According to a research done in 2006 in Britain by Fraser Consultancy, a British consultancy firm, a large percentage of so called loyal customers may be 'stealth customers' prepared to jump ship when they feel they have suitable alternative. The findings of this survey was that the ethical reputation of companies does matter and customers have latent resentment against companies or brands for real or imaginary reasons.
This segment called 'Conflicted Customers' is fairly large, as much as 25% of the customer population. The survey also found out that as much as 44% of customers exchanged notes with their friends and acquaintances on ethical behavior of brands and companies. Since bulk of the corporate reputation is shaped by 'word of mouth' this conflicted customers can cause a lot of damage to a company's reputation and thus affect its bottom line.
Fraser Consultancy came out with 'Ethical Reputation Index' and ranked various companies in 2006 and listed the best and worst 10 in Britain. A few of them were local brands and balance global. The worst global brands were:
Worst 10 as per Fraser Consultancy
1 McDonald's
2 Burger King
4 Nike
5 Shell
7 Barclays Bank
10 American Express
The local British brands have been deleted.
Except McDonald's and Burger King, we agree with other listings. The main reason attributed is that they are offering junk food affecting the health of children. This is a matter of debate. They are fast food chains offering convenience. The food may be junk but popular, filling and of low cost. Children cannot afford to spend large amounts from their pocket money. I have written an article titled 'Brand fight back - the case of McDonald's' where the actions taken by the company to change the perception has been covered.
These companies are meeting a basic need. As parents it is our duty tell our children that consuming such junk food regularly is not good for their health but consuming such food occasionally does it matter ? We all have taken junk food when young. Listing the above two companies as worst on ethical grounds does not appear to be fair. It is important to understand what ethics stands for. As long as these companies do not claim that they are offering health food, I wouldn't hold it against them.
Reference: World Business 2006 article titled 'Watch that corporate reputation'.
© Copyright, Sep 28-08 . Without prejudice. All rights reserved
Corporate Reputation Matters - To learn more about this author, visit Madhavan T Gopalachary's Website.
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Madhavan T Gopalachary
(Visit Madhavan's Website)
Madhavan Gopalachary, nick name "madgopes"
(g pronounced as in go) given by IIT
classmates, is a Mechanical Engineer and
an alumnus of Indian Institute of
Technology, Madras having passed out
specializing in IC Engines &
Thermodynamics.
He has nearly 35 years of experience in
the Corporate World. He started off as a
trainee and handled sales, marketing,
manufacturing, product management, profit
center management, strategic planning and
corporate development including R & D in
various organizations and at various
levels before becoming a CEO. His last two
professional assignments were at CEO level
before embarking to start management
consultancy business on January 01, 1998.
He has worked for British, Swedish MNCs as
well as very large Indian business houses.
He has spent a large portion of his time
from June 1998 till date in East African
Countries practicing as an independent
Management Consultant.
More details can be obtained at the
following web sites:
mmg.name
/mtg.html;
mmgconsu
lting.biz/
Madhavan's articles can be accessed at www.madgopes.com
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