our thanks to all members for participating in our fourteenth sitting of the Reputation Council report. We hope you enjoy this edition and please get in touch if you would like to discuss any of the issues we’ve covered, or if you have any questions about your own communications challenges.

CLICK HERE TO DOWNLOAD THE REPORT

 
Milorad Ajder
Global Service Line Leader
Corporate Reputation
milorad.ajder@ipsos.com

The Reputation Council Report 2018: Full Report

Welcome to the latest briefing from the Ipsos Reputation Council.

This – our thirteenth sitting – has been the biggest and most international yet, involving 154 senior communicators from 20 countries.

As Paul Polman, CEO of Unilever, once said: “reputation has a habit of arriving on foot and departing on horseback”. In the past year, a welter of high-profile reputation scandals affecting businesses, their leaders and even whole industry sectors has, once again, focused our minds on the risks and rewards of this powerful but potentially volatile asset.

Some of these scandals have posed a genuine threat to companies’ continued survival or licence to operate. Others have fizzled out. In this edition, we examine how Reputation Council members distinguish between issues which might blow up into a genuine reputation crisis, and others that are just day-to-day turbulence. What indicators or early warning systems can communicators draw on, to help them build resilience?

The technology sector has been wrestling with some unprecedented reputation issues recently. Concerns around privacy, data leaks, advertising practices, AI and automation have come together to create the phenomenon of ‘techlash’. We talk to Council members about the implications for their own businesses and the lessons that communicators can learn from the way in which the technology sector is responding to techlash.

We’re also beginning to see greater scrutiny of the role that CEOs should play in external communications, against a backdrop of issues such as pay ratio reporting, gender inequality, shrinking CEO tenures and the ‘celebrity leader’. In this edition, we explore Council members’ playbook for CEO-led communications, and look at how the CCO can ensure that these communications build, rather than destroy, reputation value.

The opportunities and challenges that come with communicating in a global context is a theme we’ve examined in past editions. In this sitting, we ask Council members how they strike the right balance between global and local messaging and narratives, and how they keep a finger on the pulse of their reputation (or reputations) around the world.

Lastly, we’ve introduced some new, ‘quickfire’ sections, in which we analyse Council members’ views on a number of contentious, topical talking points, such as the death of CSR, the distraction posed by social media, the need to pick a side in a polarising society, and whether consumers will overlook poor corporate behaviour if the price is right

I hope you enjoy this edition of the Reputation Council report. Please do get in touch if you’d like to find out more about any of the issues covered or discuss how they might affect your own business.

Milorad Ajder
Global Service Line Leader
Corporate Reputation
milorad.ajder@ipsos.com

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