Are companies dealing in intangibles even more susceptible to brand reputation damage than those dealing in tangible products?
Posted by brandmaster on March 28, 2008
We know that stock markets seem to often defy logic. The financial sector which we might expect to be grounded in figures and statistics depends heavily upon reputation, legacy and history. Yet over recent weeks and months we have seen tremors in world markets make financial companies appear incredibly fragile – brands which were surrounded by reputation and history can crumble on flimsy rumour and Chinese whispers. Perhaps the very fact that their real expertise and stability is so intangible makes them far more vulnerable than a smokestack brand that has tangible assets and visible products.
Mary Adams said
The answer to your question is yes, companies dealing with intangibles are more dependent on the strength of their reputation. But the truth is that every business today is dependent on intangibles. The average intangible component of the S&P 500 is 80%. JetBlue is an asset-intensive business but its reputation came down just as fast (although not quite as far) as Bear Stearns. Reputation is the “new bottom line”–it is a necessary condition to a company’s ability to generate earnings in the future.