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Home arrow Market Research Findings arrow Advertising and Marketing arrow Consumers Will Buy, Recommend and Invest in Companies that Concentrate on Building Their Reputation
Consumers Will Buy, Recommend and Invest in Companies that Concentrate on Building Their Reputation PDF Print E-mail
Written by Harris Interactive   
11 Jul 2008

Seventy-One Percent of Consumers Say the Reputation Of Corporate America Is "Poor", But Consumers Will Buy, Recommend and Invest in Companies that Concentrate on Building Their Corporate Reputation

Google Achieves #1 Ranking in 9th Annual Harris Interactive Survey of 60 Most Visible U.S. Companies

ROCHESTER, N.Y.,June 23, 2008 – Not only has the stock market lost ground since last fall, but so has the reputation of Corporate America in the eyes of consumers. Seven out of 11 industries saw their reputation decline last year from 2006 and 16 of the companies with the worst marks fell even further, according to the Harris Interactive Reputation QuotientTM (RQ) survey.

But despite a slide in Corporate America’s image among consumers, the RQ found that a strong statistical correlation exists between a company’s overall reputation and the likelihood that consumers will purchase, recommend or invest in a company or its products and services.

The RQ surveys thousands of American consumers in a two-step process, through online and telephone interviews, to first identify the 60 most visible companies and then to rank these companies based on their reputation in six different categories: Emotional Appeal, Products & Services, Social Responsibility, Vision & Leadership, Workplace Environment, and Financial Performance. While the RQ found that certain industry sector reputations—including airlines, consumer products, insurance/financial services, pharmaceutical and retail—are perceived to have plummeted since 2006, the reputations of the most visible companies have remained relatively stable, according to Harris Interactive, which has conducted the annual RQ study in the U.S. for nine consecutive years. While overall, the reputation of American companies continues to decline, a few companies are bucking the trend and building their reputations in this tough environment.

"What the RQ survey has shown in recent years is that companies that pay attention to enhancing their reputation see bottom line results. The companies with a good reputation have stayed near the top of the list and those with bad reputations have gotten worse," says Robert Fronk, Senior Vice President, Senior Consultant, Reputation Strategy at Harris Interactive. "The survey also provides a roadmap for what areas linked to corporate reputation have the most impact on consumers."

Ken Powell, Chairman and CEO of General Mills notes, "Reputation can be measured in recognition, employee recruitment and retention, even stock price multiple.  But in the end, we believe the most important measure is trust. General Mills values its reputation tremendously, and we constantly strive to remain worthy of the trust of our customers, consumers, employees, investors and communities."

What does it take to get to the top? Google provides a case in point. Four years ago, the company was not included among the top 60 most visible companies on the list. But this year, Google rose to No. 1, beating last year’s RQ reputation leader, Microsoft. Google also beat this year’s second-runner-up, Johnson & Johnson, which was the top ranked company, until last year, since the inception of the survey in 1999.

"How did Google achieve this stratospheric climb? The company scores either in first or second place on reputation drivers of financial performance, vision/leadership, social responsibility and workplace environment," says Fronk of Harris Interactive. "For Americans to hold a company in high regards today, clearly more than just profits are needed – companies need to focus on overall corporate social responsibility and how their employees are treated in order to build trust with today’s consumers." It’s interesting to note that Google ranked No. 2 on the social responsibility dimension, but does not even make the top five of companies based on its support of good causes, the environment or communities. "Google received a top-ranking for social responsibility primarily due to their workplace environment," Fronk notes, "demonstrating that corporate responsibility, in the minds of consumers, starts with your own employees first."

The top 10 companies on this year’s list in order of ranking include: 1) Google; 2) Johnson & Johnson; 3) Intel Corporation; 4) General Mills; 5) Kraft Foods; 6) Berkshire-Hathaway Inc.; 7) 3M Company; 8) The Coca-Cola Company; 9) Honda Motor Co.; 10) Microsoft. For a full list of the top 60 companies and other findings visit: www.harrisinteractive.com.

Jeffrey Smith, spokesperson for American Honda Motor Company, Inc., notes, "Honda strives to be a company that society wants to exist. As such, we endeavor to create value for our customers and society through our efforts to improve fuel efficiency, enhance safety, provide products of the highest quality, and be on the leading edge of corporate social responsibility."

The six areas that the RQ survey focus on that influence consumer behavior include the following along with the companies that scored highest in these categories:

Social Responsibility – Whole Foods, Google, General Mills, Microsoft, Johnson & Johnson
Emotional Appeal – Johnson & Johnson, Kraft, General Mills, Google, 3M Company
Financial Performance – Berkshire Hathaway, Google, Microsoft, Intel, Procter & Gamble
Products & Services – Johnson & Johnson, 3M Company, Intel, Google, P&G
Vision & Leadership – Berkshire Hathaway, Google, Microsoft, Intel, Apple
Workplace Environment – Google, Johnson & Johnson, General Mills, Intel, Kraft

From an industry perspective, the technology sector fared very well with Google, Intel Corporation, and Microsoft Corporation all being within the top 10 ranking. Coming out of its very public Board battles, Hewlett-Packard/Compaq was the biggest gainer and Intel, Apple and Google also showed significant positive rating changes from 2006 to 2007.

"At Intel, we view our corporate reputation as a strategic business asset and ours is a direct reflection of the focus our employees put into creating innovative technology and also in contributions to their local communities," said Dave Stangis, Intel’s Director of Corporate Responsibility.  "We are extremely proud to be ranked among these leaders and to see that consumers place value in our products, our workplace and our business success."

With mergers, bankruptcies, and media attention around cancelled flights frustrating consumers, the airline industry had the largest drop in rankings from 2006, with only 26% of Americans giving positive RQ scores to airlines.

Following are additional survey findings:

Overall, more companies taking an active role affecting and managing their reputation are seeing positive results, while those that are not continue to see their reputation decline. Of those companies who scored in the Top 30, 19 (63 percent) improved their scores year-over-year, while 11 (37 percent) had scores that declined. However, of the companies that scored in the Bottom 30, just 14 (47 percent) improved their scores year-over-year while 16 (53 percent) declined even further.

Despite a drop in the consumer products sector overall, many consumer packaged goods companies scored in the upper echelons with General Mills, Kraft Foods and The Coca-Cola Company ranking in the Top 10. Of interest, males tend to give higher scores to technology companies and women give top marks to consumer packaged goods companies.

Of the 52 companies measured in both 2007 and 2006, 15 experienced noticeable changes in their reputations – nine went up and 6 declined. What’s striking, said Fronk, is that in the previous four years combined, 2003 to 2006, there had been 14 significant movements, 4 of which were declines. "The large number of companies that experienced significant change in one year might provide some evidence that the increase in online media, blogs and social networking may lead to a less glacial pace of impacting corporate reputation," Fronk notes.

In addition to significant shifts for technology companies, other big gainers in 2007 included Berkshire Hathaway, BP and Verizon Communications. Berkshire Hathaway benefitted from its strong financial performance as well as the halo effect of Warren Buffets’ $37 billion donation to charity the previous year. BP, which had a number of challenges in recent years including the CEO’s resignation over an affair, a plant explosion that resulted in employee deaths, and pipeline leaks in Alaska, likely benefitted from continued goodwill from its "Beyond Petroleum" advertising campaign as it has outranked its oil and gas competitors in recent years, despite low marks for the sector overall in corporate reputation.

 
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