Brand Equity and Corporate Reputation. Understand both.

Here’s a question that’s probably been bothering you for a while. One that pops into your mind when you notice the price of Nike Air Jordans or you are going to try Airbnb on the next family vacation and it’s on the front page of your paper.

“What the hell is the difference between brand equity and corporate reputation?”

Well, we’re going to tell you.

It’s all about stakeholders, your relationships with them, and the impact they can have on your company.

Brand equity looks at one stakeholder group – customers and prospects.

Certainly, these are important folks. Their key behavior is to buy what you’re selling. Very important. And brand equity measures the success of your marketing in building customer relationships.

Corporate reputation, on the other hand, looks at lots of stakeholders who can help or hinder your company’s ability to achieve its strategic goals.

To name a few:

The investment community – who buy or recommend your stock and your debt so you can raise capital.

Governments here and abroad – who give you permission to do business and make the rules.

Media – who report on what you’re doing.

Employees – who can give or withhold extra effort and who are key ambassadors for the company outside the workplace.

Prospective employees – who are your future work force.

Academia – who could recommend the best and the brightest to be your employees.

Citizens – who can elect leaders, vote on referenda, boycott or protest – all of which can affect your ability to do business.

And business peers and suppliers and – well, you get the idea.

These multiple stakeholders’ behaviors are crucial.

A solid corporate reputation greatly increases the odds that their behaviors will benefit your company.

So:

Brand Equity = one stakeholder group and one behavior.

Corporate Reputation = multiple stakeholders and multiple behaviors.

Three tips for doing great corporate reputation research:

The underlying theory of reputation measurement is that knowledge leads to evaluation which leads to behavior. Typically, the more stakeholders know, the more favorable their evaluations and the greater the likelihood for positive behaviors. You need to ask about all three areas to know the dimensions of your opportunities - or issues.

Ask strengths and weaknesses of your company as an open ended question. Frequently the words used can give insight into the intensity of the emotional evaluation of your reputation.

When asking about specific corporate attributes, include negative statements.

You will not get the whole story if you don’t. Joseph Hall wrote, “A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was."