Corporate Reputation Review

Analyzing the German Corporate Reputation Landscape

Volume 4 Number 4

GERMANY

Prof. Dr Klaus-Peter Wiedmann Holder of the Chair for General Management and Marketing, Hanover University

INTRODUCTION A public survey that asks the ‘man on the street’ to name companies that come to mind — such as the three best and three worst companies — produces ‘top-ofmind’ (TOM) positions. Such positions provide extremely interesting information that relevant companies need to take into account in planning reputation management. Such information is interesting, of course, for those companies that are mentioned in such a survey: companies learn whether their reputation efforts are succeeding or failing, and they can compare their specific TOM positions with those of other companies. In comparing their TOM positions with those of other companies, companies should not confine themselves to their own sectors, however; that would be short-sighted. They should also look at the positions of companies from other sectors, because these yield important information about the public’s awareness, needs, emotions and thoughts. Such insights into the ‘reputation landscape’ also make findings of such surveys extremely interesting for companies that are not mentioned. Analysis of TOM positions, when pursued carefully, can yield a surprising number of insights and ideas. While this paper concentrates on results obtained in Germany, it also provides basic ideas about such analysis in general.

WHICH COMPANIES HAVE THE BEST REPUTATIONS IN GERMANY, AND WHAT EVALUATIVE PATTERNS CAN BE DERIVED FROM THIS RANKING? Figure 1 provides an overview of the reputations of various companies in Germany. There is an obvious gap between the top three companies and the others, and, within this lead group, DaimlerChrysler clearly ranks ahead of Siemens and Volkswagen. Concentration processes in the area of TOM positions A concentration process — which, incidentally, is also taking place in other countries — is easily recognized by considering not only the outstanding roles of three companies, but also the distribution of votes for various companies throughout the entire survey. For example, a total of 27 per cent of all votes were cast for the top five companies, while the top ten companies received 40 per cent of all votes and the top 20 account for 54 per cent of all votes. Ultimately, this result means that the man on the street, when asked to mention particularly good companies, cannot think of very many companies. ‘Top-of-mind’ positions should not be confused with the degrees to which companies are known in general. They have much more to do with companies’ cognitive/emotional presence within the evoked sets for relevant stakeholders. Moreover, this cognitive/emotional pre-

Corporate Reputation Review, Vol. 4, No. 4, 2002, pp. 337–353 # Henry Stewart Publications, 1363–3589

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Germany: Analyzing the German Corporate Reputation Landscape

Who is most visible in Germany?

Figure 1:

12.0%

10.0%

% of total nominations received for ‘best company’ from representative sample of 1000 adults (18+) in Germany

8.0%

6.0%

4.0%

2.0%

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R

C

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C ED ES S EU VO IEM ) EN TS LK S C SW H A E TE GE N LE K K A O R M ST A B D M T W Q U EL LE A LD M I IE LE B O SC M H ET R PH O G ILIP M (O S PE L) R EW E SO A N B Y EL A F VA EC OR N (E D ES TR D O EK TL É LUX A , M /L 'O A re R a K TK l) M IC AU F) R O SO FT A D ID A TE B S A N YE D EU GE R TS LM A C N H N E SP BA A R NK K A SS A LL E IA N Z IB M N O K IA LI K D A L U FL A N D B A SF

0.0%

Klaus-Peter Wiedmann, U of Hanover, Germany © Reputation Institute

sence does not automatically mean that the company in focus is highly appreciated. In a number of additional studies, the author attempted, via correlation analyses, to identify relevant relationships between the TOM positions and a) advertising expenditures, b) media presence and c) overall public presence. With regard to factors b) and c), we drew on expert opinions and thus also used the ‘presence noted by experts’ as an explanatory factor. Moreover, companies’ results improved to the extent that their entire communicative presences were considered — as in the case of the ‘public presence’ criterion that was developed. Such presence is reflected not only in the extent to which companies are treated throughout a wide range of media (= media presence), but also in the extent to which companies, along with their products, employees, shares, etc., are present in everyday life (for example, we see automobile companies’ products on the road every

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day). On the other hand, the TOM position rankings are only slightly similar to public-presence/visibility rankings. Only a few individual positions can be understood via such comparison. In other words, some companies that are only ‘also-rans’ in the TOM ranking have a very strong public presence. Therefore, other factors, in addition to those such as size and presence, must also influence TOM position. Company size and public presence are important, but the sector also seems to play a significant role A look at the sectors represented immediately reveals that all top five companies can be classified within the technology sector and that a total of three companies are automobile companies. Among the top 15 companies, a total of 11 can be considered technology companies in the broadest sense, and 18 of the top 40 can be considered technology companies (see Table 1).

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Table 1: Top-of-mind ranking and social acceptance/social visibility Rank of the Company

A / V

1. DaimlerChrysler 2. Siemens 3. Volkswagen 4. Deutsche Telekom 5. BMW 6. Karstadt-Quelle 7. ALDI 8. Miele 9. Bosch 10. Metro 11. Phillips 12. GM (Opel) 13. REWE 14. SONY 15. Ford

96.4 / 100 96.5 / 78.8 94.3 / 75.7 66.7 / 53.8 97.8 / 35.8 95.4 / 34.2 95.8 / 39.0 95.8 / 28.2 95.7 / 27.5 93.8 / 24.5 89.1 / 24.5 60.8 / 31.5 100 / 19.1 94.0 / 19.9 78.3 / 23.9

Rank of the company A = Social Attractiveness V = Social Visibility

Rank of the Company 16. AB Electrolux 17. Nestle Lóreal 18. AVA (EDEKA et al.) 19. Microsoft 20. ADIDAS 21. Bayer 22. Tengelmann 23, Deutsche Bank 24. Lidl 5 25. Sparkasse 26. Allianz 27. IBM 28. NOKIA 29. Kaufland 30. BASF

A / V 86.4 / 17.5 83.7 / 17.1 86.5 / 14.7 55.4 / 22.3 93.6 / 12.3 77.2 / 13.9 93.1 / 11.5 48.2 / 21.5 67.5 / 13.5 43.4 / 21.1 67.8 / 12.3 91.3 / 9.1 100 / 8.3 94.7 / 7.6 70.8 / 9.6

Rank of the Comp. 31. Mannesmann

A / V 81.0 / 8.3

(today = vodafon)

32. Henkel 33. Lufthansa 34. Spar 35. Coca Cola 36. Bauknecht 37. Porsche 38. Walmart 39. Phillip Morris 40. Nike

94.5 / 7.2 84.2 / 7.6 88.2 / 6.8 87.5 / 6.3 92.9 / 5.6 100 / 4.6 48.0 / 10.0 100 / 4.8 91.0 / 4.8

= Ranking in accordance with absolute frequency of mention = Positive mentions as a percentage of total mentions = Percentage of reference figure (DaimlerChrysler = 100)

Technology plays an important role in Germany At least in part, chemical companies can be classified as technology companies. In the case of BASF, this view surely fits with the public’s perception, while other associations come into play with Bayer and Henkel (such as pharmaceuticals from Bayer and detergents from Henkel). If the latter two firms are given only half a point, therefore, then a total of 20 — or exactly half — of the companies can be classified within the technology sector in some way or another. The Old Economy is valued especially strongly Significantly, nearly all companies — with the exception, perhaps, of Microsoft — can be classified as Old Economy companies. What is more, on closer inspection even Microsoft fits within the Old Economy. Needless to say, some of those surveyed mentioned companies such as Yahoo, AOL, etc. Each of these companies was mentioned only a maximum of two to

three times. And even if one includes all ‘New Economy’ companies, no more than 16 mentions result. Apart from the fact that only a small portion of the general population has actively considered these companies and expects them to play an important role in future economic development, the losses on Germany’s ‘Neuer Markt’ stock exchange, and the resulting ‘bashing’ of the New Economy in German media, are likely to have had a considerable impact in this area. On the other hand, it is indeed somewhat surprising that even very well-established companies in the media sector did so poorly. A company such as Bertelsmann, for example, one of the world’s largest media companies, and a company that helps Germany compete internationally in the vitally important media sector, received only three votes. Obviously, a company’s social relevance plays only a subordinate role with respect to achieving a strong topof-mind position. By contrast, personal relationships to companies’ products and

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Germany: Analyzing the German Corporate Reputation Landscape

services, along with the fascination elicited by the relevant sectors and companies (fascination which has much to do with personal experience), have a much stronger influence. Relevance to personal experience plays a decisive role — retail companies and strong brand names thus receive particularly strong attention A strong personal relationship, along with a tendency toward experiential centering, are likely to be important reasons why retail companies (four of them among the top 15: Karstadt/Quelle, Aldi, Metro, Rewe) and makers of brand name products used in everyday life (Nestle´/L’Oreal, Henkel, Coca Cola) and of products for sports and recreation (Adidas, Nike) are centrally represented among the top 40. This area also includes Phillip Morris, the cigarette maker — and it is quite interesting, in light of the public’s strong orientation to health and fitness and of its general rejection of smoking, that this company made the top 40 (even if just barely), and did so ahead of Nike. It is also remarkable that a total of three chemical-pharmaceutical companies are placed in this group: Bayer (21st place), BASF (30th place) and Henkel (32nd place). Moreover, it is quite interesting that these rankings run exactly counter to what would be expected under the aforementioned hypothesis of experiential centering. According to that hypothesis, a company such as Henkel, namely a company uppermost in the minds of consumers, should rank ahead of Bayer and BASF. Obviously, a number of factors are at work simultaneously in this area, and this highlights the need for differentiated reputation research, such as that planned for the second survey phase of the EURO-RQ study. Similarly, there must be a number of different reasons why, among financial ser-

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vices providers Deutsche Bank, Allianz and the Sparkassen organization hold similar places among the top 40. It is true that all three companies/company groups stand out by virtue of their large size. Deutsche Bank — and Allianz, in part — tend to represent ‘big business’; Deutsche Bank also stands for ‘big international business’, while the Sparkassen organization, with its largely independent subsidiaries, represents ‘local business’, as the ‘Sparkasse (bank) just around the corner’, with a public-sector orientation. Can the perspectives of Germans be understood simply by considering the rankings of various different companies? What about small and medium-sized companies? The top 40 list naturally also reflects those effects under which particularly large, media-present companies are mentioned by many people and thus tend to rank (and must rank) considerably higher, in terms of numbers, than smaller companies. In this context, what can be the chances of businesses such as the corner garage, ‘our city’s furniture store’, small, local machine manufacturers or companies that supply obscure products that go into the production of other products (even if they happen to be well-known brands)? Do Germans simply value large and very large companies, and thereby forget that small and medium-sized companies are the backbone of the economy — especially when it comes to protecting jobs? Certainly not: the problem here originates in a one-sided evaluation perspective, and that is a problem that certainly can be solved. To deal with this problem, the author has introduced an ‘SMB score’ (score for small and medium-sized businesses). Every smaller and medium-sized company that was mentioned and identified at least somewhat reliably, and that can be classified within the manufacturing sector, was taken

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into account via this score. Overall, a total of some 170 companies were subsequently placed within the SMB score. As a result, Germany’s ‘Mittelstand’, ie, its small and medium-sized companies, would receive a very high top-of-mind position. ‘High’ means on a level such as that of Volkswagen, one of Germany’s best-known and most-respected companies (it received only a few votes more). Needless to say, use of the SMB score brings up a number of methodological problems, problems that, unfortunately, cannot be discussed in detail in the present context. On the other hand, the major reason for mentioning this system was to highlight the need for a differentiated view of the German reputation landscape — and, thereby, to highlight the important role of the ‘Mittelstand’ in the awareness of German citizens (see in somewhat greater detail, Wiedmann, 2001). Needless to say, the idea of forming sum scores, and of using such scores as a basis for identifying relevant patterns in the awareness of the German public, can be transferred to many other branches. For example, if we focus on retail companies, then summing the companies among the top 40, to produce one company category, would yield a score of 405, which is far higher than that of DaimlerChrysler. This is not really acceptable, however, since consistency would require formation of sum scores for all other areas as well. If one forms a sum score only for those retail companies that otherwise would ‘fall under the table’, because they were mentioned only by a few people — as a result of regional differences in presence and/or specific preferences, while the intended category was really ‘my retailer for . . .’ — then the impressive figure of about 370 mentions would result. With this approach, the category of ‘my retailer’ would rank first by far among the top-of-mind positions. While of course the retail sum score

must be used very carefully, this score does help, in a suitable way, to mitigate the impression that results when one focuses only on the numbers of mentions achieved by individual companies. After all, ultimately it is not large industry alone that achieves outstanding top-of-mind positions. Companies with a strong orientation to the immediate experience of individual respondents have positions that are just as strong, if not considerably stronger. In the present context, we are ‘stuck in the middle’ to a certain extent, since it is found that either a) very large, highly media-present companies or b) small or medium-sized companies within respondents’ immediate experiential contexts achieve strong top-of-mind positions. Companies that tend to fall between these two extremes simply have ‘bad luck’ — in the public’s awareness, they are neither ‘fish nor fowl’ and run the risk of being overlooked. The ‘country-of-origin’ effect obviously still plays an important role Multinational companies and global players have a special position within the group of very large companies with a strong media presence. We must ask, therefore, whether — and to what extent — such companies have already established themselves within the evoked set for the German population. For example, how strongly has the German public’s awareness become globalized with respect to the visibility of global players or, in particular, of foreign companies? If we concentrate on the top 20 companies, then the results are rather sobering. There is some good fortune, however, in that DaimlerChrysler is now a global player (ie, is no longer solely a German company) and that other German companies have foreign subsidiaries. In all honesty, however, the German population still perceives such companies almost exclusively as German companies. Conse-

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Germany: Analyzing the German Corporate Reputation Landscape

Table 2: Top-of-mind internationalization in Europe — How many companies are homebased? Belgium

Den-

France

mark

Germany

Greece

Italy

Nether-

Spain

Sweden

UK

lands

Top 5

3

5

5

5 (DC)

4

3

5

3

4

5

Top 10

4

10

8

10 (DC)

7

5

10

6

8

8

Top 20

6

16

12

12 (DC)

13

10

15

12

15

17

The numbers in the boxes show how many of the companies come from the country in question. DC = including DaimlerChrysler, a company that the German public still largely perceives as a German company.

quently, their mention cannot be understood as a manifestation of extensive globalization or even internationalization. Taking this argument a step further, no foreign companies can be found either among the top five or top ten companies on the list. Foreign companies are not found until the focus is widened to the top 20 companies. On the other hand, foreign companies account for 40 per cent of the companies in this group (see Table 2). Let us briefly compare the awareness situation in Germany with that in other European countries. Table 2 contains data, for nine additional European countries, on the numbers of companies from each relevant country (ie, the ‘home-based’ companies in each relevant country). Without discussing these results in greater detail (cf. Wiedmann, 2001), we can note that, in general, evoked sets for Europeans have not yet become internationalized with respect to companies. All in all, the TOM positions in Germany exhibit a moderate degree of internationalization. DIFFERENTIATED ANALYSIS OF REPUTATION POSITION ON THE BASIS OF A VISIBILITY-ATTRACTIVENESS MATRIX It seems necessary, in the interest of a differentiated perspective, to avoid defining the ‘best companies’ solely in terms of

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numbers of mention, and to introduce two other, more meaningful constructions into the discussion, namely a) the social-attractiveness dimension and b) the social-visibility dimension. In the following, these two dimensions are described briefly and then combined to form a ‘visibility-attractiveness matrix’. The social-attractiveness dimension In some cases, one and the same company was seen by some respondents as among the best companies and by other respondents as among the very bad companies. As a result, more meaningful information can be obtained by considering numbers of positive votes in relation to numbers of negative votes. The author considers such a relationship to be an expression of ‘social attractiveness’, and records it as the number of positive votes as a percentage of the number of mentions overall. In other words, in what percentage of cases was a company that was mentioned also included among the best companies? If we then rank the aforementioned top 40 companies in terms of their social attractiveness, some conspicuous differences result in comparison with the previous simple frequency consideration (see Figure 4). The percentage values with one digit after the decimal point are not intended to imply a particularly high degree of accuracy; their only purpose is to provide

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Table 3: Ranking according to ‘social acceptability’ 1. NOKIA 10 0

1 1. Ka rs ta dt - Qu elle 95.4

2 1. Nike 9 1.0

3 1. BAYER 77.2

2. Phillip Morris 1 0 0 3. Pors ch e 1 0 0

1 2. Ka ufla nd 9 4.7 1 3. He nke l 9 4.5

2 2. Phillip s 89.1 2 3. Spa r 8 8.2

3 2. BASF 7 0.8 3 3. Allia nz 67.8

4. REWE 1 00

1 4. Volks wa ge n 9 4.3

2 4. Co ca Cola 8 7.5

3 4. Lidl 67.5

5. BMW 9 7.8

1 5. SONY 9 4.0

2 5. AVA 8 6.5

3 5. De ut s ch e Tele kom 6 6.7

6. Sie m e ns 9 6.5

1 6. Me t ro 93.8

2 6. AB Ele ctro lu x 86.4

3 6. GM (Op el) 6 0.8

7. Da im le rChrys le r 96.4

1 7. ADIDAS 93.6

2 7. Lu ft ha ns a 8 4.2

3 7. Micros o ft 5 5.4

8. ALDI 9 5.8 9 Mie le 95.8

1 8. IBM 91.3 1 9. Ten ge lm an n 9 3.1

2 8. Ne s tle Lórea l 8 3.7 2 9. Ma n ne s m a nn 81.0

3 8. De ut s ch e Ba nk 48.2 3 9. Wa lm art 48.0

2 0. Ba ukn ech t 9 2.9

3 0. Ford 7 8.3

4 0. Spa rkas s e 4 3.4

1 0. Bos c h 9 5.7

Soc ia l Attra ctive n e ss = Num b e r of p o sitive m e n tio ns a s a p e rce n ta g e of tota l m e ntio n s / Ma nn e s m an n –> tod a y = Vod a fon e

Klaus-Peter Wiedmann, U of Hanover, Germany © Reputation Institute

criteria for ranking, in light of the often very small differences between percentage values. An immediately obvious aspect of the results presented in Table 3 is that the top social-attractiveness rankings are held by companies that previously played a rather insignificant role, simply because they were mentioned relatively infrequently. When they were mentioned, however, they often were seen considerably more positively than other companies that previously ranked higher. The companies with the highest social attractiveness A prominent group of four companies received no negative votes whatsoever, thereby achieving an attractiveness score of 100 per cent: Nokia, Phillip Morris, Porsche and Rewe. While Porsche has repeatedly received positive media coverage recently, this has been due not only to its status as a maker of excellent cars, but also to its status as a company that has achieved considerable progress in applying advanced management concepts. Nokia, on the other hand, has had some negative press — especially in connection with the poor performance of its stock. Clearly,

however, such negative reports have not undermined the very positive overall impression that the company has repeatedly been able to create in the past. The company’s reputation has been good enough to protect it from bad press when its shares have dropped moderately in value. In contrast to Porsche and Nokia, Rewe has had little presence during the period under consideration. Much the same can be said for Phillip Morris, which tends to hide behind various individual brands. Nonetheless, this company’s 100 per cent attractiveness score is quite remarkable in light of the company’s specific problem situation, as mentioned above. BMW drivers will be happy to learn that BMW ranks ahead of DaimlerCrysler in social attractiveness and, what is more, that it also considerably outranks Volkswagen. On closer inspection, however, it must be conceded that the relatively small differences between these companies in the available data hardly permit clear differentiation. All companies that have an attractiveness score over 90 per cent are in a very comfortable situation in this area. It should also be noted that this applies to just over 50 per cent of the top 40 companies.

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Germany: Analyzing the German Corporate Reputation Landscape

Clearly enough, the companies with topof-mind positions are also those that are assessed very positively. Conversely, this would mean that people tend to push the ‘bad guys’ out of the evoked set and wish to remember only the ‘good guys’. This possibility will be considered more closely in the course of our discussion. Most ‘top-of-mind companies’ have quite high social attractiveness. This bodes ill for the reputation situation of those companies with a relatively poor attractiveness score A focus must be kept especially on those companies whose attractiveness score is less than 75 per cent or which received more than 25 per cent negative votes from among the relevant votes cast. The reputation situation of those companies that received over 50 per cent negative votes is particularly worthy of monitoring: Sparkassen organization, Walmart, Deutsche Bank. Microsoft, GM (Opel), Deutsche Telekom, etc. are only slightly above this very critical attractiveness level. In light of the otherwise upbeat mood prevailing at these companies, these companies may well have serious deficits in the area of reputation management, deficits that will be considered more carefully later on. In this context, it seems useful to introduce the concept of ‘social visibility’ into the analysis in a more differentiated form. The ‘social-visibility’ dimension, and generation of the VA matrix The social-visibility dimension already played an important role earlier on. This was only with respect to the absolute frequency with which companies were mentioned, however. In our view, it is much more useful to use a relational figure in this area — as was already done in the area of social attractiveness. One possible way of doing this is to let the company that was mentioned most frequently be a reference

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base and then to set all other data in relation to it. DaimlerChrysler was mentioned a total of 251 times (positive and negative votes). On this basis, therefore, BMW had a social visibility score of only about 36 per cent. The individual scores for all top 40 companies are shown in Table 3. Table 3 also contains relational values with respect to social attractiveness, listed as the first value after the company name. The social visibility score comes second. When one correlates the two dimensions of ‘social visibility’ and ‘social attractiveness’, one can obtain a matrix such as that shown in Figure 2. Within this VA matrix, a great deal of very different strategic positions can be identified in which companies can be found and which require specific approaches in the area of reputation management. The VA matrix highlights the outstanding ToM position of DaimlerChrysler, a position due primarily to the company’s high social visibility. In the area of social attractiveness, on the other hand, DaimlerChrysler is not far ahead of other companies. Somewhat more than half of all top 40 companies meet the criterion of ‘attractiveness score over 90 per cent’ — in other words, when people think of these companies, they do so with clearly positive associations. Most companies have a ‘visibility problem’ first and foremost In comparison with DaimlerChrysler, all companies have a more or less developed visibility problem. A particularly strong indication of this is that nearly one-fourth of all top 40 companies are found in the core position CA* (V 5 10, A 4 90). While some of these companies have a high public profile, as a group they have been unable to move into TOM positions. If we make the CA circle somewhat larger, thereby no longer limiting it to the

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Figure 2:

Positioning in the social visibility/acceptance matrix

1

10 0%

AC

AB

AA

II b

I

2 3

4

BC

BB

BA 7

12

III

II A

25 23 19 38

CC

CB

Social attractiveness 11. Phillips 12. GM (Opel) 13. REWE 14. SONY 15. Ford 16. AB Electrolux 17. Nestle Lóreal 18. AVA (EDEKA, Marktkauf ) 19. Microsoft 20. ADIDAS

8/9/10

14 13 16 /1 7 1716 18 21 20 /2 2 2220 34 27 29 28 30 29 /3 2/36 36 31 32 37 /3 9 33 35 40

26 /24

1. DaimlerChrysler 2. Siemens 3. Volkswagen 4. Deutsche Telecom 5. BMW 6. Karstadt-Quelle 7. ALDI 8. Miele 9. Bosch 10. Metro

5

15 24

Social visibility

6 8 9 11 10

33 /3 4/35

100% 21. Bayer 22. Tengelmann 23, Deutsche Bank 24. Lidl 25. Sparkasse 26. Allianz 27. IBM 28. NOKIA 29. Kaufland 30. BASF

31. Mannesmann (vodafon) 32. Henkel 33. Lufthansa 34. Spar 35. Coca Cola 36. Bauknecht 37. Porsche 38. Walmart 39. Phillip Morris 40. Nike

Klaus-Peter Wiedmann, U of Hanover, Germany © Reputation Institute

core representatives of this strategy position (approximately V 5 20, A 4 80), then nearly 50 per cent of all top 40 companies are now included. Clearly enough, most

companies lack a USP (of any sort) that would enable them to achieve a strong mental presence or outstanding position in the ‘evoked set’.

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Germany: Analyzing the German Corporate Reputation Landscape

Differentiated analysis of the reasons and parameters for a company’s current top-of-mind position, within the CA field, as a basis for viable strategic and operative planning If we could include all companies within our second survey phase and ‘measure’ their reputation situation in terms of the RQ, then it would be relatively easy to find the reasons for their current positions and to learn what strategies they should take in order to improve their positions in a lasting way. Such differentiated analysis is a necessary prerequisite for any solid strategy and measures planning. On the one hand, a company must seek to learn what characteristics are particularly effective in establishing the company within the evoked set for relevant target groups. On the other hand, companies must also consider consequences: what opportunities and risks (can) arise through enhancement of social visibility, and what basis may the company have to create in order to profit from enhancement of social visibility? Overall, therefore, the solution for companies is certainly not as easy as simply choosing a strategy of enhancing ‘social visibility’. In the case of Phillip Morris — a company that has always pursued a productmarketing strategy and hidden behind its various individual product brands — it comes as no surprise that this company is among the core representatives of the CA position within our VA matrix. What is more, in light of the aforementioned vulnerability of its various product areas, it would be neither necessary nor useful, with respect to all target groups, for the company to enhance its social visibility. The case is different with AB Electrolux or Henkel, for example. In the case of Henkel, the company’s CA position should give pause, since this company, while operating primarily with product brands, has been working intensively for some time to establish its corporate brand as an umbrella brand with

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a strong competence image and to exploit this brand in its competitive strategy. This company should thus work hard to overcome its persisting visibility deficits. Mannesmann (now Vodafon) and IBM are in a somewhat similar position in that their corporate brands have played a significant role in their product-brand strategies. Intensive efforts to enhance social visibility make especially good sense in cases in which product and corporate brands are largely identical. In the technological sphere (Nokia, Sony, Lufthansa, Porsche, Bauknecht), and in the world of sports (Nike, Adidas), entrepreneurial competence plays a central role — as a sort of credibility background for outstanding products. What is more, in light of the increasing similarity of products on the one hand, and of the increased socio-ecological risks on the other, consumers want to know more about relevant companies, their commitment, their employees, their successes, etc. This is proven, for example, by studies that we have carried out in Germany (see c.f. Wiedmann 2001). High attractiveness with moderate visibility — an acceptable strategic situation? In addition to the CA position, which is particularly noticeable simply because of its great quantitative importance in the context of the top 40 German companies, we must also consider other strategic positions within our VA matrix: positions, for example, which also have high social attractiveness, in comparison with the aforementioned CA position or top position of DaimlerChrysler (AA), but which have moderate social visibility as a characteristic feature (BA). Interestingly enough, the core field of this ‘BA position’ contains no companies whatsoever. Only its peripheral areas, in the areas of transition to the AA position (Siemens and Volkswagen) or to the CA

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position (Miele, Bosch, Metro, Aldi, Karstadt-Quelle, BMW), are occupied. The other best candidates for a BA position include Aldi, Karstadt-Quelle and BMW. On the other hand, retail giant Metro, with a visibility of slightly less than 25 per cent, already falls out of this range. In the retail sector, therefore, Aldi and KarstadtQuelle hold the best rankings within the VA matrix. The reason why these companies lag rather sharply behind technology companies such as DaimlerChrysler, Siemens and Volkswagen may be that while products that meet everyday needs are extremely important, they are simply not as fascinating as the world of technology. Consequently, it is necessary to ask whether, and to what extent, companies in this position should try to enhance their social visibility. Companies in this position may be better advised to follow a strategy of ‘strengthening and protecting our current position’. A closer look at the strategic position of BMW shows a completely different state of affairs. Without doubt, this company needs to enhance its social visibility considerably. The company’s poor ranking in comparison with Volkswagen is also remarkable. While we must avoid snap judgments, there are many indications that BMW’s potential to achieve a high degree of ‘fascination’, along with a pertinent high degree of social visibility, is just as high, in light of its current range of products and services, as that of Volkswagen. Obviously, social visibility does not depend on product quality or product experience alone. In any given situation, the effective success pattern consists of many other factors as well, and all of these factors also have to be considered. Ultimately, the key is an experiential world that makes overall sense and is shaped by many very different factors — factors such as are (will be) taken into account (at least to some extent) within the framework of RQ measurement.

Since the author has not yet analyzed in detail the key forces driving BMW’s reputation (the second phase of the research is still pending), at this point he can only speculate regarding the reasons for BMW’s relatively low social visibility. One reason could be that rumors circulated, during the survey period, regarding BMW’s poor financial situation as a result of poorerthan-expected results in the case of Rover and regarding a possible related takeover (possibly, even by VW). Obviously, companies that lack an aura of success have very little opportunity, or at least have greatly reduced opportunity, to achieve a high TOM position. Very interesting relationships emerge in the ‘fictive degrees of regression’ that, on the basis of the positions of Siemens and Volkswagen, can be placed in the figure (Figure 5) alongside the strategy positions of Deutsche Telekom (4), GM (Opel) (12), Microsoft (19), Deutsche Bank (23), Sparkassen organization (25) and Walmart (38). In light of this pattern, social visibility decreases with decreasing social attractiveness, ie, companies that lack a clear success image have smaller chances of achieving a top-of-mind position. But the converse of this conclusion — ie, the conclusion that all companies with high social attractiveness always also have high social visibility — obviously does not hold, however. Much to the contrary, the cluster of ‘hidden champions’ is relatively large, as the findings show. Appropriately differentiated multivariate analyses should be carried out, on the basis of findings from the second phase of our EURO-RQ study, to identify relevant company clusters and to explain relevant TOM patterns. Companies such as Deutsche Telekom (4), GM (Opel) (12), Microsoft (19), Deutsche Bank (23), Sparkassen organization (25) and Walmart (38), in addition to having rather low social visibility, tended to be mentioned both positively and

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Germany: Analyzing the German Corporate Reputation Landscape

Ranking for the ‘worst’ companies

T FI A

G

KO M

DO N

LE M

C

TE D

EU TS

CH

E

TS C DE U

SH

HE

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HN

Number Of Votes

AL D' S M (O PE SP L) A DE RK U AS TS SE C HE BA M NK IC D R O EU S TS OF CH T E PO S T

100 90 80 70 60 50 40 30 20 10 0

EL L

Figure 3:

1. 2, 2. 3. 4. 5. 6.

Deutsche Bahn 91 a) Deutsche telekom 45 b) Shell 45 McDonalds 35 GM (Opel) 31 Sparkasse 30 Deutsche Bank 28

7. 8. 9. 10. 11. 12. 13.

Microsoft 25 Deutsche Post 24 Fiat 21 ALDI 19 C&A 17 Dresdner Bank 14 WALMART 13

13. 13. 14. 14. 15. 16. 16.

a) Ford 13 b) Esso 13 a) Schlecker 11 b) Lidl 11 Allianz 10 a) Aral 9 b) Citibank 9

Klaus-Peter Wiedmann, U of Hanover, Germany © Reputation Institute

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among the ‘worst companies’. Now the paper will consider this phenomenon of high ‘organizational ambiguity’ somewhat more closely. Before doing so, however, it will touch briefly on those companies that primarily received very poor ratings.

received the most negative votes. Second place in this regard was shared by Deutsche Telekom and Shell. Third place in this ‘contest of the worst’ went to McDonalds. Figure 3 shows what companies placed after these companies.

WHAT COMPANIES IN GERMANY WERE CONSIDERED THE WORST COMPANIES? In light of its many types of poor performance (for example, in the areas of punctuality, service, etc.) and, even more strongly, of the great public attention given to these problems, thanks to the leading media, it is hardly surprising that Deutsche Bahn (German Railways)

Deutsche Bahn is first among the most poorly rated companies The large separation between Deutsche Bahn and the second-place holders in the list of most poorly rated companies is striking. Since the public presences of companies lower down on the list, as well as their communications budgets and shares of voice, are by no means smaller than

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Deutsche Bahn’s, it seems likely that Deutsche Bahn’s extremely negative media presence during the survey period played a considerable role. While the second-place holders also had significant negative press, their media presence was still much less negative than that of Deutsche Bahn during the survey period. Reasons for a very bad corporate reputation Media presence can be considered only an intervening variable. While it always plays an important role, it is never the real reason. The real reasons lie in the specific problems, deficits, etc. that relevant companies are seen to have. A closer look at the most poorly rated companies in Germany reveals the following possible responsible areas:

— Poor performance directly connected to products and/or services — Poor performance with respect to achievement of relevant company aims (such as a perceived general lack of success) or with regard to relations with various stakeholders and especially with employees — Value conflicts or violation of specific values (such as socio-ecological values) and pertinent PR crises and fundamental ideological rejection (‘ideologically bad companies’). In the case of Shell, the last of these factors is likely to have played a role in connection with the company’s perceived ecological misbehavior in the Brent Spar case, while in the case of McDonalds, fears of ‘loss of Western culinary culture’ and general ideological conflicts were probably at work. The above-defined general reasons would seem to apply to the various companies as follows, in keeping with assumptions regarding the factors at work:

— Poor performance with regard to products and services: Deutsche Bahn, Deutsche Telekom, Microsoft, Fiat, Deutsche Post, — Poor performance with regard to achievement of company aims: GM (Opel), Sparkasse, Schlecker, Ford, — Ideologically bad company: Shell, as a company with a negative ecological image; McDonalds, as a company with a negative cultural image; Deutsche Bank and Dresdner Bank, as companies seen not only as powerful banks, but also — in the context of a possible merger — as companies that plan to cut large numbers of jobs. As to all other companies, classification is more difficult in that the causes are much more diverse. A detailed RQ study would, and will, provide better insights with respect to all companies. Additional interesting insights can be gained, however, by evaluating individual companies not solely in terms of their numbers of negative votes, but also in terms of the ratios between their negative votes and their positive votes, thereby returning to the more meaningful factor of social attractiveness, as was done earlier in the context of the top 40 companies.

Analyses with regard to social attractiveness and to degree of social rejection By weighing percentages of negative votes, as has been done in the ranking in Figure 4, thereby considering the other side of the same phenomenon, then we can speak of degrees of social rejection. This term is specifically linked to numbers of negative votes as percentages of total numbers of votes. On this basis, it is possible to separate rejection effects from top-of-mind effects and ‘out-of-mind’ effects.

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Germany: Analyzing the German Corporate Reputation Landscape

Figure 4:

Ranking according to relationships between worst/best values

1.

Shell (45/1)

98 %

2. 3. 4. 5. 6. 7.

Deutsche Bhn (91/7) & Dresdner bank (14/1) McDonalds (35/4) & Aral (9/1) Esso (13.2) Fiat (21/7) Deutsche Post (24/9) & Schlecker (11/5) C&A (17/10)

93 90 87 75 73

8. 9. 10. 11. 12. 13.

Sparkasse (30/23) Deutsche Bank (28/54) & WALMART (13/25) Microsoft (25/31) GM (Opel) (31/48) Deutsche Telekom (45/90) & Allianz (10/21) Ford (13/47)

57 52 45 39 33 22

14.

ALDI (45/79)

19

63

more negative What peecent of all votes are negative?

more positive

Klaus-Peter Wiedmann, U of Hanover, Germany © Reputation Institute

Measured in terms of social rejection, Shell places 1st in the ‘ugliness contest’ The ranking in Figure 4, which is based on degrees of social rejection, is very interesting in that Shell is in first place. Without doubt, a range of different factors have been at work. Germans have traditionally had their problems with oil companies, in part because of their helplessness in the face of frequent increases in gasoline prices. While this effect is likely to play a certain role in perception of Shell, this company’s clear lead over other oil companies in the area of social rejection indicates that other factors have been more significant. Moreover, the only reason that is considered relevant is the public relations crisis in connection with the Brent Spar case. The surprising aspect, however, is that the Brent Spar case took place several years ago, and it had long since stopped receiving press coverage by the time this survey was conducted. What is more, Shell has not come in for public criticism as a result of other problems. While Shell products are no longer

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being boycotted at gas/petrol stations — as they were in the peak phase of the crisis — Germans obviously have not yet forgotten the Brent Spar case. Shell urgently needs to act, by taking professional reputation-management measures, to regain consumer trust and appreciation. If it fails to do so, it runs the risk of being caught up in a massive, lasting public relations crisis at the next turn. Since oil companies face especially large risks of incurring harsh public criticism, ‘Shell is sitting on a time bomb in Germany’, and it must act to defuse this bomb before it goes off. Value conflicts contribute significantly to social rejection A number of other interesting hypotheses suggest themselves in the light of the above findings. If one focuses on the line that can be drawn between those companies that are rejected by more than 50 per cent and those rejected by less than 50 per cent (see Figure 4), and if one considers these companies and the relevant reasons for the rejection more closely, then the following

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emerges: obviously, rejection becomes particularly strong when value conflicts are at work. Perceptions of poor performance are less likely to generate top-of-mind positions, and companies with poor performance tend to be ignored by, or play a subordinate role in, the evoked set.

Here, it seems useful to apply the aforementioned hypothesis whereby social visibility decreases with decreasing attractiveness scores. If we neglect the ‘extreme case’ of Deutsche Bahn, which has very high social visibility in comparison with all other very poorly rated companies, we find support for this assumption by extending the aforementioned lines, which begin about at Aldi (7/- 19) and can be extended to Schlecker (9), Esso (6) and Aral (5). Are displacement processes at work here? Is it true that while in the media ‘bad news is good news’ the public quickly loses sight of the ‘bad guys’ or at least keeps them out of top-of-mind positions? This ‘extinction’ or ‘displacement’ effect seems to be at work even in the case of Shell, the company with the highest rejection score. With a social visibility of less than 20 per cent, this company seems

Differentiated consideration of reputation deficits, on the basis of the visibilityattractiveness matrix Evaluation of the situation of companies with the most negative votes can be usefully supported by including the companies within our VA matrix. To do so, it is necessary to convert social rejection scores into the relevant underlying social attractiveness scores. For example, if Shell has a rejection score of 98 per cent, then its attractiveness score is 2 per cent. The results of such conversion are shown in Figure 5.

Figure 5:

Integration of worst companies in the VA matrix Ranking of the worst companies

1

2 3

- 16 4

- 19

-2

6

12- 1 5 - 1 -1 1 2 - 1 4 25 23 19

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-8 - 6- 9

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24 - 17

1716 18

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33 31 34 35

26 /24

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8/9/10

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16 /1 7

20 /2 2 22 20 27 29 28 29 /3 2/36 36 32 37 /3 9 40

33 /3 4/35

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.

Shell Deutsche Bahn Dresdner Bank McDonalds Aral Esso Fiat Deutsche Post Schlecker C&A 25 Sparkasse 23 Deutsche Bank 38 WALMART 19 Microsoft 12 GM (Opel) 4 Deutsche Telekom 26 Allianz 15 Ford 7 ALDI

2 / 19 7 / 41 7/6 10 / 16 10 / 4 13 / 6 25 / 12 17 / 14 17 / 6 37 / 11 43 / 22 48 / 22 48 / 10 55 / 23 61 / 33 67 56 67 / 13 78 / 25 81 / 41

Ranking of the best companies

Klaus-Peter Wiedmann, U of Hanover, Germany © Reputation Institute

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Germany: Analyzing the German Corporate Reputation Landscape

Figure 6:

The most controversial companies in Germany

+/1.

Deu ts c h e Ba n k

(26/28)

2

2.

Mic ro s oft

(31/25)

6

3.

S p ar ka s s e

(23/30)

7

4.

GM (Op e l)

(48/31)

17

5.

Fo rd

(47/13)

34

6.

D. Te le ko m

(90/45)

45

7.

ALDI

(79/19)

60

What about organizational ambiguity?

+ = po sitive vo te s, - = n e g a tive vo te s, p o sitive m in u s ne g a tive vo te s = m e a s ur e m e nt of am b ig u ity Klaus-Peter Wiedmann, U of Hanover, Germany © Reputation Institute

to have virtually disappeared — at least in comparison with its objective presence. One important factor is likely to be everyday involvement; it is a likely explanation — at least in part — for the position of Deutsche Bahn (German Railways), which combines a high rejection score with high social visibility. Too many people, day in and day out, have to deal with the company’s many ‘perceived inadequacies’. And the social exchanges that take place regarding this topic, repeatedly producing ‘new’ stories and gladly recounted older ones, keep ‘open wounds from healing’. As a result, the company’s reputation is highly vulnerable. ORGANIZATIONAL AMBIGUITY — DISAGREEMENT ABOUT COMPANIES’ REPUTATIONS Finally, it is important to note that the lower, somewhat right-skewed middle section of the VA matrix (Figure 5) contains many companies that fall both within the top 40 companies and within the worst companies, ie that have received both positive and negative votes. In order to under-

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stand this phenomenon somewhat better, in Figure 6 has been listed those companies about which respondents disagree most. It is assumed that the difference between positive and negative votes reflects the extent of such ambiguity (the intensity of such disagreement) relatively well — in the following way: the smaller the difference between a company’s positive and negative votes, the greater the relevant ambiguity. The companies with the largest degrees of ambiguity by far include Deutsche Bank, Microsoft and the Sparkassen organization. They are followed by GM (Opel). By contrast, public opinion is much clearer with regard to Ford and Deutsche Telekom — although the evaluations of these companies certainly also exhibit salient differences. Possible explanations for this state of affairs include: — With regard to the two banks, differences in respondents’ values are likely to play a significant role, even if the value cleavages are quite different in the two cases. Whereas respondents’ views of Deutsche Bank will depend on

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whether respondents see mergers, economic power, rationalization, globalization strategies, etc. positively or negatively, respondents’ perception of the Sparkassen organization is likely to be influenced by the importance attached to aspects such as close proximity (‘the bank around the corner’), solidity, simplicity, etc. — In the case of Microsoft, value differences also play an important role, although respondents are influenced by their experience — which can vary widely from respondent to respondent, in terms of type and intensity — with Microsoft products. — In the case of GM (Opel) and Ford, a proximity-distance problem is at work. Where respondents have specific contact with these companies’ products — either through personal use or indirectly, through ‘word of mouth’ — their evaluation of the companies tends to be considerably more positive. — In the case of Deutsche Telekom, while its overall picture tends somewhat more clearly towards the positive, the individual assessments diverge even more widely. The many possible reasons for this are likely to include aspects such as enthusiasm for technical subjects versus emphasis on criteria for good management, and belief in the ability of formerly state-owned companies to evolve versus the presumption that large public companies remain customer-unfriendly bureaucracies even after they are privatized. On the whole, differences in the value systems of German citizens seem to play a certain role in nearly all cases. In light of the great differentiation and pluralization of social values that has occurred, with growing intensity, in recent years in Germany, it is surprising that the ambiguity was not even greater.

CONCLUSION Analysis of TOM positions yields much information about the perspectives and assessment patterns that, in public awareness, are involved in creation of specific company-reputation ‘landscapes’. In light of these findings in Germany regarding spontaneous classification of individual companies as either particularly good or particularly bad, it is clear that company reputations are complex, multicausal phenomena, and that many different factors help decide what companies will receive good placement within the evoked set for relevant stakeholders. In Germany, the following factors obviously play an important role: media presence and general public presence, relevance to individual experience and ties to spheres that the public values in general, such as fascinating technology, economic success, quality and social responsibility. In the present context, links emerge to those factors that are also emphasized in connection with RQ (‘reputation quotient’). Clearly, companies’ TOM positions also depend on whether companies have relevant advantages or strengths in the areas of ‘products and services, vision and leadership, workplace environment, financial performance, social responsibility’ and on whether the strengths are tied to a strong ‘emotional appeal’. Simply being good is not enough — certainly not enough to achieve a TOM position. Companies also need to be emotionally relevant to the experiential spheres of the members of their target groups.

REFERENCES Wiedmann, K.-P. (2001) ‘Die Wahrnehmung von Unternehmen in Deutschland — U¨berlegungen zur Entwicklung geeigneter Konstrukte und Ergebnisse der ersten Stufe der EURO-RQStudie’, Schriftenreihe Marketing Management, Universita¨t Hannover, Hannover.

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