July 1, 2006
By Clark Crowdus
The stony silence of oil company CEOs in the face of criticism over record profits--while record prices are being seen at the pump globally--is emblematic of a corporate goal that's not in sync with the needs of its consumer constituency.
In other words, while Big Oil gets exceptional grades in two of the five 'Ps' of marketing--Product (high-performance, clean-running fuels) and Place (widely available product and no shortages)--its current Pricing (high) and Promotion (i.e., all of its communications) are negatively affecting its overall Position in the marketplace.
For example, when NBC-TV's "Today" Show reports that it can't get any oil company CEO to discuss the price of gasoline for its annual summer vacation series, "Pain at the Pump," the public perceives this and other bad Big Oil public relations (PR) moves as arrogance and indifference, reinforcing negative perceptions. Politicians get on the bandwagon and hold press conferences; there's talk of a tax on windfall profits; and afterward everyone goes on a more expensive automobile vacation than last year.
In the past, the whole thing has blown over.
But this won't always be the case. Oil industry leaders need to think about how both pricing and reputation are tied to their bottom line, and how to improve them both. A hit to reputation almost always produces an immediate and equal hit to the price of stock. And even when it doesn't, as is currently the case with oil businesses, the day of reckoning eventually comes.
If the public associates Big Oil brands with arrogance and hubris long enough, when the time comes for those businesses to draw on the public's goodwill for a major industry initiative, or to advance an important business shift that requires public understanding and support, they'll find the goodwill account empty.
What if elected officials perceived the oil business as weakening and a drag on their own reputations? Those much-discussed windfall profits taxes could very well become reality. Investors in the oil industry, take note.
And "quick-fix" reputational advertising--or for that matter, business-as-usual fuel advertising--may even backfire in times like these because the public consciously rejects the advertising before it has a chance to communicate.
There's plenty of good experience and best practices out there for the oil companies to draw upon. Other businesses have led the way, blazing some new trails in an effort to burnish reputation. For example, Wal-Mart became keenly aware of its poor reputation, and in the past two years has embarked on a major reputation initiative. While this was late in coming, it's beginning to bear fruit.
The lead element of Wal-Mart's strategy is an annual media conference in which the company invites any reporter to come, hear presentations, and ask any and all questions--with all of Wal- Mart's responses on-the-record.
Next came Wal-Mart's efficient and generous response to Hurricane Katrina. When preceded by an intensive 18-month media blitz focused on building goodwill, the accrual to Wal-Mart's 'reputation account' was significant. The company's disaster response resulted in Wal-Mart earning the top rating in last fall's Delahaye Index, which tracks the reputation of the USA's top 100 companies.
Media could have ignored or downplayed Wal-Mart's role, but it chose to highlight it and even contrast it with the poor performance of politicians and the government. This is because of the groundwork Wal-Mart laid previously.
Besides the good-will visibility of the world's No. 1 retailer, many other corporations are, of course, doing good things. Coors Brewing Co. has championed efforts to communicate the dangers of kids drinking alcoholic beverages. And many financial institutions have embarked on educational programs to improve consumer financial planning and to serve diverse segments of the population.
Oil companies do good things, too.
For example, BP, seeing the effects of global warming in 1997, addressed the issue by announcing--and then exceeding--quantitative targets for reducing carbon emissions from its operations. BP then provided objectively verified annual reports on its progress.
And since 2001, Chevron Corp. has made it a permanent policy to evaluate the impact of greenhouse gases for all capital projects. Chevron also supports studies and other activities to increase knowledge that improves biodiversity conservation practices in the private sector.
But what oil companies fail to do is get credit for what they do accomplish. When oil producers close refineries, they're accused of limiting supply. But couldn't that just as easily be perceived as limiting pollution as well?
Regardless of industry or scope of operation, there are things marketers can and should do now to make deposits in the 'reputation account' and thus add value to their brand: