Corporate Image
Related Terms: Brand Equity
"Corporate image" was once advertising jargon but is today a common phrase
referring to a company's reputation. The "image" is what the public is supposed
to see when the corporation is mentioned. The ordinary man and woman on the
street usually have a wry view of public relations, advertising, hype, hoopla, and
therefore also of corporate imageand this often for good reasons. But a good
corporate image is a genuine asset; it translates into dollars at the counter and
higher stock valuation.
The concept is usually associated with large corporations, but small businesses
also have a corporate image even if neither their owners nor customers think of
it that way. In the absence of active efforts, corporate image "simply happens": it
is how a company is perceived. Management, however, may actively attempt to
shape the image by communications, brand selection and promotion, use of
symbols, and by publicizing its actions. Corporations trying to shape their image
are analogous to individuals who will dress appropriately, cultivate courteous
manners, and choose their words carefully in order to come across competent,
likeable, and reliable. In the personal as in the corporate case, the image should
match reality. When it does not, the consequence will be the opposite of the one
intended.
THE ELEMENTS OF IMAGE
A corporate image is, of course, the sum total of impressions left on the
company's many publics. In many instances a brief, casual act by an employee
can either lift or damage the corporate image in the eyes of a single customer or
caller on the phone. But the overall image is a composite of many thousands of
impressions and facts. The major elements are 1) the core business and
financial performance of the company, 2) the reputation and performance of its
brands ("brand equity"), 3) its reputation for innovation or technological
prowess, usually based on concrete events, 4) its policies toward its salaried
employees and workers, 5) its external relations with customers, stockholders,
and the community, and 6) the perceived trends in the markets in which it
operates as seen by the public. Sometimes a charismatic leader becomes so
widely known that he or she adds a personal luster to the company.
Image versus Images
Only in the best of cases does a corporation enjoy a single reputation. Different
publics may have different views of the corporation depending on their different
interests. A company's brand image may be very good but its reputation among
suppliers poorbecause it bargains very hard, pays late, and shows no loyalty
to vendors. A company may be highly regarded on Wall Street but may be
disliked on the Main Street of cities where it has closed plants. A company may
be valued for providing very low prices yet disliked for its employment practices
or indifferent environmental performance. It is much more likely that a small
business will have an all-around reputation for excellence than that a very large
conglomerate will merit all-around praise. Smallness has its advantages.
At the Core: Business Performance
The single most important factor in the corporate image is a company's core
business performance; performance, by definition, includes financial results. A
growing, profitable corporation with a steady earnings history will, for these
reasons alone, please its customers, investors, and the community in which it
operates. A profitable company that, nevertheless, exhibits huge gyrations in
earnings will fare worse: its earnings and dividends will be unpredictable; it will
have layoffs; its stock will fluctuate; its vendors will be more uneasy; its
employees nervous. When a business fails in its core function, its reputation
heads straight south. Enron Corp., an energy trader, had a stellar reputation as
the 7th largest corporation measured in revenues. It fell into bankruptcy almost
abruptly on December 2, 2001; the Justice Department began to investigate it
for fraud. Suddenly every aspect of the company that had been admired and
laudedits audacity, energy, profitability, innovativeness, entrepreneurial spirit,
and so ontook on opposite and negative connotations. The core business had
failed; Enron's reputation imploded. No amount of corporate image polishing
could have saved Enron's reputation after that.
MEASURING THE CORPORATE IMAGE
Corporations evaluate their image, much as politicians do, by survey. They
employ the methodology of marketing surveys used both in polling and in
support of advertising. The investigators select appropriate samples of the
public and interview them; telephone surveys are the most common. They use
statistical methods of extrapolation to project from the sample what the public
as a whole (or selected publics) think. Corporations, of course, also rely on the
much "harder" measures such as sales and stock performance. Surveys of the
corporate image are sometimes motivated by sagging sales and a miserable
press.
The theory of the corporate image holds that, all things equal, a well-informed
public will help a company achieve higher sales and profits, whereas a forgetful
or poorly informed public may come to hold negative impressions about the
company and may ultimately shift more of its patronage toward competitors.
A recent campaign launched by Toyota Motor North America Inc. illustrates
measurement and a response to it. As reported by Jamie LaReau in Automotive
News, "Toyota periodically surveys U.S. consumers' perceptions of the
automaker. The surveys suggested [that] Americans' awareness of Toyota's
U.S. presence had declined since 2000 ' even as the company was building
and expanding plants." The company launched a print and TV program to
highlight the company's contributions to the U.S. economy.
WORDS AND ACTION
The example of Toyota is a case in which Toyota felt the need to communicate
("words") something about its investments ("action") in the United States. Ideally
words and actions are always closely linked in building or repairing the
corporate image. Ideally, also, the two will correspond. To achieve a close
alignment of words and deeds is often difficult in practice. Who has not
observed with a knowing eye the difference between the cheerful, helpful clerks
in the TV ads of a company and the surly indifference of that same company's
actual clerks? Expert advisors to the corporate world, such as Roger Hayward
writing in Accountancy Ageemphasize the need for consistent follow-through
so that employees become "a vast army of goodwill ambassadors."
Whether the objective is to make the most of a good thing or to turn around an
adverse situation, good management practice will ensure that action is
accomplished before the words are spoken. A case of that sort is presented by
the Rite Aid chain store. The company went through a financial scandal in the
late 1990s; its former chief executive and others were convicted and jailed. A
new management team first turned the chain around before, as reported
in Chain Drug Review, it launched a campaign to tell the world that "the
turnaround is complete and we are a stable, healthy company focusing on
growth," as Chain Drug Review quotes Karen Rugen, Rite Aid's senior vice
president of communications and public affairs, a newcomer to the company.
ATTENTION TO DETAIL
The management of the corporate image also involves management of the
more mundane side of image, the corporation's logo, its brand images, the look
and feel of its retail outlets, its offices, signage, even its stationery and the look
of its calling cards. Good management implies ensuring that all spokespersons
for the company say the same thing in the same way for a consistent message.
Furthermore, in pays attention to consistent self-presentation in the look of its
facilities.
SMALL BUSINESS AND CORPORATE IMAGE
Every small business will have the equivalent of a corporate image because it
will have a reputation among its employees, customers, vendors, neighbors,
and the government agencies with which it deals. The first action of the owner,
in choosing the name of enterprise, is an exercise in building a corporate image.
The process continues in many ways: in the choice of brand names to be used,
the location of leased space, office decorations and/or store equipment
selected, the company's Web site design if the business has an Internet
presence, its sales literature, and so on. As the business begins to operate, it
will build its visibility in its market by outward symbols; the quality of its products
or services; the knowledge, skill, and friendliness of its employees; its
promptness in paying bills; its effectiveness in mounting promotions; and the list
goes on.
By their very nature, small businesses tend to be closer to all of their
constituencies. As a consequence, the business will enjoy rapid feedback from
the public when it begins to make mistakes or has some bad luck. If that should
happen, the small business, like the major corporation, will engage in the
actionsfollowed by wordswhich will be necessary to recover losses or make
the most of unusual success.
BIBLIOGRAPHY
Brady, Diane, Michael Arndt and Amy Barrett. "When Your Name is Mud,
Advertise; Companies in Crisis Used to Lie Low. The New Response to Bad
Press is Positive Spin."Business Week. 4 July 2005.
Hayward, Roger. "Insight: Corporate Reputation" Accountancy Age. 30 June
2005.
LaReau,
Jamie.
"Toyota
Polishes
Corporate
Image
in
TV
Campaign." Automotive News. 28 February 2005.
"Retailer Burnishes Its Image as 'Stable, Healthy Company'." Chain Drug
Review. 20 December 2004.
"What's in a Name?" Industry Week. September 2005.
