Safeguarding corporate brand and reputation

April 2019  |  EXPERT BRIEFING  |  RISK MANAGEMENT

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The most invaluable assets of a business are its brand name and reputation. Indeed, a company’s brand and reputation is often synonymous to its success.

Corporates often believe that the trust and loyalty a brand can invoke in a market is a vital element in defining its success. A strong brand has various positive implications. For instance, customers are not only willing to pay for a company’s products but they are also happy to pay for the overall experience, which is why companies with a greater brand reputation are able to charge a higher price for the same product as their competitors.

Safeguarding brand reputation

An organisation’s reputation is brought to life in various ways, such as word of mouth, actions, employees, quality of products, social media promotions and discussions and so on. While it may take years for an organisation to build its reputation, it can be lost overnight. Employees play an important role of being brand ambassadors of the organisation. Therefore, it is crucial for an organisation to equip itself against such reputational damage by providing training to its employees and communicating with them frequently. Another interesting situation is to consider the outsourcing scenario. When outsourcing work to a vendor or service provider, a company must ensure that the work performed by the vendor or service provider is of utmost quality and that the work is delivered within the stipulated time frame. If anything goes wrong in this situation, customers will not easily forgive such mistakes and this can cost the company its brand reputation. In short, a customer may not like to buy from a company he or she does not trust, investors would not like to associate themselves with a company that has a bad reputation, and an employee may not wish to work for a company with reputational issues. A complaint redressal/escalation policy can go a long way to addressing the concerns of a consumer and a clear employee policy can minimise the stress levels of employees.

With the advent of social media and ‘fake news’, corporates need to be cautious about their brand image and reputation. As such, it becomes imperative to take steps to protect their brand and reputation by securing their rights under various intellectual property laws. Some corporates have to contend with spurious goods flooding the market, in the form of piracy and counterfeiting. In such cases, corporates also need to send a strong message to infringers that there will be punitive action in the event of any trademark, patent or copyright infringement. It also becomes important for parties to conduct anti-counterfeiting raids in the market to ensure that culprits are identified and caught. There are statutory remedies of a civil or criminal nature against infringers, under Indian intellectual property laws. Such strong actions, through enforcement, would enhance the brand value of the organisation.

Given that safeguarding corporate brand and reputation is a major strategic risk, a company’s board of directors should be primarily responsible for protecting their brand and, as such, must plan a strategy. In India, one of the major brands in the food sector recently suffered a serious setback when its noodle packets were recalled due to not receiving the right clearance from regulators. This proved very costly for the brand and led to a number of its brand ambassadors revoking their endorsements. Safeguarding the corporate brand and reputation cannot be reactive. It should not be a just a thing to do when an incident occurs. It should be proactive, with a proper risk mitigation plan and a scientific approach able to foresee such situations. Within a risk mitigation plan, companies should: (i) ensure that the company’s logo, website and trademark are unique and original and take appropriate legal advice so that there is no claim of similarity or infringement against the company; (ii) ensure that the company’s logo, website and trademark are protected under the relevant trademark and copyright laws; (iii) ensure that the company’s arrangements and agreements with customers, service providers and vendors contain protection to the brand and reputation; (iv) ensure that the company has a robust policy that gives pointers to all shareholders, management, employees, customers and vendors on their conduct; (v) ensure that the company has a systematic way to monitor its communications in social media; and (vi) ensure that the company takes an aggressive stance on tackling any issues or infringers with respect to its brand or reputation.

Another interesting aspect to note would be the #MeToo campaign, which has recently brought to light allegations of sexual misconduct and has had an impact on how people perceive particular brands. Following the emergence of the #MeToo campaign, organisations are being forced to evaluate their internal policies and conduct. Each company’s work culture is unique and it is important that management acknowledges internal issues and utilises their internal culture to bridge any gaps. Such efforts should also be effectively communicated to employees in order for them to feel aligned with the ethos of the organisation.

Conclusion

Most companies should commit to adopting a good risk management policy which encompasses the entire value chain of stakeholders. On the other hand, there are certain corporates who overlook the importance of brand and reputation since they perceive it as more being intangible in nature and often get caught up only with revenue numbers. Furthermore, with the rise in social media marketing strategies, one should always be on the look out for any kind of news, fake or otherwise, which can impact consumers. There is always a possibility that some reputational risks arise due to a slow burning issue or an issue or a problem that was not properly addressed. Instead of covering up such issues or brushing them aside, study them, learn from mistakes and move forward to develop a good reputation and corporate brand. Once a reputation is ruined and a brand’s image is tarnished, it is a herculean task to rebuild.

 

Junia Sebastian is a partner at ALMT Legal, Advocates & Solicitors. She can be contacted on + 91 (0) 80 4016 0036 or by email: jsebastian@almtlegal.com.

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Junia Sebastian

ALMT Legal


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