Reputation Gurus

Monsanto just announced a higher quarterly profit and it’s likely to fuel more criticism about the agriculture industry.  Groups are attacking companies like Monsanto, Archer Daniels Midland, Cargill and others for “food profiteering,” “bullying,” and exploiting the global food crisis.    

Agri-industry is becoming the new Big Oil.  Today, ag companies are targets of growing public criticism.  Tomorrow, they may be called to testify before Congress.  Rising global demand for both food and biofuels has increased commodity costs.  And now, like oil companies, agri-businesses are being vilified.

To avoid the reputational taint of Big Oil, agri-companies need to get involved in discussions of food profiteering.  Oil producers ignored consumer complaints till they were dragged into Congressional hearings.  To avoid a similar fate, agri-businesses need to show that they are not creating the so-called food “crisis.”  This means they need to do something extremely unusual for B-to-B companies - they must communicate aggressively and quickly.

In September 2006, the iconic Chicago department store Marshall Field’s was renamed Macy’s—upsetting many Chicago residents and die-hard Field’s customers. The community rallied and someone even started the Fields Fans Chicago blog to keep the Marshall Fields name on Macy’s stores in Chicago. Many local long-time customers boycotted.  By December, the company reported sales had slowed.  Less than a year after the name change, Macy’s announced that it would no longer try to pacify customers still angry about the switch, and focus instead on wooing a new group of customers to bolster sales.  The latest financial results suggest that hasn’t worked out too well, either.

Despite the hard lessons learned from Marshall Field name change, Sam Zell, head of the cash-stretched Tribune Company that also owns the Chicago Cubs, is trying to rename another Chicago icon—Wrigley Field. Zell has offered to sell Wrigley Field naming rights for the right price. Fans were shocked and preservationists perturbed.

Wrigley is now listed as one of Illinois’ top endangered places. The Chicago Sun-Times held a video contest to allow fans to vent their dissatisfaction and many protested at Wrigley Field on Opening Day.

In both these cases, the names represent more than a baseball franchise or department store. For over 100 years, they represented memories, experiences, and dreams—and the two brands have inspired immense loyalty and endless hope through a depression, wars and even a terrorist attack.

GCI Group believes that Change Rules, but we also realize that change may not be the best course if it alienates customers or fans, and diminishes the equity of a brand or the consumer experience. So, what’s in a name? It depends…so take stock before you go a changin’!

With summer on the way, pretty much any day is a good day for frozen yogurt.  Today, fro-yo is making a big comeback as a new generation of companies reinvent the product for the 21^st Century by touting the benefits of probiotics and natural ingredients under intriguing brand names like Pinkberry, Red Mango and Starfruit. 

But as Pinkberry learned recently, one has to be careful about what one claims. As reported in the New York Times, a class-action lawsuit charged Pinkberry with deceptive advertising that inproperly claimed it was “all natural” and mis-classified the product as “frozen-yogurt.” Clearly, these claims were meant to distinguish the company from competitors. 

Pinkberry recently settled the case for $750,000 that will go to Los Angeles hunger and children’s charities and the promise that ingredients will be listed.  While people like the taste, the “all natural” claim suggests the product is better for you and has fewer calories.

It does make one wonder, though, if the stain of scandal will prompt consumers to second guess their purchase of premium products in a slowing economy. Will there be a meltdown in the frozen yogurt market? It may take time to see if this year’s fro-yo craze will stay hot after the weather gets cool. And if the new generation of yogurt chains have learned how to market frozen yogurt that can stand the test of time…and competition.

Red Bull has successfully sued several bars for substituting other energy drinks to patrons who ask for a mixed drink with Red Bull.  A Chicago court just awarded the company more than $500,000. 

Red Bull now runs the risk of hurting its own reputation.  Why?  The company that created the energy drink category looks like it is bullying competitors.  And, if that message is delivered by your friendly, neighborhood bartender, you’re pretty likely to believe it. 

Simply “being in the right” may not be enough to win in the court of public opinion if a company doesn’t aggressively manage its communications.  Red Bull must protect itself with consumers.  Failure to do so will harm its reputation and, likely, threaten sales.

A recent New York Times/CBS News poll reports that 81 percent of Americans believe “things have pretty seriously gotten off on the wrong track” in the U.S. Hardly a day passes without terrible news about an individual company or whole industry. Bankruptcies. Bailouts. Buyouts. Observers might call this an economic crisis.

Though unreported, a common thread in the downturn has been that many American companies have compromised their reputations. As the graphic here shows, a corporate brand or reputation is the product of customer interactions on eight factors – ranging from financial performance to product quality.

This means companies need to pay attention to how they are perceived overall. Unfortunately, some executives spent the last few years defining their companies’ reputations on the strength of financial performance alone.

When a brand is narrowly defined, risk increases because stakeholders have fewer factors on which to judge the brand. Failure to deliver on a brand’s more focused promise means that stakeholders lose faith or trust in the brand. Companies that defined themselves primarily on the basis of financial performance disappointed when they failed to meet financial expectations.

The tendency during challenging economic times is to trim spending on all “non-crucial” activities. But, companies must be careful in assessing what is really crucial. I’d argue that the corporate reputation or brand is at least as important – and valuable – as a few quarters’ performance.