Building and Sustaining of the Corporate Image


Building and Sustaining of the Corporate Image

Every organization in the present day environment is understandably concerned with building and sustaining its corporate Image.  Most organizations strive towards a positive corporate image. This can be attained only by taking also into account such aspects as stakeholders’ perception and employees’ behaviour, and not just creating attractive buildings, uniforms, logos and slogans. These objects help only in establishing the first impression of the organization amongst the stakeholders.

There is a strong positive correlation between how people perceive the organization and the pro-corporate supportive behaviour. Corporate image is perceived as the mental picture of the organization. It is the sum total of the perceived characteristics of the organization. Every organization has its corporate image whether the organization does anything about it or not. Corporate image is formed based on the stakeholders’ perceptions of specific actions of the organization as well as associated industry and national issues. The corporate image of the organization to a large extent influences the reactions of the stakeholders to the specific actions, services, and products of the organization.

Corporate image is the net result of the interaction of all the experiences, beliefs, feelings, knowledge and impressions that people have about the organization. It literally means the level of reputation and an overall picture the organization has been able to create in the eyes of public, competition, end customers and other subjects involved. It is the sum of activities linked with the organizational culture, corporate identity and design, delivered by the communications from the organization.

According to Philip Kotler, corporate image represents a set of opinions, thoughts and impressions, which one creates about a firm or a product. Attitudes and acts of humans have connection with image of the organization or the product. Corporate image is in the eye of the receiver. It is simply the picture that an audience has of the organization through the accumulation of all received messages. It is determined by all actions of the organization. It is wrong to assume that the organization communicates only when it wants. Corporate image is powerful. It helps to determine how a stakeholder will behave towards the organization. How the stakeholder perceives the organization: as weak or strong, open or devious, warm or cold, rigid or flexible, etc.

The corporate image is one of the essential intangible assets for any organization. It determines the identity of the organization and its reputation in public. It helps the organization to sustain its operations and existence successfully in an environment of innovation, technology advancement, changing economic conditions, increased competition and changing socio-economic structure. It helps the organization to achieve its objectives of growth. It is an asset which gives the organization a chance to differentiate itself aiming to maximize its market share, profits, attracting new customers, retaining existing ones, neutralizing the competitors’ actions and above all its success and survival in the market.

Corporate image is selectively perceived mental pictures of the organization. The sum total of these perceived characteristics of the organization is what is normally referred to as the ‘corporate image’.

Corporate image is defined as the ‘overall impression’ left in the mind of the stakeholders as a result of accumulative feelings, ideas, attitudes and experiences with the organization, stored in memory, transformed into a positive/negative meaning, retrieved to reconstruct image and recalled when the name of the organization is heard or brought to ones’ mind. Thus, corporate image is a result of the communication process in which the organization creates and spreads a specific message that constitutes its strategic intent; mission, vision, goals and identity that reflect its core values which it cherish. This is consistent with the vision of brand image. Thus, corporate image can be considered as a type of brand image in which the brand name refers to the organization as a whole rather than to its sole products/services.

Formbrun has defined corporate image as ‘the overall estimation in which a company is held by its constituents through perceptual representation of an organization’s past actions and future prospects when compared with other leading rivals’.  According to Rayner, corporate image confers clear-cut advantages and privileges on the organization. It proves difficult to imitate, at the same time, it creates responsibilities. Whereas, the obligations that the organization owes must meet the personal standards of the employees, the quality standards of customers, the ethical standards of the community and the profitability standards of the investors. Therefore, the organization sustains its corporate image by building strong and supportive relationships with all of their constituents- i.e. customers, suppliers, investors, community, and government etc.

As per Villanova, Zinkhan and Hyman, corporate image is an overall perception of the organization held by different segments of the public. For example, the products and services which the stakeholder buy are seen as having personal and social meanings in addition to functional utility. Again, they are interested in the long term stability of the organization and ability of the organization to maintain supplies, product/service, quality and price. The organizational management is interested in all aspects of financial ratio analysis that all outside investors used in evaluating the organization to bargain effectively for more funds.  Further the shareholders are interested in the organizational profitability, stability, potential for growth and dividend policy. Likewise, the creditors are interested in the ability of the organization to pay interest and repay the principal sum on a due date. The government is interested in organizational profits to assess tax liabilities and may also be interested in other information example statistics on employment and wage levels. The employees are interested in the long term stability of the organization and ability of the organization to maintain supplies, product / service, quality and price. The financial analyst and advisers are interested to advise their audience that can be any of the other stakeholder groups. For example, stockbrokers are interested in the information on profitability and prospects of capital growth to advise investors and potential investors. Moreover, the competitors, the community and the channel members who are involved in the distribution network including the wholesalers, retailers and the kind are interested in the comparative performance of the organizational business and accessing its role as a corporate citizen.

The importance of corporate image to the organization is as follows.

  • It is the pivotal intangible asset that is not to be ignored since it is considered as a monolithic identity which makes the organization distinctive and interesting to the stakeholders.
  • It creates distinctive capabilities and gain competitive advantage for the organization.
  • It makes the organization visible, distinctive, authentic, transparent and consistent in the complex present day environment.
  • It demonstrates goodwill of the organization amongst its stakeholders.
  • It shows the element of trust which is a key source of the credibility of the organization amongst the stakeholders

The reasons that are necessary for the organization to build its corporate image and sustain it are summarized below.

  • Corporate image may be a decisive factor in the consumer choice of goods and services
  • Building a favourable corporate image becomes especially relevant in communities where the organization is a major force. Of particular importance here is the organization’s position on social responsibility
  • A strong corporate image can improve the financial structure of the organization and raise the appeal of its securities amongst potential investors and shareholders
  • Building a favourable corporate image can be advantageous when public perceptions of the organization do not reflect reality, are not clearly formed, or when vestiges of past management mistakes, plant accidents, poor earnings, environmental problems and the like may still be having a negative impact
  • Corporate image building is also very important when external forces like increased or new competition, breakthrough products and technologies, deregulation, or an existing competitor’s new identity focus call for countermeasures.

The corporate image is the subjective feelings of the stakeholders which are built on several tangible assets of the organization such as quality, reliability, service, and price etc. The corporate image of the organization is determined amongst others by the institutional image, the product image, brand image, diffused image and the consumer demand image. It is influenced by the image of its clients (customers), the image of its suppliers, the image of the competitors, the behaviour of its employees in public and the ideal image of the industry. The corporate image links the organization to its social environment and helps the organization in achievement of its objectives.

There is a necessity that the organization makes a concerted effort not only to build its corporate image but also to sustain it. Managing of the corporate image is normally a big challenge for the organization since both the internal and the external stakeholders play an important role in the development of the corporate image. Managing of the corporate image is the key to security and success of the organization and helps it in maintaining public trust.

Corporate image is a critical factor in the overall evaluation of the organization. It is the strength that lies in the stakeholders’ perception and mind when hearing the name of the organization.  It is the asset that differentiates it in the market and is a must for the organization for its successful positioning in the market.

Since the corporate image affects stakeholders’ behaviour, the organization strives to develop and manage the corporate image for many reasons which include the following.

  • Enhancement of the corporate competitive advantage thus leading to higher profitability.
  • Promoting favourable relationship with the community in the environment it operates, otherwise it may experience difficulty in recruitment, selection and maintaining the employee morale.
  • Influencing investors and financial institutions.
  • Establishing a corporate goodwill for the organization.
  • Creating good identity for the employees thereby leading to their satisfaction.
  • Stimulating sales, thus influencing customer loyalty.
  • Promoting good relationship with the government, opinion leaders and various interest groups.

Factors affecting corporate image

Corporate image consisted of two main components. The first is functional such as the tangible characteristics that can be measured and evaluated easily. The second is emotional such as feelings, attitudes and beliefs the one have towards the organization. These emotional components are consequences from accumulative experiences the stakeholders have with the passage of time with the organization.

There are two factors which affects the formation of the corporate image of the organization. They are (i) internal factors which are controllable and (ii) external factors which are non-controllable. The internal controllable factors can be used to influence the corporate image of the organization. The external factors, however, can also be indirectly manipulated.

There are six internal factors for the corporate image of the organization (Fig 1). These are given below.

  • Self-image of the organization – This is the so-called ‘ideal’ self-image. It is how the organization chooses to identify itself to the public or to projects itself to the public.
  • Corporate advertising – By this the organization communicates its identity in the way that the achievement of organizational goals gets facilitated. This is a management responsibility. Institutional advertising generates awareness and goodwill of the organization behind its products or services.
  • Brand image – Brand image plays an important role to the success of a product. It consists of functional, symbolic and experiential aspects. There is a significant interaction between brand image and corporate image.
  • Public relations – It is a means to build up a general reservoir of goodwill. These can be for example sponsoring local events and contributing to charities, which can project an image of ‘good corporate citizenship’.
  • Frontline employees’ behaviour – Contact with frontline employees of the organization serves to form an impression about the organization. The courtesy and knowledge of the frontline employees and their behaviour is influenced by the corporate culture and climate within the organization.
  • Website – Internet is a potential means of communication to all their stakeholders. It is part of an integrated marketing communications concept. The help stakeholders gather information, form perceptions, and more than that gives them the possibility to directly respond back. Further website enables the organization to recreate and reposition itself to meet the demands of the market place.

Internal factors for corporate image

Fig 1 Internal factor for corporate image

Information received second-hand through personal experience of friends and colleagues can influence the corporate image of the organization. For forming a corporate image due to the external factors there are the following four major sources.

  • Industry image – The general image of the industry can have an impact on the corporate image of the organization. Thus, it is always a managerial issue whether the image of the industry is positive or negative.
  • Country of origin image – This also has an effect on the corporate image.
  • Press reports – Press releases are controlled by the organization. Press reports are done by the press correspondents. People tend to sharpen their idea about the organization through the broad variety of news items.
  • Word of mouth – It tends to be highly persuasive and credible and can significantly influence the image a stakeholder forms towards the organization.

Effective communication plays a very important role for the organization not only in building the corporate image but also to sustain it. It is a very influential tool for the corporate image. Through planned communication, the organization builds awareness, reinforces goodwill, informs and corrects misleading information. Corporate image is the combined impact that has been made on an observer by the planned and unplanned visual and verbal communications of the organization as well as by the outside influences. The basic communication strategy for the corporate image is to differentiate the organization from others and to create a favourable attitude for the organization in the minds of the stakeholders.

The organization needs to develop a clear image that reflects its mission and goals. It should not leave any room for interpretation by the stakeholders.

The desired corporate image of the company is to be defined and planned precisely and carefully.  The four steps in the planning of the corporate image are as given below.

  • To make an in-depth analysis of the existing corporate image of the organization.
  • To create an image campaign that is consistent, carrying the same theme, supporting the same message.
  • To ensure that the campaign is getting through to the stakeholders.
  • Since perception is not necessarily reality, it is necessary to get regular feedback.

For this it is necessary that the organization knows its stakeholders: their needs, wants and the extent of their interaction, before starting a campaign. That ensures the campaign will be on right track. Developing of an effective corporate image is recognizing that different stakeholders may give varying importance to different attributes of the organization.

There are at least four strategies for developing the corporate image of the organization namely (i) single image focusing on one attribute important to all stakeholders, (ii) single image focusing on most important stakeholders, (iii) single image that combines two or more attributes, and (iv) multiple images directed at different stakeholder groups.