Managing and maintaining corporate reputation and brand identity: Haier Group logoReceived (in revised form): 10th October, 2005 MAKTOBA OMAR is a graduate of Leeds University Business School. She is currently a lecturer at Napier University Business School, Edinburgh, Scotland and a member of the research committee. She is also a part-time research visitor at Harbin University of Commerce, China. Current research interests focus on globalisation, international strategy and marketing policy. She has written for a number of national and international academic journals as well as spoken at conferences and workshops. The main research focus of her present work is the impact of political risk, economical development, entry strategy and foreign direct investment in relation to UK companies operating in China. ROBERT L. WILLIAMS, JR is currently Assistant Professor of Business and Marketing at Villa Julie College, Business and Paralegal Division Greenspring Valley Road, Stevenson, Maryland, USA, having previously taught at Susquehanna University, Lycoming College and Dusquesne University. He is a graduate of The Pennsylvania State University, USA, and spent more than 20 years in various management positions at Fortune 50 company Tyco International and AMP Inc. Current research interests focus on competitive advantage, branding and market entry strategies of Chinese companies. Abstract The riots against the World Trade Organization in Seattle and the protests in Washington present a real threat to the reputation of global firms. Those changes in circumstance led international firms to pay considerable attention to the management of corporate reputation, which has been recognised as a major challenge for firms competing in changing environments. The paper argues a case for the practical management of corporate reputation and investigates its relationship with other related elements. The paper explores the development of the management of corporate reputation in relation to communication, identity and trust, and communication, identity and image. The two concepts create guidelines for managing corporate reputation; firms should manage their corporate reputation in relation to trustworthiness and credibility, which are based on the past achievement of the firm. INTRODUCTION While reputation is a difficult concept to measure, managers frequently assume a positive relationship between business performance and corporate reputation. Indeed, the literature avers that from a customer’s perspective, a healthy reputation may act as a risk suppressor.1 Early research on corporate reputation started with corporate image, corporate identity, and personality. Between the 1950s and the Dr Maktoba Omar University of Napier, School of Marketing and Tourism, Colinton Street, Edinburgh, UK Tel: 44 (0)131 455 4404 Fax: 44 (0)131 455 6269 E-mail:
[email protected] 1970s, the focus was primarily on the image that external stakeholders held of a firm or store.2 During the 1970s and early 1980s, strategy moved to centre stage and corporate identity and corporate personality became salient. From the late 1980s, the focus has shifted to corporate reputation.3 Corporate reputation has been gaining notice in the last few years as an important asset of the firm.4 Academicians in corporate strategies 268 PALGRAVE MACMILLAN LTD 1479-1803/06 $30.00 BRAND MANAGEMENT VOL. 13, NO. 4/5, 268–275 APRIL–JUNE 2006 Object specific components9 are based on the facts that the firm is well known: good or bad. NO. This estimation is based on the entity’s willingness and ability to perform an activity repeatedly in a similar fashion.15. Past actions11 are where corporate reputation WHY IS CORPORATE REPUTATION IMPORTANT? An empirical study with leading US/UK companies by Fombrun and Rindova found that those companies with a more positive reputation appeared to project their core mission and identity in a more systematic and consistent fashion than companies with lower reputation rankings. 13. In many cases.7 The cumulative judgment by the public over time provides the company with significant competitive advantages.00 BRAND MANAGEMENT VOL. quality.8 The definitions of corporate reputation have considered four main elements. the reputation of a firm is perceived as the strong relationship between the customers and the organisation. illustrate the need for companies to pay increased attention to building and sustaining their reputation for economic gain by using a brand logo to shape a unique identity case study. because they fear negative consequences that may have an adverse effect on their businesses. Information cues result from direct and indirect experiences and information received. 4/5.5 The better the organisation’s quality.16 CORPORATE REPUTATION Corporate reputation is seen as the outcome of a competitive process in which firms signal their essential characteristics to constituents to maximise social status.HAIER GROUP CORPORATE REPUTATION AND BRAND IDENTITY have begun to recognise the fact that corporate reputation provides firms with competitive advantages.14 In general. not only about their products. An attribute is some specific part of the entity-price.12 Reputation is defined as: ‘the estimation of the consistency over time of an attribute of an entity. Satisfactory corporate reputation is an important driver of successful organisa269 PALGRAVE MACMILLAN LTD 1479-1803/06 $30. identity and history. and marketing skills’. is defined as a set of economic and non-economic attributes ascribed to a firm and inferred from the firm’s past behaviour. 268–275 APRIL–JUNE 2006 . Net effective or emotional reactions10 are based on the overall estimation in which a firm is held by its constituents. its importance. and finish with recommendations and research agenda.6 The objective of this paper is to review the literature in relation to corporate reputation. the more popular it will become. prospective customers are less inclined to work with new organisations with no track record.13 Fombrun defines corporate reputation as the net perceptions of an organisation’s ability to meet the expectation of all its stakeholders. and its relation to other concepts. This is considered an important element that contributes to successful organisations. which is viewed as client relationship-building. particularly for large-scale projects. these companies try to impart significantly more information. with its customers continuing to use similar services of the organisation for projects related to its experiences. but also about a range of issues relating to their operations.17 Further. The above two points can include: design a programme that keeps the customer happy through good quality products and services. and work on community involvement. In turn. show sensitivity to the environment. Other than highly visible company crisis-type situations such as those mentioned. 268–275 APRIL–JUNE 2006 . and therefore difference.24. The organisation’s reputation derives from its unique 270 product offering. which can have a significant impact on the business performance of an organisation18.19 Academicians agree that corporate reputation is an important asset for the firm. the uniqueness of the product offering calls for management practices that stress product quality and customer service. 13. These conditional generalisations (as social scientists would call them) about the variations are what drive corporate reputation in different countries.21 Companies known for being extraordinary and having wellmanaged corporate reputations will gain the consumer’s confidence. 4/5. making them aware of their roles in delivering their brand’s identity.25 In addition.33 de Chernatony stresses the significance of bringing the company staff into the brand-building process. industries and strategic situations.31 ENHANCE CORPORATE REPUTATION Fombrun illustrates that managers should pay increased attention to building and sustaining their reputation for great economic returns. it generates goodwill to the firm and it must be constantly maintained. PALGRAVE MACMILLAN LTD 1479-1803/06 $30. The authors alluded to the erosion of corporate reputation. hire PR staff to safeguard communications through the media. NO.00 BRAND MANAGEMENT VOL. one rarely reads about the modest deterioration of corporate reputations. it will lead the customer to assume that the products have a higher quality26 and may enable the firm to command premium price.23 They are the basis of a tool called the Reputation Quotient which Fombrun developed with the market research firm of Harris Interactive to systematically measure corporate reputation.OMAR AND WILLIAMS tional relationships with clients.28. then alerting them to their brand’s reputation.30 generate word of mouth endorsement and act as a barrier against imitation.29 enhance the organisation’s access to capital markets. so they can participate in the process of considering how to change to better deliver the desired identity.27 attract better applicants and investors. as it is very fragile and extremely hard to repair.22 An organisation’s reputation is therefore built on the shared foundation created by all six dimensions — the six pillars of reputation. An understanding of the complex phenomena surrounding advancing and enhancing corporate reputation is of particular pertinence.34 He also suggests that if the company decides to capitalise on brand reality the director of human resources should be included on the brand’s team. An exceptional reputation will distinguish the firm from its competitors.32 This can be achieved by the following practices: (1) shape a unique identity and (2) project a coherent and consistent set of images to the public. Balmer and Gray emphasise the importance of the stakeholder groups and their crucial role to the organisation’s ongoing success.20. keep the employees informed of the reputational side-effects. NO. and are often used in the exploratory stages of research. Office Depot. and it was also ranked 95th among the 100 top world brands — the only Chinese brand recognised. water dispensers. P. 271 PALGRAVE MACMILLAN LTD 1479-1803/06 $30. 4/5. Haier was rated the top brand in China. with headquarters in New York City and production facilities in South Carolina. ABC and BrandsMart.35 According to Yin. Haier is also available through the websites of many retail channel partners. HVAC. beer dispensers. While more needs to be learnt about building reputation. Haier products are currently available through a US distribution channel which includes retail chains such as Wal-Mart.00 BRAND MANAGEMENT VOL. and has recently surpassed General Electric to become the third largest worldwide. Fry’s.36 ‘case studies as a research strategy comprise an all-encompassing method with the design and data analysis’. The purpose of this case study is to analyse consumer attitudes and feelings for the new Haier logo. to determine whether it will have a positive or negative impact upon Haier’s reputation. CASE STUDY OBJECTIVES • Objective 1: To determine how respondents perceive the new Haier logo. So the initial activities to introduce the Haier brand into the large US market will be a critical component of establishing Haier’s reputation with US consumers. fans. 13. A case study is neither a data collection tactic nor merely a design feature. BACKGROUND Haier Group is the largest ‘white goods’ manufacturer in China. Target. Home Depot. the Middle East. America. In 2002 Haier America President Michael Jamal stated that ‘we promote Haier as a global brand — not Chinese or American’. BJ’s. Spain and New Zealand. such as a factory or a leveraged buyout.C. ‘you would use the case study methods because you deliberately wanted to cover contextual conditions — believing that they might be highly pertinent to your phenomenon of study’. there is also a need to learn about rebuilding it (if company behaviour permits). and Haier introduced the new ‘two brothers’ logo (Figure 1) which shows two children: one holding an ice cream cone and the other giving a ‘thumbs up’. dishwashers. freezers. air conditioners. Lowe’s. Haier products received some of the highest quality ratings from Wal-Mart buyers. Fortunoff. but a comprehensive research strategy. small appliances and other electronic products. Best Buy. China. He points out37. plasma televisions. 268–275 APRIL–JUNE 2006 . with manufacturing locations in Europe. Bed Bath and Beyond. Indeed. Richards. especially in the US market.38 The American division of the Haier Group (Haier America) was founded in 1999. Menards. Their full product line includes products such as refrigerators. Haier is the only Chinese company to establish manufacturing operations in the US market.HAIER GROUP CORPORATE REPUTATION AND BRAND IDENTITY Rarer still are database reports of company reputation in situations of either crisis or modest decline. wine cellars. HAIER GROUP LOGO SURVEY Case studies are defined as an intensive examination of a single instance of a phenomenon of interest. 38 per cent of respondents viewed the logo as positive. ‘kids’ and ‘cute’. respondents indicated they would buy the following PALGRAVE MACMILLAN LTD 1479-1803/06 $30. 71 per cent of the positive respondents indicated they thought it was for a company offering children’s products. In the autumn of 2004. ‘excited’. Undoubtedly this small sample is an issue as regards statistical validity. 13. Descriptions included ‘happy’. while 18 per cent considered it negative. 268–275 APRIL–JUNE 2006 .OMAR AND WILLIAMS Figure 1 Haier logo Reproduced by permission of the Haier Group. while only 8 per cent thought it was for appliances. wherever possible. half of the respondents were neutral about the logo. . The survey included a series of questions including openand close-ended. Comments included: ‘thumbs up . NO. single-multiple response checklists and Likert scale questions. validated measures of the concepts to serve the aims of this study. Question types involved demographic.00 BRAND MANAGEMENT VOL. • Objective 2: To determine how important a product’s logo (reputation) is to the respondents. smiles are positive’ and ‘it has nothing to do with appliances’. . a face-to-face interview survey was distributed to 200 randomly selected people over the age of 18 in Baltimore. However. MD and Harrisburg. knowledge and attitude/opinion areas. 4/5. behavioural. ranked responses. The survey also included a colour picture of the new logo. given a list of choices. FINDINGS RESEARCH METHODOLOGY A questionnaire instrument was constructed using. When asked whether they would consider buying a product from a company with this logo on it. 272 Objective 1 In general. both metropolitan areas of the USA. PA. and future work should encompass a larger sample size. 4/5. according to David Parks. washing machines (1. When asked to rank manufacturers of refrigerators. while only 41 per cent indicated it was positive. ‘dependable’ (5 per cent) and ‘quality’ (4 per cent). words or symbols.4 per cent) and microwaves (0.5 per cent). 61 per cent indicated that a familiar logo created the expectation of higher quality. Respondents described the boy on the left as Hispanic (52 per cent). However. design. The one word most often associated with this new Haier Logo was ‘childlike’ (40 per cent). 22. Haier scored the lowest. waving to consumers. ‘fun’ (20 per cent). When asked to agree or disagree with the statement ‘A product’s logo helps me to recognise what brand the product is before I buy it’. singly or in combination that distinguishes one product from another in the eyes of the consumer’.6 per cent). Japanese/Asian (18 per cent). IMPLICATIONS AND FUTURE RESEARCH A brand is defined as ‘consisting of any name. it seems that in terms of a logo as a symbol representing corporate reputation. children’s clothing (33.40 In this initial case study involving Haier. 31 per cent stated Whirlpool. However. ‘friendship’ (24 per cent). When specifically asked about this new logo related to home appliances.7 per cent).8 per cent disagreed/strongly disagreed.00 BRAND MANAGEMENT VOL. creating awareness of the product and differentiating it from other competitors’. Additionally. shoes (6. style. as opposed to their actual 273 Objective 2 Respondents indicated that quality (70 per cent) at an affordable price (32 per cent) had the greatest influence on their purchase decisions. Whirlpool scored highest in brand reputation (41 per cent). followed by General Electric and Maytag (tied at 27 per cent) and Neptune (5 per cent). the survey sample indicated that half of the respondents were neutral overall regarding the logo. 268–275 APRIL–JUNE 2006 . only 17 per cent of the respondents stated that a product’s logo would have an effect on how much they would be willing to pay for the product.8 per cent). or Chinese (10 per cent). 13. if the logo was assigned to products for children.39 Brands ‘act as a kind of flag. with 47 per cent indicating it would have no effect and 36 per cent remaining neutral. when asked the last brand of appliance most recently bought. while 11.HAIER GROUP CORPORATE REPUTATION AND BRAND IDENTITY products: ice cream (37 per cent). 57 per cent felt it was negative. Indeed. Sixty-one per cent indicated that both children in the logo were boys. while 39 per cent thought they were boy/girl. while the other has blonde hair and blue eyes and represents the West. cleaning supplies (4. televisions (7. No one would consider purchasing a refrigerator with this logo on it. the brand (14 per cent). followed by General Electric (20 per cent) and Maytag/Kenmore (tied at 16 per cent). followed by PALGRAVE MACMILLAN LTD 1479-1803/06 $30.6 per cent were neutral.2 per cent). ‘diversity’ (5 per cent). In fact.6 per cent indicated they agreed/strongly agreed. 65. COO of Haier America. Eighty-eight per cent felt the boy on the right was Caucasian. the ‘Haier twins’ logo depicts the toddler on the left with black hair and black eyes representing China. NO. 20–38. A. and Camerer. 43–57. 33. (25) Balmer and Gray. and Loy. 4. 443–454. Vol. (1996) ‘Reputation: Realising Value from the Corporate Image’ Harvard Business School Press.47 There do not appear to be any object specific components. A. (14) Fombrun. B. (7) Spence. 41–53. (2000) ‘Measuring corporate reputation: A case example’. 37. p. 3. (22) Fombrun and Shanley. Vol. Butterworth-Heinemann. C. (11) Weigelt. A. 1. by devaluing an important asset (in China. ref. G. Vol. 3 above. (8) Fombrun and Shanley. And far from signalling their essential characteristics. (1988) ‘Reputation and Corporate Strategy: A Review of Recent Theory and Applications’. 268–275 APRIL–JUNE 2006 . T. UK. ref. R. MA. 16 above. (3) Fombrun. 31–42. and Gardberg. 3. V. pp.44 Haier’s new logo may in fact negatively impact the company. 3. (2000) ‘The market valuation of corporate reputation’. (1990) ‘What’s in a name? Reputation building and corporate strategy’. (13) Herbig. Corporate Communication: An International Journal. 1. K. Vol. Academy of Management Journal. (20) Black and Carnes. 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(1974) ‘Market Signaling: Informational Transfer in Hiring and Related Screening Procedures’. No. 5 above. Caruana. and Gray.49 the new Haier logo was in fact proven to mislead consumers as to corporate reputation. T. (17) Fombrun and Rindova. pp. (15) Hebson. pp. then nearly three-quarters felt positive about the logo/brand/company reputation. and Shanley. (1998) ‘Reputation management in Global 1000 firms: A benchmarking study’. No. No. 13–17. corporate reputation is very fragile and must be constantly maintained. 13. 3 above. Harvard University Press. 3. ref. J. (26) Dowling. Berkshire. K. ref. ref. Boston. New York. (18) Ewing. pp. R. 6. Strategic Management Journal. (1998) ‘Corporate Image Management’. (4) Black. (1981) ‘The role 274 PALGRAVE MACMILLAN LTD 1479-1803/06 $30. (23) Fombrun. Vol. (24) Howard. 1. (6) Hebson. R. (1999) ‘Corporate reputation and perceived risk in professional engineering services’. purchase intentions and other factors relate to the importance of corporate reputation expressed earlier. Corporate Reputation Review. Marketing Intelligence & Planning. (5) Fombrun. L. (9) Brown. Foulsham. (12) Fombrun and Shanley. 4 above. ref. London. Corporate Reputation Review. ref. 3. No. 6 above. References (1) Fombrun. 19 above. 205–215. No. (27) Klein. Corporate Reputation Review. S.. 3 above. An exploration involving the relationship between the previous logo and the new logo could expand upon consumers’ perception of corporate reputation. ref. and outside the USA). Vol. NY. Vol. and Milewicz. No. 9. Future research should expand the sample size beyond the two metropolitan areas. T.48 as many respondents did not know Haier. (2000) ‘Who tops corporate reputation?’. 121–128. 7/8. cost and time considerations precluded this possibility. Cambridge. J. 1. C. 5 above. C. E. (21) Howard. C. 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