The article draws a distinction that most companies blur. Brand is about generating demand among customers. Reputation is about approval among stakeholders. Nike’s choice of Colin Kaepernick for the thirtieth anniversary of Just Do It is used to illustrate it.
The authors read the decision as deliberate: Nike chose to increase the appeal of its brand among younger, more liberal, ethnically diverse consumers globally while risking part of its existing older and more socially conservative customer base, and its overall reputation.
Key findings
- Most companies try to have it both ways, seeking a distinctive brand positioning among consumers while enjoying the approval of all their stakeholders. The authors call it rare for a company to recognize that the actions required to drive brand strength may come at the expense of reputation.
- The short-term cost was real. Nike’s share price fell over 3 percent the day after launch and more than 200,000 mentions of a boycott hashtag appeared on Twitter and Instagram.
- The backlash then cooled, and the shares traded strongly in the wake of increased sales.
- Making reputation the centerpiece of communications carries a cost of its own. The authors say many companies that did so found their brands became bland or, worse, irrelevant.
The company with the best reputation and falling sales
The counterexample offered is Campbell Soup, recognized as having the top reputation among US companies while facing lagging sales and a continued drop in share price. The diagnosis is that by focusing on what makes the organization respected by everyone, companies often fail to give a distinct group of customers a compelling reason to buy.
The authors also note where social media pushed companies toward reputation. Organizations now understand the need to monitor their activities for risks that can be amplified online, and to use social channels to draw attention to reputation-boosting work in the community and on the environment.
Why rebellion suits this particular brand
Just Do It has carried an element of rebellion since its inception, and the authors read the Kaepernick campaign as full-throated in that regard. They place Nike alongside other brands with rebel legacies, naming Harley Davidson and Virgin, which recognize that stirring the social pot can be effective even when it alienates some stakeholders.
On that reading, a spokesperson who combines strong athletic credentials with a recognized social conscience makes business sense, and Nike is playing the long game to expand the appeal of its brand to a new generation of consumers who respect both athletic excellence and social purpose.
Where Nike learned the difference
The article closes on the 1990s, when controversy and protests over labor practices in Nike’s overseas factories damaged its reputation and threatened the appeal of its brand. The lesson taken is that an apparent lack of social legitimacy can derail a business.
The reverse also holds. A positive reputation alone is not enough to win consumers or persuade them to pay a premium, which requires a distinctive and compelling brand positioning that resonates with the target audience and reflects their aspirational values.
Scope and limitations
The article was published in early October 2018, weeks after the campaign launched, and the authors assess it on the market reaction available at that point.
Source
This page summarises Why Brand Trumps Reputation, by Jonathan Knowles, Richard Ettenson, 5 October 2018.