Trust is one of the most crucial factors in marketing successful brands. In the era of the digital consumer a company’s transgressions can spread like wild fire. Intangible as it may be, reputation is a key asset of any consumer goods company, allowing it to command a premium for its brands, attract and retain the best talent and earn consumer loyalty. Reputational damage is a major risk, which many learn the hard way, and a proactive approach is therefore needed.
The Role Of Trust Has Intensified
Trust is central to many significant consumer trends that have a daily impact on consumer markets. It is a key factor in:
- The rise of the sharing economy;
- The willingness of consumers to hand over their personal data;
- Winning consumers over and engendering their loyalty;
- The capacity of a brand to earn consumer recommendations.
Are We All Cynics Now?
At the same time many consumers have become increasingly cynical of big brands, especially those of large multinational corporations. Words that have resonance with today’s consumer include authentic, genuine, simple, natural and real. Perhaps not words that have been traditionally associated with international brands – although many have worked hard in recent years to claim them. This partly explains why international companies have spent large amounts of money on buying smaller, more authentic brands – such as Campbell Soup Company’s purchase of Plum Organics, a premium organic baby and toddler food products company which was, as its marketing points out, “founded by parents”. And why many in the food sector have embraced the idea of the clean label – for example, Kind, with 22.0% of the energy and nutrition bars sector in the USA, advocates “ingredients you can see and pronounce”. Kind claims it believes that “if you can’t pronounce an ingredient, it shouldn’t go into your body”. It’s almond and apricot bar has 29 words in its ingredients list, compared with 111 in rival Quaker Granola Oatmeal Raisin.
What Factors Were Considered Most Important When Determining The Level Of Trust In A Company?
Misplace Trust At Your Peril
Volkswagen offers a cautionary tale of what happens if consumer trust is not respected. The Financial Times reports that the emissions scandal could cost the company up to €30 billion. In addition it has led to the company’s debt being downgraded. In an attempt to win back trust, US consumers have been offered a goodwill package which includes up to US$1,000 in gift cards, discounts on new cars and three year breakdown cover. This is in addition to the costs involved in replacing hardware and software in affected cars.
The ripple effects of a loss of trust can extend well beyond the company and affect the wider category, related categories and even a country. The melamine scandal in China in 2008 amply illustrates this. Melamine, an industrial chemical, was found in baby milk and other food products. The episode damaged China’s reputation in manufacturing globally as well as a host of multinationals manufacturing in China including Heinz, Nestlé and Unilever.
Trust In The Future
Although some would argue that consumers have short memories, the risks associated with reputation and the loss of trust are so important that trust should remain at the heart of strategy planning. It is at least as important as other, more quantifiable, risks such as supply shocks, and as such requires a comprehensive strategy.
The fast-evolving beliefs and expectations of consumers will need to be tracked continually, as will differences between countries and consumer segments. As connectedness and transparency continue to play a central role in decision-making, trust will persist in being an asset to be safeguarded.
Sarah Boumphrey — Head of Strategic, Economic and Consumer Insight - Euromonitor International
Euromonitor International is the world leader in strategy research for consumer markets. Global coverage and leading edge innovation make our products essential for companies worldwide. From socio-economic context to intimate detail on the smallest products or markets, we offer unmatched detail and unbiased content for every region, country, category and channel. Euromonitor International market research focuses on industry, country, company and consumer lifestyle research. We analyze companies and markets in more than 200 categories across 80 countries.