Research: Company Behind the Brand Drives Consumer Purchases

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Given the strong emphasis on branded products, it is logical to conclude that the performance of a product is all that matters to the consumer. But a new global study suggests that the reputation of the company behind the branded product plays a surprisingly important role in the consumer purchasing decision.

Seventy percent of consumers surveyed avoid buying products if they do not like the parent company, according to a study conducted by KRC Research, a market research firm, for the Weber Shandwick PR agency. The study was conducted among 1,375 consumers and 575 senior corporate executives in Brazil, China, the U.S. and U.K. Weber Shandwick’s Chief Reputation Strategist Leslie Gaines-Ross says, “Consumers are using their dollars as a vote of confidence in companies they trust… The company standing behind the brand assures consumers that they can trust the quality, ethics and safety of the brands they are buying.”[more]

The research reveals six new realities about the interdependence of corporate and product brand:

1. The company behind a product is as important as the product brand itself, a factor validated by both consumers and company executives. In fact, 87 percent of executives say a strong corporate brand carries as much weight as strong product brands. The majority of executives believe 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).

2. Product quality assurance is supported by corporate reputation. Consumers often use the word “assurance” to describe the value of the company behind the brand. More than half of consumers said they are increasingly checking product labels to see what company is behind the product (67 percent) and that they do research to learn about the companies that make what they buy (56 percent). One consumer participating in the study 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.”

3. Disconnects between a corporate and product reputation triggers sharp consumer reaction. Over half of consumers (54 percent) say they are surprised to find out that a product or service they liked was made by a company they didn’t like. Forty percent of these consumers say they stop purchasing the product. Surprised consumers are twice as likely to stop buying the product as they are to continue buying it.

4. Consumers are discussing the reputation of products and companies. The majority of consumers who purchase products (69 percent) say they frequently or regularly discuss how they feel about these products. Consumers also say they talk about customer service, how employees are treated, company scandals or wrong-doing, and their feelings about the company as a whole. Consumers report they are more likely to discuss corporate scandals and wrong-doing (43 percent) than corporate good deeds (37 percent).

5. Consumers shape reputation instantly. World of mouth is the leading influence (88 percent) in shaping the reputation of a company with consumers. Online reviews (83 percent) and online search results (81 percent) play major roles as well.

6. Corporate reputation contributes to company market value. Executives estimate that, on average, 60 percent of their firms’ market value is attributable to its reputation. A majority of executives (86 percent) say their companies have increased their efforts to build reputation over the past few years. 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. The study suggests that consumers recognize that reputation is long-lasting and enduring while financial performance can be short-term and cyclical.

A separate new study comes to a related conclusion, suggesting that the fastest-growing brands are those that are “ideal-driven.” It was conducted by former Procter & Gamble global marketing officer Jim Stengel, who now heads his own firm, The Stengel Company, in partnership with research firm Millward Brown.

The study indicates that the 50 brands showing the fastest growth in a ten year period (2000-2010) have all been driven by ideals or, according to the study, a brand’s “inspirational reason for being — why it exists, and the impact it seeks to make on the world.” In short, they’ve got soul and heart.

The 50 brands were closely associated with “fundamental human values,” according to Marketing Daily: eliciting joy, enabling connection, inspiring exploration, evoking pride, and impacting society — a big plus for brand marketers who keep corporate citizenship top of mind.

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