Seventy Percent of Consumers Avoid Products If They Dislike Parent Company, Weber Shandwick Survey Finds
NEW YORK, Jan. 18, 2012 – A new global study commissioned by Weber Shandwick found that the company behind the brand is critical to consumer purchasing decisions. Seventy percent of consumers surveyed avoid buying products if they do not like the parent company. Executives agree — in fact, 87 percent say that “a strong corporate brand is just as important as strong product brands.”
The Company behind the Brand: In Reputation We Trust illustrates the challenging consumer landscape facing today’s marketing and communications executives. The research identifies six key insights revealing a world where consumers no longer just buy products based on their own merits but also shop by company reputation.
“Consumers are using their dollars as a vote of confidence in companies they trust,” said Weber Shandwick’s Chief Reputation Strategist Leslie Gaines-Ross. “As our research confirms, corporate and brand reputations are now nearly indivisible. The company standing behind the brand assures consumers that they can trust the quality, ethics and safety of the brands they are buying.”
The New Realities of Corporate Reputation
The importance of a company’s reputation matters more than ever and when unified with the reputation of its product brands creates one powerful “enterprise” brand. As Weber Shandwick’s Global Corporate Chair Micho Spring said, “A strong corporate reputation is essential to unlocking the full value of the enterprise and strengthening its brands, products and services as a result.”
Weber Shandwick’s research reveals six new realities on the interdependence of corporate and brand reputation:
Corporate brand is as important as the product brand(s). The leading reasons the vast majority of executives (87 percent) believe that a strong corporate brand carries as much weight as strong product brands is their recognition that product brands benefit from the overall reputation of the company (65 percent) and that people care about the companies behind the brands they buy (55 percent). Executives in China and Brazil are even more likely to agree in the equal prominence of corporate and product brands (96 percent and 93 percent, respectively).
Corporate reputation provides product quality assurance. Products are the beneficiaries of strong corporate reputations. Over two-thirds of consumers report avoiding products made by companies they do not like and checking labels to see who the parent company is.
- 70 percent avoid buying a product if they don’t like the company behind the product
- 67 percent are increasingly checking product labels to see what company is behind the product
- 61 percent get annoyed when they can’t tell what company is behind a product
- 56 percent do research to learn about the companies that make what they buy
- 56 percent hesitate to buy products if they can’t tell who makes them
Consumers are exerting greater control over what brands they buy. In fact, when asked on an open-ended basis, consumers often used the word “assurance” to describe the value of the company behind the brand. To many, a highly-regarded corporate reputation engenders good feelings about a company’s products and importantly, provides assurance that the brands will be of high quality, ethically sourced and made responsibly. As one consumer said, “It is the company you are financially supporting when you buy its product. We have too many choices to buy a product from a company we don’t like.”
Any disconnect between corporate and product reputation triggers sharp consumer reaction. Over one-half of consumers (54 percent) report being surprised to find out that a product or service they liked was made by a company they did not like. When asked what they do in response, surprised consumers said they most often stop purchasing the product (40 percent) or search online to dig deeper into what other products are made by the company (34 percent). Surprise about a product’s lineage does not usually work to the company’s benefit – surprised consumers are twice as likely to stop buying the product as they are to continue buying it.
Products drive discussion, with reputation close behind. Wrong-doing overshadows right-doing. Consumers were asked what they talk about when they discuss companies. At the top of the list is products — nearly seven in 10 consumers (69 percent) say they frequently or regularly discuss how they feel about a product they bought. Also included among their top five talking points are customer service, how employees are treated, company scandals or wrong-doing, and their feelings about the company as a whole (its reputation). Consumers report that they are more likely to discuss corporate scandals and wrong-doing (43 percent) than corporate good deeds (37 percent), environmental protections (31 percent) and community services (29 percent).
Consumers shape reputation instantly. What sources of influence move consumers’ perceptions of companies? Not surprisingly, consumers say that word of mouth is the leading influence (88 percent) when it comes to impacting opinions of companies. Also influential are online reviews (83 percent) and online search results (81 percent). Brazilian consumers rate more traditional sources about companies — news sources, awards and advertising — as significantly more important than consumers in the other three markets.
Corporate reputation contributes to company market value. Most admired status carries more weight than financial earnings. Executives estimate that, on average, 60 percent of their firms’ market value is attributable to its reputation. This high value explains why companies have ramped up their reputation-building activities, with the vast majority of executives (86 percent) reporting that their companies increased their efforts to build reputation over the past few years.
For consumers and executives alike, the reputation of a company is perceived as more important than positive financial earnings. More than half of consumers say they are more confident in buying products from a company with a most admired standing than one with a positive share price forecast. Nearly six in 10 executives say they would rather see their companies in the news for a most admired standing than a positive share price forecast. The findings imply that both consumers and executives now recognize that reputation is long-lasting and enduring while financial performance can be cyclical and short-term.
Weber Shandwick’s research highlights how consumers want assurance that their well-earned dollars, yuan, pounds or reais are being spent on products produced by companies that share their values. They have higher expectations for the companies and the brands they like and will not hesitate to turn their backs when they are disappointed or led astray.
As Spring remarks, “Through this proprietary research and approach to creating one powerful enterprise brand voice, we help companies build and protect corporate reputation and drive strong business results.”
For more information, please go to our infographic and executive summary. Additional reports on this topic will also be issued later in 2012 that provide insights on the contribution of CEO reputation and single- vs. multi-brand companies.
For additional information on our award-winning global services focused on building and safeguarding reputations and brands in an ever-changing transparent environment, please contact Leslie Gaines-Ross at email@example.com/ 212.445.8302 or Micho Spring at firstname.lastname@example.org/ 617.520.7075.
About the Study
The online research was conducted with KRC Research in October/November 2011 among 1,375 consumers and 575 senior executives in companies with annual revenues of $500 million or more. Respondents were located in four key markets: two developed markets (U.S. and U.K.) and two emerging markets (China and Brazil).