Managing Corporate Reputation and Building a Brand Portfolio
We have all heard our parents say things like;
“Do your family proud!” “Wear that name with pride!” “Carry on the family legacy!.”
This has a lot to do with keeping up the family reputation. Your surname identifies you with generations of others from whence you came. We all have a friendly jovial uncle, a mothering aunt, a wayward brother and a tech savvy sister somewhere in our families. They all have a part to play in building the family reputation with their own unique personalities and talents.
A corporate brand is like a big family. It has a reputation, a history and a future. In this family, are many different personalities [brands], who appeal to different audiences [target markets] but have their own unique selling points. They are still part of the same family [corporate brand] and each of them have a role to play in building the family reputation and brand awareness.
A brand needs to manage this family effectively and cohesively and build reputation by being transparent and authentic.
According to Aaker (2004) a corporate brand has
- A rich tradition and heritage;
- A high level of capability and assets;
- A local and international presence;
- Influential and prominent founders;
- Particular values; and
- Excellent performance records.
(Sounds a lot like your family doesn’t it?)
Nestlé is a huge global brand. It has a rich tradition dating back to its beginning in 1866 with a tin of Anglo-Swiss condensed milk. In 1905 Henry Nestlé ‘s infant formulae and the Anglo-Swiss company merge and become the formidable family company, Nestlé we know today.
The Nestlé brand reputation, together with their code of conduct has been built on their constant ability to deliver on expectation and remain relevant and valuable in an ever changing landscape.
The Company achieved 9th place in the worked at the Global RepTrak 100 study. The RepTrack study measures the world’s most highly regarded companies and attempts to unlock the key to building strong reputations. The study examines the connection and perceptions of the stakeholders by focusing on their services, innovation, workplace, citizenship, governance, leadership and performance.
WHEN YOUR REPUTATION TAKES A KNOCK
Nestlé, however, is constantly under scrutiny by the public and has appeared several times in the media negatively. A few of their brands have had some negative runs ins [remember the wayward brother I spoke about earlier?] MAGGI noodles caused a knock to the Nestlé’s reputation in India when high levels of MSG and lead was found in their noodles. The Company recalled the product and had a PR nightmare when the social media #Maggiban was being displayed all over social media.
Nestlé BOUNCED back in full swing to salvage the reputation of the brand family. Maggi may not have been able to survive a negative surge like this if it was a stand-alone brand. Lucky for Maggi it had the reputation of Nestlé to fall back on. Nestlé released a campaign to build their reputation in India following the #Maggiban saga.
BUILDING GOOD REPUTATION
Reputation is built within the organisation. The CEO and senior management have a lot to do with it. They must personify the brand, not only to the public but to the employees. Reputation of the organisation by the employees is key. If employees perceive the organisation to have a good reputation, they will express this to the outside world as well.
A Company’s leader is one of the highest influences in the overall reputation of a Company. It is evident that a CEO’s reputation is directly correlated to the overall reputation of their Company as well.
According to Cravens et al. (2010), there are several elements that influence corporate reputation: Products and services, Employees, Top Management, Relationships with all stakeholders, relationship with environment, strategic partners, society, innovation, value creation, financial strength, strategy, culture and intangible liabilities.
Company reputation can change in an instant.
TRANSPARENCY AND ACCOUNTABILITY
Companies, like Nestlé need to be transparent with their customers. Brands cannot hide anymore. Consumers have become more informed and are aware of what they are buying and where products come from. Younger generations are more ethical and health-conscious and concerned about sustainable living.
Transparency isn’t and option – it is a requirement.
Consumers want to know everything – all about your company and where you buy from too. When a mistake is made, it must not be pushed under a rug.
Nestlé had to learn this lesson when Green peace activists launched a full attack on Nestlé regarding their use of palm oil and their acquiring of it.
Nestlé discovered that engaging with its critics and addressing some of their concerns was more effective than trying to shut down discussion on social media.
LABEL INSIGHT found in a study of more than 2,000 customers that 94% of people are more likely to be loyal to brands that are completely transparent. The study also found that 56% of people would stay loyal to a brand for life if it was completely transparent and 73% of people would pay more for a product that was completely transparent.
MANAGING THE BRAND PORTFOLIO
“We continue to actively evolve our portfolio towards attractive, high-growth businesses. We recognize that acquisitions can provide access to new technologies, brands, categories and geographies. Similarly, small to medium-sized acquisitions can offer a fast and cost-effective way to embrace new capabilities or business models. We are also actively divesting businesses that are non-core and where we have limited ability to win. We do this in a disciplined way with an aim to minimize potential disruption and maximize the value of existing businesses.” – direct quote from – Nestlé
Nestlé has an enormous portfolio over over 2000 products which they are actively evolving to attract high growth-businesses. Constant reassessment of the portfolio is done with each change in consumers view, or trend in the market.
Management of the portfolio is done through acquisitions and disposals and alliances and is based on brand performance, strategy and consumer need.
Terrafertil was aquired by Nestlé recently in order for the brand to set up future positioing in the plant-based markets .
In another example a new acquistion was announced on the 5th December 2019 as Nestlé USA launches meatless pizza and lasagna with Sweet Earth Awesome Grounds
In a decision to invest and innovate across their categories where they hold much higher leadership positions, Nestlé sold their Nestlé Skin Heath to a consortium in Abu Dhabi in 2019 and their confectionary business to Ferrero in 2018 for a whopping $2.8billion.
In 2018, Nestlé acquired the perpetual rights to the Starbucks Consumer Packaged Goods and foodservices globally, to ensure a larger stake in the fast growing coffee industry.
The organisation is in tune with consumer trends and its growth and constantly addresses their portfolio to ensure that the brands within add value to their family and longevity. There is something for everyone.
The Nestlé brand is in 97% of homes globally and its reputation preceds it on every level. The brand has become more transparent and accountable and continues to grow and embrace its capabilities. There are still issues with their sustainability and sourcing of ingredients. But as the pressure mounts from the public sector and social media holding Nestlé to account, I am sure we will see further sustainable sourcing and changes to the brand portfolio for the better.