Brands must move toward greater transparency

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, to publicise its ‘Raising the bar’ initiative on corporate social responsibility and health.

The project was a response to public concerns. Because the Company is family-owned and have never had to explain from a City perspective, but now consumers want that information. 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. 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.

Research carried out in the run-up to Bernard Matthews’ relaunch showed that “consumers expect companies to provide information about their activities.” Brands are seen to self-police and are open and honest in all their communications to gain consumers’ trust.

Greater transparency is essential in the current consumer climate. It is 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.

McDonald’s 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, 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.

Surprisingly, the fashion house fared worse than Primark, which became the subject of negative headlines after a BBC Panorama documentary accused it of using child labor overseas. Armani came last because people just don’t know about the brand, so they tend to think the worst. Armani is not alone. 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.

A crisis is sometimes the catalyst for change. 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 which is a chemical and can cause cancer. 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. An ‘ecosystem’ theory which positions that companies have to open up because of intense competitive pressures. Companies need to create alliances and manage relationships with firms they might even be competing with. 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.