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March04

Bad name, high esteem?

WHY do brands which seem to manage their reputation badly still reputationseem to be held in high esteem by some people?

Why do so many people still vote for the African National Congress, despite so much anger at high levels towards real or perceived corruption, poor service delivery by some ANC-controlled municipalities, and abuse of positions by senior government officials who are said to enjoy political protection from the ruling party?

Why does support for the Democratic Alliance in the Western Cape remain strong, despite all the accusations levelled at the party by many residents of poor areas in the province? Why does Telkom still get listed as one of the most respected brands in South Africa; have you seen its soaring share price?

Why, despite all the picketing at stores and social rambling by the likes of BDS (Boycott, Divestment and Sanctions), do many loyal customers – including some nicodemus* BDS supporters – still shop at Woolworths? Why is Eskom seen as an attractive employer by many aspirant employees, despite its growing notoriety as a service provider?

Why do many customers choose to remain loyal to companies and political parties that only seem to remember them in months leading to elections?

Does all of this prove that customers do not care about corporate reputation?

Part of the answer lies in the fact that brands that have been established over many years tend to reach a point in their trajectory where adherence to them is driven more by a combination of ‘old-habits-that-die-hard’, ‘fear-of-the-unknown’, ‘better-the-devil-you-know’, ‘memories-of-the-good-old-days’, ‘absence-of-real-substitutes’, etc than by satisfaction with the quality of their offering.

This strange phenomenon gives the people who manage those brands a false sense of comfort and love that they’re often too happy to exploit for as long as they believe they can.

Some firms offer consistent quality

But of course, there are also cases of old established brands offering relatively consistent quality, innovation and attention to customer needs and general stakeholder issues, despite occasional mistakes. Woolworths might fall into this category.

To bring this closer to home, take a look into your own life for the things/people that you’ve become attached to over the years, those who – judged by their conduct vis-à-vis you – do not seem to attach much value to you, until the day you decide to start seeking satisfaction elsewhere.

This could be your spouse, the political party you’ve always voted for, a retailer you’ve always shopped at, etc. Ask yourself why you keep those people and brands in your life – despite what others say about them – when you can go elsewhere to satisfy your needs.

In a recent Sunday Times interview, Shoprite CEO Whitey Basson stated: “As far as the Shoprite people are concerned, the [latest budget announced by government] is actually favourable – as it offers an increase in pensions, the social grant, etc, and the tax hikes won’t reach the average Shoprite customer, so I’m not really too stressed about that.”

Ian Moir, the CEO of Woolworths, would probably offer a totally different answer to the same question because the customers he’s targeting – those falling into the LSM levels 8-10 – will be affected by increased taxes and fuel costs, resilient as they’re known to be. For the aspirant black middle class and those who still rely on monthly salaries to pay their bills, the impact will be greater.

Also, despite the issues raised through the BDS campaigns, the bulk of Woolworths customers do not share the concerns raised about the Israel/Palestine conflict. They would therefore not give up the quality they are accustomed to for this cause.

Seemingly illogical party support

The same applies to the seemingly illogical support of political parties described above. In the case of the ANC, hardcore supporters even manage to press buttons in their minds to separate the illustrious image of the party from that of the individuals who run it and who, through their conduct, give it a bad name.

People do care about corporate reputation. But corporate conduct has to touch them where it matters most for them to change behaviour and patronage. In cases where substitutes are few or non-existent, customers will get angry for a while and, where possible, withdraw their support for a short period, and return afterwards.

This happened about three years ago when many Woolworths customers stayed away for a short period after false reports that the retailer would no longer be employing white people. In the same vein, continued levels of reported white racism and denial about the real ravages of apartheid on the black population will ensure that the ANC keeps winning election after election.

Tarnish reputation on issues that really matter to stakeholders, and you will see behaviour change.

*Those who go to shop at Woolworths while the rest are not watching.

  • Posted by donvalley
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