Brand reputation refers to the perception, evaluation, and expectations that people have towards a brand, influenced by various factors such as product or service quality, brand history, crisis management, and communication with the public.
Brand and reputation represent two different perspectives: the former concerns the desired image of the brand, while the latter pertains to the actual perception.
Reputation is a complex concept involving various disciplines, and its meaning varies depending on the context, but it mainly focuses on people, perceptions, evaluations, and communication.
Three key elements contribute to reputation formation:
- Social networks: social interactions where an individual's behaviors become a topic of discussion, influencing their reputation.
- Communication channels: impressions are transmitted from one individual to another through various communication channels.
- Individual behavior and social expectations: an individual's behaviors influence how others perceive them and contribute to reputation formation. Although reputation is determined by third parties and not entirely controllable, individual behavior plays a significant role in shaping it.
Similarly to individuals, not all behaviors contribute to building a positive reputation for businesses. It's primarily behaviors aligned with societal expectations that foster a favorable image. For companies, this entails meeting stakeholders' expectations. Corporate reputation is mainly influenced by product excellence and concrete behaviors adopted by the company itself.
The concept of corporate reputation gained importance in the 1990s, with the first definition of "corporate reputation" formulated by Fombrun, founder of the Reputation Institute. He describes it as the collective representation of a company's past actions and results, reflecting its ability to create value for stakeholders. Corporate reputation impacts various aspects of business, including relationships with suppliers and human resources, as well as product positioning in the market and in consumers' minds.
Corporate reputation is complex and multifaceted, as demonstrated by the "RepTrak" model developed by the Reputation Institute to measure it. This model identifies 23 indicators grouped into seven main dimensions:
- Products and services offered
- Innovation
- Work environment
- Ethics
- Social responsibility
- Leadership
- Performance
Reputation depends on the quality, reliability, and satisfaction of products and services offered, as well as on corporate innovation. A healthy and motivating work environment is essential for attracting and retaining talent. Ethics involve the transparency of corporate decisions and adherence to ethical principles. Social responsibility, or CSR, is crucial for creating value for stakeholders and improving the community. Leadership reflects the clarity of the company's vision and mission, as well as its ability to manage challenges. Corporate performance and profitability are key indicators of a good reputation.
Additionally, reputation is closely linked to human and social relationships, as it stems from a company's actions within the social context. The "Pulse" represents the emotional core of the RepTrak model, measuring the esteem, trust, admiration, and positive attitude of the external public towards the company.
Often, trust and loyalty are confused: brands seek trust believing it leads to loyalty. The concepts of "brand trust" and "brand loyalty" clarify the distinction: the former indicates the consumer's intention to rely on the brand, while the latter refers to a long-term relationship between brand and customer, consolidated through repeated purchases over time and a consistent preference for the brand.
A consumer is considered loyal to a brand when they prefer to purchase the same brand over others, repeat purchases over time, and maintain a positive attitude towards it. Customer satisfaction is a prerequisite for loyalty and triggers processes of trust and loyalty. A high level of satisfaction typically translates into trust, which in turn leads to repeat purchases and customer loyalty.
Building customer loyalty is crucial for a brand as it facilitates market share acquisition and allows for premium pricing, as high trust levels reduce price sensitivity. Brand loyalty develops through three levels:
- Brand recognition: the consumer knows the brand and considers it an alternative if their preferred choice is unavailable.
- Brand preference: the customer prefers the brand over others but is willing to consider alternatives if necessary.
- Brand persistence: this is the highest level of loyalty, where the customer is committed to the brand and unwilling to consider other options.
Achieving a high level of trust increases the value of the brand: brand loyalty is indeed a key component of brand equity and is influenced by it.
The concept of reputation contributes to the development of sustainable competitive advantage and the establishment of long-term relationships with various stakeholder groups. Corporate reputation is influenced by communication strategies aimed at creating positive impressions, and e-reputation, derived from electronic contacts, has become increasingly important today. The influence of the Internet on reputation management, both online and offline, has become a key issue, with speculations about its positive and negative impact. The internet has changed how information circulates and how stakeholders interact with companies, necessitating further research to fully understand its impact on reputation.