Watch that corporate reputation

Ethical reputation might mean a lot more than businesses think. According to research by the Fraser Consultancy, there may be a large ‘stealth' segment of apparently loyal customers ready to jump ship as soon as a more ethical alternative product or service becomes available.

by Fraser Consultancy
Last Updated: 23 Jul 2013

Karen Fraser, of the Fraser Consultancy, calls such consumers ‘conflicted consumers', and her research shows there are plenty of them. In her work on British consumers, she found that nearly one in four people said they bought products and services from companies whose ethical reputation they deemed poor or very poor.

Fraser also found that 44% of people in her survey had spoken about corporate ethics with friends or acquaintances in the past month, and that a third of such conversations negatively portrayed the company or brand involved. At a time when businesses increasingly rely on word of mouth, this is very bad news indeed.

So relevant is Fraser's idea for modern-day corporations that it was picked by the Harvard Business Review as one of their 20 breakthrough ideas for 2007. In an article outlining the conflicted consumer concept, Fraser wrote: "Though they are good customers for the moment, their doubts may feed a powerful if latent resentment toward a brand."

To identify which brands or companies were particularly exposed to conflicted consumers, Fraser has been compiling the Ethical Reputation Index since spring 2006. The index highlights companies with the worst reputation and the underlying reasons for this lack of trust.

Her latest poll revealed that McDonald's came top of the list for the perceived damage its food had on children. Burger King followed (see ranking below) for the same reason, while companies also appeared for their perceived lack of care about the environment or the way they treated their workers.

Companies who fared well on the other hand were rated because of their ethical foundations, high level of consumer trust and an emphasis on sustainability. Fraser says that companies can learn from these rankings. "Mud sticks," she says. "It takes time to change a reputation. Companies should also know that throwing money at a campaign can be counterproductive if consumers don't believe what you're saying. And in an age of digital communications, companies do face increased scrutiny."

Worst 10
1 McDonald's
2 Burger King
3 Ryanair
4 Nike
5 Shell
6 BSkyB
7 Barclays Bank
8 Camelot (British National Lottery)
9 Easyjet
10 American Express

Best 10
1 The Body Shop
2 M&S
3 Boots (chemist retail chain)
4 Google
5 The Coop
6 Sainsbury's
7 Tesco
8 Kellogg's
9 BBC
10 Waitrose (upmarket British supermarket)

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