Is potential brand damage at P&O down to bad luck, bad management, or poor communications?
Whichever, there can be little argument that once again a major brand may suffer significant brand damage.
It doesn’t take a specialist to spot the potential for such injury to the brand. We’ve seen cases in recent history of major names taking serious hits – sometimes enough to destroy the brand and the business.
- Arcadia, owner of Debenhams, Top Shop and others. The brand mired by poor customer value and controversy over finances and its pension fund – not helped by its controversial controller.
- Anderson Consulting. Its role in the Enron scandal called into question one of the critical brand values – probity. Enron went, and the Anderson Consulting brand with it.
- Uber. Flying high in public approval until it seemed to become a magnet for brand tarnish. From rumours of harassment, to scrutiny of employment practices – brand questions that were certainly not helpful for its disappointing IPO.
- Mighty Facebook has seen its once-loved brand skate from one PR crisis to another.
- Volkswagen, automotive paragon, caught questionably manipulating pollution data.
Such examples raise the question of how you evaluate brand damage. The cost to the business may be quite straightforward to assess – it is in pounds spent on litigation and compensation, lost revenue and forfeited customer relationships. But damage to the P&O brand is more difficult to evaluate as it concerns attitudes, emotions and values – and the actions that may result from them.
There are a number of tried approaches to brand valuation and views on which is the most appropriate and reliable can be quite heated, but there are standard models. However, these models cannot easily be inverted to apply to brand damage.
For example, one approach uses the value of advertising and promotion invested in a brand – this is always a bit suspect to me as it does not take account of the effectiveness or otherwise of the campaigns. Manifestly, this cannot be used in reverse.
A more robust approach has been to calculate the notional cost for an organisation to license the brand in question. This is perhaps more accurate, though it does depend upon a good deal of subjectivity. What is the value of licensing a tainted brand?
Direct financial loss or movement in share price could be included in a formula of indicators, but although these may be a measure of corporate loss, they may not help us assess actual damage to the brand. The real brand damage is reputational. Financial loss is a result.
Let us return to the example of P&O: as we noted earlier we can already look at the cost to the company of the outcome, and look at the impact on the share price. A more accurate indicator may be sales – though this may take time to become apparent. Customer attitude to brands is often directly reflected in willingness to buy and switching brand choice. But customers are not the only stakeholders and in the case of powerful multinational brands, the reputation amongst governments, influencers, regulators, trade bodies, employees and trades unions will all reflect the degree of brand damage.
In short, reputational damage inevitably results in brand damage. It will be up to P&O’s skill to keep the ship afloat.