Corporate Advertising

Corporate Advertising is a paid use of media used by the companies to communicate their messages to a wide audience quickly and effectively. Unlike Product Advertising, Corporate Advertising not intended to increase sales of a particular product, but it seeks to benefit the image and reputation of the corporation as a whole. It brands the company the way product advertising brands the products and services. While the product advertising relates to marketing aspects of the business, the corporate advertising falls within the corporate communication area.

Corporate Advertising falls into 3 broad categories:

1. Image Advertising:

This kind of advertising is done to reinforce Identity or enhance reputation. It strengthens the identity of the company, following any structural changes like mergers, acquisitions etc where the company needs to communicate its new mission, vision and strategy to various constituents. Effective image advertising also allows companies to differentiate themselves from rivals.

2. Financial Advertising:

A strong investor relations function is very important for any organization. Financial advertising is one of the tools that companies use to enhance their image in the financial community. It can also stimulate interest in a company’s stock among potential investors. Overall, a strong financially oriented corporate advertising can actually increase the stock prices of the company.

3. Issue Advocacy:

This kind of advertising is used by the companies to respond to external threats from government or special interest groups. It typically deals with controversial subjects and is a means through which a company responds to those who challenge the status quo of the company.

History of Corporate Advertising in America:

According to Expert Thomas Garbett, the earliest corporate ad, paid for by the AT&T had a headline, “Telephone service, a public trust”. By giving this advertisement, AT&T tried to defend its monopoly status and combat the assumption that it couldn’t possibly be acting in the public interest given the lack of competition. Almost a decade later, many more companies were running corporate advertisements. Today, it is highly visible and intensely scrutinized by constituencies, which reinforces the notion that corporate advertising should be aligned with company’s vision and consistent across advertising media like print, television, web etc.

Who uses Corporate Advertising and Why?

Almost all the big organizations today, use corporate advertising to enhance their image and reputation, because they tend to be more diversified and thus have a greater need to establish a coherent reputation out of a variety of activities. Controversial Industries like cigarette, oil, pharmaceuticals, food etc are more prone to having image problems to deal with. Due to this, they use corporate advertising extensively to develop a stronger reputation and deal with the problematic situations.

To enhance sales:

It is also used by the companies to eventually boost sales, create a stronger reputation and goodwill by letting constituents in on what the organization is all about, particularly if it does beneficial things that people might not be aware of.

TPO:

Small companies also try to enhance their image by using endorsements from a third party organization (TPO) who can provide ratings and rankings of these companies or its services.

To recruit and retain employees:

Corporate advertising can be helpful to employees by explaining in simple terms, what a large, complex organization is all about. It is an indirect way of building morale among employees. It also helps companies to attract the best talent at the entry level and also for the senior management level.

However, if all the above goals for corporate advertising are met, it will ultimately improve a company’s financial situation.

Example of a corporate advertisement

Personal experience:

When I read any financial newspaper, or watch a business news channel, I come across more corporate advertisements rather than product advertisements. May be this is because the people who occasionally read financial journals and newspapers or watch business news are those who either have stakes in any company or they are potential investors. They are also the people who are interested and are keen about knowing what is happening in the corporate world. And therefore, this is the best channel of media one can go for corporate advertising.

Reference:

Corporate communication, 4th edition, Paul A. Argenti, The Tuck School of Business, Dartmouth College.

http://www.rocw.raifoundation.org/management/mba/corporateimagebuliding/lecture_notes/lecture-08.pdf

Identity, Image and Reputation

The first and the most critical part of the corporate communication function is the corporation’s brand identity and image. It is very important to address how a close alignment between a company’s identity and image generates a strong reputation, and also to know how to distinguish between the image, identity and reputation in the minds of consumers, shareholders, employees and other relevant constituencies.

Identity and Image:

A company’s identity is the visual manifestation of the company’s reality as conveyed through the organization’s name, logo. Motto, products, services and all other tangible pieces of evidence created by the organization and communicated to the various constituencies like customers, media, employees, etc.

An image of an organization is a reflection of that organization’s identity. It is the way the various constituencies view the organization. An organization may have different images pertaining to different constituencies depending on their perceptions.

Shaping Identity:

Identity is the only part of the reputation management which can be completely controlled by an organization. There are various things that contribute positively to a corporate identity. They are:

1. An inspirational corporate vision: A vision that encompasses the company’s core values, principles, philosophies, standards and goals is the most central part of corporate identity. It is a common thread that all the constituencies relate to.

2. Names and Logos: Branding and strategic branding management are the critical components of identity management system. Companies change their names and logos to institute structural changes because of mergers and acquisitions, to shape and enhance their identity and to differentiate themselves in the marketplace. A good name adds a lot to the image building process of an organization.

3. Consistency: A company’s vision should be consistent across all its identity elements right from name, logo to employees’ behavior.

Identity Management Process:

Step 1: Conducting an Identity Audit:

An organization has to collect various facts from various constituencies to get a better sense of their image, which provides it with a starting point of creating an identity, by conducting research with constituents. This research should be both qualitative and quantitative in nature and should try to determine how consistent the identity is across constituencies including employees, analysts, customers etc, which can be used as a basis for potential identity changes.

Step 2: Set Identity objectives:

After analyzing the Identity audit, the company’s senior management should set goals and explain how each constituency should respond to specific identity proposals. The main goal should be to make customers aware of the dramatic transformations that are going on in an organization.

Step 3: Develop Designs and Names:

Once the Identity objectives are clear, the actual design should be developed. The changes in name or logo should be made in consultation with the experts because so many names already exists that the companies need to avoid any possibilities of trademark and name infringement. The logo should reflect accurately, the company’s reality.

Step 4: Develop prototypes:

The organization should develop prototype using new name or/and logo. The new identity should be applied to everything including ties, t-shirts, packaging, business cards, and stationery to see how it works in practice.

Step 5: Launch and Communicate:

This is the phase where the new identity of the company is formally introduced to the company’s constituency and the public. The presenting of an identity, particularly for the first time is a complex process and it is easy for constituencies to wrongly interpret the changes.

Step 6: Implementing the program:

The final stage of the identity management process is the implementation of the program. In order to ensure that the identity change program is implemented successfully, the company should develop an identity standard which shows the staff and managers how to use the new identity consistently and correctly.

Reputation:

Reputation represents Identity and image of the corporation as a whole. It differs from image because it is built over time and is not simply a perception of the people. It also differs from identity because it is a product of both internal and external constituencies. Companies with strong and positive reputation can attract and retain the best talent as well as loyal customers and business partners. Only when image and identity are in alignment will strong reputation result.

Example:

A classic case of turning around a corporate reputation and enhancing product sales involves the Ford Motor Company. Not too many years ago the American automobile industry was reeling from imported cars from Japan and Europe that simply outclassed and outperformed their American counterparts. US automakers simply could not match either the reality or the perception of the quality of imported automobiles, especially from Japan. Ford took the issue head on and launched its corporate program, "Quality is Job One."

More than an advertising slogan, although a good one at that, Ford made narrowing the quality gap between its cars and Japanese imports the overriding positioning for the Company, its employees, shareholders and stakeholders. The company changed its culture and its behavior. Quality truly was the Number One priority for the company. It made measurable progress, narrowed the gap and was rewarded by the buying public, perhaps best exemplified by the Ford Taurus, the best selling model in the world for three years running. Ford made good on its promise and the public responded.

Personal Experience:

During my internship in an Insurance company, I was working under a manager who worked with that company for over 10 years. He knew everything about the company, his employer and the people working with him. Since he was pretty friendly with me, he talked to me about all the negative things about the senior management and the company as a whole, which ruined the company’s image from my viewpoint. I feel that the Senior management should take steps to develop good relationship with the employees so that such instances can be avoided.



Reference:

“The Forgotten Brand: The Power of Corporate Reputation”, James H. Dowling Chairman Emeritus, Burson-Marsteller, Mexico City, December4, 1996
http://www.cem.itesm.mx/dacs/publicaciones/logos//anteriores/n6/forg.htm

Corporate communication, 4th edition, Paul A. Argenti, The Tuck School of Business, Dartmouth College.

Communication Theories

Theories of communications have their roots back 2,500 years ago to the classical Greece. The traditional theory was improved by the Romans and remained static until the 20th century. During World War I and World War II communication was developed for propaganda techniques to persuade troops. Later, sociologists entered the field of communications theory.

Communication can be described as information-related behavior which is a necessary life process. There are three common settings of communications: Interpersonal, machine-assisted, and mass communication. Popular theorists of communication are Harold Laswell, Shannon & Weaver, Wilbur Schramm, Katz & Lazarsfeld, Westley & MacLean, and Kincaid.

Model of Laswell

Laswell developed a model in 1948 which focused on verbal messaging. It deals with the question: “Who says what to whom in what channel with what effect?” Thus, it emphasizes speaker, message, and audience and provides a more generalized view of goal or effect of communication.

Model of Shannon and Weaver

The model of Shannon and Weaver was developed one year later in 1949. It measures accuracy of message transmission in a given system, based on a technology analogy. Information is not equated with meaning and therefore, there is an opportunity to reduce uncertainty. Furthermore, noise is overcome by using redundancy of information. However, the limitation is that the model deals only with mechanistic representation of information. It does not deal with meaning, content, or substance. The model of Shannon and Weaver can be regarded as the father of Information Theory and bought all disciplines together to focus on research. The most important contribution of Shannon and Weaver is the concept of information.

Three Models of Schramm

Schramm developed his first model in 1954. It is a simple model of communications where a source encoders a signal, sends it to a destination which has to decoder the signal. In his second model Schramm introduced the “field of experience” on both sides, source and destination, for the correct interpretation. The purpose was to overcome the problem of noise. Communication becomes circular and a relational model is created.
Schramm’s third model is a further development in terms of feedback that the destination sends to the source.

1st model:

2nd model:

3rd Model

Model of Katz and Lazarsfeld

Katz and Lazarsfeld, two political scientists, developed a 2-step flow of communication model in 1955. It includes mass media and links interpersonal dynamics to mass communications. Furthermore, it involves opinion leaders who influence the message on its way from the source to the public.

Westley-MacLean Model

The Westley-MacLean Model states that communication begins with a potential message. Then, an advocate is involved and selects an event to form a new message. The model accounts for both, interpersonal and mass media communication. It broadened and elaborated the feedback concept.

kincaids’s Convergence Model

This model developed in 1979 says that communication is a process in which participants create and share information to reach mutual understanding. Several cycles may increase mutual understanding but do not complete it. Furthermore, communication ceases when sufficient level of mutual understanding has been reached. The dominant components of the model are information and mutual understanding. Human communication takes place in a dynamic, cyclical process over time. Hereby, mutual understanding and agreement are the primary goals.

Personal experience

An example for the application of a communication model with a feedback component would be a class in college. The feedback component could be seen from two sides. The first possibility is to see the professor as a source that sends a message (knowledge) to the students. The students on the other hand give their feedback in tests or assignments to show the professor the understanding of the materials.

Communicating Strategically

This chapter explains the basic theory behind all kinds of communication, ie the way the organizations communicate with various groups of people. A coherent communication strategy is critical for a company to enhance its reputation, to convince the shareholders that the company is still worth investing in, or to get customers to buy more of its goods and services. This strategy depends on the three components of speech as described by Aristotle. They are
1. The Organization
2. The constituency
3. The message
4. The Response

Developing an Effective Organization Strategy

There are various steps involved in developing an effective organizaion strategy. They have to be very well followed in the organization in order to determine what strategy is effective and what is not.

Determining objectives

The first part of an effective organization strategy is to determine objectives as to what the orgnization wants each constituency to do as a result of the communication.

Deciding What Resources Are Available

An organization has to know what resources are available in order to effectively communicate the determined objective. Those resources mostly include money, human resources, and time. Money plays an important role in terms of how to communicate a determined objective. Dealing with a matter like this, organizations should take the long-term objectives in consideration rather than short-term cost savings.Human resources a considerable issue in the setup of an effective communications strategy. How many employees should be work on the communication matters of an organization? Time is another important factor in determining an organization’s communication strategy. The allocation of time for communication should be determined by the long term objectives of the communication purpose and not seek short-term solutions.

Diagnosing the Organization’s Reputation

It is important for an organization to know what reputation it has. Reputation is based on the constituency’s perception of the specific organization. Besides an overall good reputation, organizations can have a limited or lacked/damaged credibility reputation. Limited reputation is the case when organizations are only known in a narrow range of constituencies. A lacked or damaged credibility can occur when certain event s negatively influenced the reputation of the organization among the constituencies. These events can either be in the control or beyond the control of the organization.

Analyzing Constituencies

An organization has to know who their constituencies are, what each thinks about the organization, and what each knows about the organization in question. Depending on size, kind, and nature organizations have different kinds of constituencies. In general we can divide primary constituencies (employees, customers, shareholders, communities) from secondary constituencies (media, suppliers, government, creditors). Sometimes organizations have to wisely choose to which constituency to communicate first. Also, constituencies interact with one another and can have opposing interests.

Delivering Messages Appropriately

A corporation must decide two things when communicating: How to deliver the message and what structure the message should have. When selecting a communication channel, an organization has many choices like Fax, Memo, E-mail etc. It is crucial to find the appropriate medium for the objective to be delivered. Furthermore, it has to be decided whether the structure of the message should be direct (right to the point) or indirect (first explain reasons, and then go to the main points).

Constituencies Response

An organization should give the constituencies the possibility to respond to its message. This is important to determine whether the communication had the desired result.

Personal experience

During my internship in an insurance company, the was a new fund offered to the customers. Many customers complained that all the details regarding the new fund offer was not revealed to them and they were kept in dark. The company had to refund the investment to many policy holders. This is an example of bad communication strategy.

References

www.managementconcepts.com/portal/server.pt?
Corporate communication-4th edition, Paul A Argenti
www.cba.uni.edu/buscomm/buscomcourse/ReadingsSummer07/CommunicatingStrategically

The Changing Environment of business

Today, the business environments have changed from the way it was years ago. The trends of globalization, diversity, networking, changing technology has strengthened the business activities and led the world into what is known as global village. Unlike earlier, the businesses today are more diversified with difference product lines and services. The products now can be marketed in not just a local market, but all over the world. The employers are more responsive, friendly and provide the employees, the freedom to work
independently. More importance is being given to the internal communication, ie between
the employer and employees, among employees, etc.

Attitude towards American business

Businesses in United States had positive as well as negative images. Hazardous working conditions in for steelworkers and railroad builders and the exploitation of young women and children working in factories in the 1860s drove negative perceptions of American companies. Successful businessmen like the Carnegies, Mellons, and Rockefellers were seen as “robber barons”. In the 1920s a rising stock market increased the gap between the rich and the middle-class which created unstable economic conditions. The Great Depression resulted from the stock market burst in 1929 negatively affected businesses and individuals alike. Starting with World War II, American companies could recover in the time of 1940s-1960s, known as the “golden age”. However, even recovering from the Great Depression and driving economic wealth in the United States, American companies suffered from fading confidence from the American population. The Vietnam War, the oil embargo, and Watergate reduced the confidence of the American people in businesses and institutions like the U.S. congress or the Supreme Court. Although the 1980s and 1990s represented the absolute economic boom in the 20th century, this perception of American businesses did not improve much. Several company scandals (Enron, Woldcom, Adelphia) and the burst of the “dot.com bubble” in the 2000s did not help to improve the public negative perception of big businesses in the United States.

The Global Village

The changing technology and the trend of globalization have strengthened the communication channels all over the world. It has disintegrated the national borders for the corporate world to open up and led to the interdependence of the businesses around the globe. This has resulted in liberalization of trade and finance, disintegrating national borders and especially the creation of multinational corporations thThe relocation of work to cheaper countries and the exploitation and (sometimes) inhuman working conditions in low cost production countries has created a hostile attitude towards large global corporations. Technology which also helped globalization to develop now plays a big role in making information about negative conduct of global companies public. This resulted in the “Anti-Globalization” movement which extends beyond traditional union bodies to include young and old consumers, concerned parents and vocal student activists. Therefore, the businesses today should be prepared to handle the international media spotlight but also proacively use today's media environment to compromise their corporate reputation.

How to compete in a Changing Enviroment

Companies have to constantly deal with a changing environment in terms of changing attitudes of people towards their way of doing business. Corporations like Gillette, Nike and McDonald’s have experienced the challenges of increasing customer awareness for social responsibility. The next section provides steps to deal with it.

1. Recognizing the changing environment

2. Adapt to the Environment without compromizing principles

3. Not assuming that the problems will disappear magically

4. Keeping the corporate communication connected to strategy.

Examples

The fast pace of the changing technology was identified by Google which helped it to develop constantly and to become the number one search engine in the world.

Personal experience

There have been times when it was difficult for me to find or shop for articles. Now, it is very easy to find, compare and purchase goods and services over internet. This was when, for the first time, i noticed the changing environment of business. Another example from my personal experience is the use of Tally and other accounting softwares for the purpose of recording the accounts and transactions systematically.
Earlier, people used to record manually with journals and ledger books and now, it is very easy and effective to use these softwares.

References

www.accessmylibrary.com/coms2/summary_0286-9194051_ITM
Corporate communication-4th edition, Paul A Argenti