When facing a crisis, the former and present reputation of a firm would be shaken and may transform into an unfavorable situation for the organization, but how a firm communicates with stakeholders about such high-impact events can influence perceptions of the corporate reputation and, in turn, positively impact on their
future purchase intentions.
On this premise, theoretical literature regarding corporate brand and reputation, crisis management and consumer perception about post-crisis outcomes are mainly
reviewed in order to serve as pre-understanding knowledge that enhances case assessments, using the 2009 Toyota crisis as a good example.
A brand can convey a numbers of facets, such as attributes, benefits, values, culture, personality, and user identity (Kotler., 2003). Through a set of symbols and characteristics conveyed by a brand, consumers can easily identify what the meaning of logos and what values they represent, as well as differentiate them from others.
Corporate branding draws on the traditions of product branding with the same objective of creating differentiation and preference for customers. It involves more complex activities at the organizational level and requires to manage interactions with multiple stakeholder audiences (Knox & Bickerton., 2003). In addition, branding on corporate agenda has been increasingly recognized as a strategic tool that leads to a dramatic extension of the applications and scope of branding (Ibid). Urde (2003) emphasized the importance of core values created in corporate branding process, in which the core values are linked to organizational mission, vision, culture and organizational values, all of which affect the brand architecture, product attributes, brand positioning and communication strategy.
Consumers tend to identify with the personification of brands by associating themselves with the particular company’s traits such as values, characteristics, attitudes, and ideals. Therefore, to personify the corporate brand, the impression created through communication must be consistent with values represented by the company (Urde., 2003).
Further, benefit associations provide a central reason for consumer’s choice of a specific brand over others in the category (Dawar & Lei., 2009). To gain customer-based brand equity, service/product users must be aware of, and familiar with, the value offering (brand awareness) and hold brand associations that are strong, favorable and unique in comparison with other competing brands (Petruzzellis., 2010).
Corporate reputation is the key aspect of corporate branding. It is of great significance to organizations: financial institutions, government, non-governmental organizations (NGO), public or private establishments, proprietorship, partnerships etc (Watson.,
2007). Essentially, corporate reputation is an aggregate evaluation made by stakeholders of how well a company is meeting stakeholder’s expectations based on its past behaviors (Wartick., 1992). Therefore, the value of a brand is determined by its assets (tangible and intangible), brand image and reputation, which forms a critical part of the intangible assets (Wang., 2005). Fill (2006) suggests that reputations are developed over time from the image, and is more embedded and stable. Yet, while image is more transient, superficial and, sometimes, instantaneous, Watson (2007) argues that
reputation does not occur by chance.
Reputation relates to leadership, management, business processes, quality of products and services, relationships with stakeholders, and the responsiveness of communication
activities as well as feedback mechanisms. A favorable corporate reputation can convince the undecided to choose a certain product or service and dissuade existing customers from moving to a competitor; whereas a damaged reputation can
be irreparable and, in extreme cases, lead to a company’s downfall (O’Rourke., 2004). Fombrun (1996) argues that, in order to build a favorable reputation, four attributes need to be developed vis-a-vis: credibility, trustworthiness, reliability and responsibility. Everything an organization does, and does not do, has a direct impact on their reputation (Dolphin., 2004). It is therefore understandable why stakeholders impulsively–sometimes correctly, too–develop expectations as to how the firm will act in a given situation.
When customer’s expectations are satisfied, they will feel safe, secured and respected. These intangible benefits are usually evident in the value of value of relationships between companies and their customers, including all stakeholders in the value chain. Customer satisfaction thus increases trust and enhances customers’ loyalty to a brand (Ravald & Grönroos., 1996).
However, failure to meet those expectations may tarnish the reputation and corporate image of organizations. This highlights the fact that although many firms have achieved
sustainable growth and marketing success, an unexpected crisis has a multiplier effect that can, within minutes, due to social media and ICT advancement, destroy even a multinational company (Fill., 2006). Therefore, reputation may offer both benefits and
challenges to organizations.
Nevertheless, the Toyota crisis is a factual example of how companies can redeem its waning public image through investments in Research and Development (R&D), managerial competence, flexible policies and strategies, as well as the willingness to weight complaints, suggestions and reported problems from consumers. Strict adherence to existing laws in a business environment, for example, gas emission law, employment law, health law, among others, also eliminates costly lawsuits and saves productive time.
In chaotic, risky or fiercely contested business environments, there’s a need for managers to adapt to robust, corporation-wide plans that effectively deal with unexpected crises. Such crisis management mechanisms offer reliable methodological tools through which situation favourableness is evaluated. In our highly volatile international markets, crisis management is also useful in determining organizational policies that aid maximization of benefits from financial globalization either in pre-crisis or post-crisis periods (De Blasio & Veale., 2009).