Mktg - Brands better off if they are more open

The days of brands adopting secretive working practices could be numbered — companies that have previously hushed up what goes on behind closed doors are finding that consumers’ demand for information needs servicing, and are opening up accordingly.

This move toward greater transparency is demonstrated by recent developments at Mars, which over the years has excelled in championing its brands but has studiously avoided publicity for the company itself. In a radical change of attitude for an organisation that once refused to confirm the death of its founder’s son, and, until last year, had only a basic corporate website, Mars last week wheeled out its brand director, Lucy Cotterell, to publicise its ‘Raising the bar’ initiative on corporate social responsibility and health.

Cotterell revealed that the project was a response to public concerns. “Because we’re family-owned , we have never had to [explain ourselves ] from a City perspective, but now consumers want that information,” she said. Sometimes it takes a scandal to inspire a culture of openness , and Mars did find itself in hot water last year after putting whey made from animal rennet in its products.

This was nothing, however , compared with the crisis faced by Bernard Matthews after bird flu was discovered at one of its farms and footage of workers mistreating turkeys was posted on the internet. The company went into communications shut-down , and watched profits plummet in silence; in the year to April 2007, it lost £50m worth of sales, according to TNS Worldpanel. Sales have continued to fall, but Bernard Matthews has seen the error of its ways, and its current advertising aims to challenge negative perceptions of the brand.

Marketing director Matthew Pullen says research carried out in the run-up to Bernard Matthews’ relaunch showed that “consumers expect companies like ours to provide information about their activities.” He adds: “Brands that are seen to self-police and are open and honest in all their communications gain consumers’ trust.”

Giles Gibbons, chief executive of corporate responsibility at consultancy Good Business, says greater transparency is essential in the current consumer climate. “It’s clear that in the internet age, consumers are finding out information for themselves either from other consumers, NGOs or the media. People are making decisions about companies based on much broader factors than five to 10 years ago,” he explains.

He cites McDonald’s , which realised after a series of PR disasters and falling sales that it could no longer operate in a secretive, distant manner and began to open itself up to scrutiny. Its website, makeupyourown-mind .co.uk, faces the critics head-on , and is something that the old-style Mc-Donald’s would never have considered. It is also paying dividends — the burger chain’s UK operation posted its best sales for a decade last year.
One brand yet to embrace a culture of openness is Armani. Last month it came bottom in Good Business’s ‘Concerned consumers index’ , which focused on fashion retail.Perhaps surprisingly, the fashion house fared worse than Primark, which became the subject of negative headlines in June after a BBC Panorama docume
ntary accused it of using child labour overseas. “Armani came last because people just don’t know about the brand, so they tend to think the worst,” says Gibbons. Armani is not alone. According to Alyson Stewart-Allen , the founder and chief executive of International Marketing Partners and a specialist on US companies , firms such as Procter & Gamble and Microsoft continue to take a ‘semi-permeable
membrane approach’ to transparency. In other words, they disclose information on certain matters, but retain an air of secrecy.

Stewart-Allen agrees that a crisis is sometimes the catalyst for change. She cites Coca-Cola’s launch of Dasani, the water brand that was eventually pulled from the UK market in 2004 after concerns were raised about the presence of bromate, a chemical that can cause cancer. “Has Coca-Cola become more transparent since then? Probably,” says Stewart-Allen . She argues that more companies will be compelled to open up because the turmoil in the financial markets will leave consumers with little appetite for those operating without scrutiny.

London Business School professor Yiorgos Mylonadis says that as well as societal change, competition in a globalised economy makes it ‘less tenable’ for companies to be closed. He has formulated an ‘ecosystem’ theory which posits that companies are having to open up because of intense competitive pressures. “You need to create alliances and manage relationships with firms you might even be competing with,” he says. It is clear that many companies can no longer confine their communications only to their brands and will have to stick their heads above the parapet. However, those opening themselves up for scrutiny need to make sure that their words are genuine, or they risk being found out.