Introduction to the organisation and main issues faced
Royal Dutch Shell Plc is an oil and gas
company multinational with its headquarters in the Hage, Netherlands (Shell,
2012). Shell as it is commonly known is among the most well-known brands in the
world and is said to be Europe’s largest Oil and Gas Company. In spite of its
financial success, the company has been involved in diverse controversies that
have greatly hurt its brand image (CEO, 2012). Human rights abuses in the Niger
Delta and support for apartheid in the earlier years is among the outstanding
human rights issues.
The company also faces
the challenges of environmental concerns with its core business of extraction
and production of oil products seen as among the leading causes of pollution
and environmental degradation. Scepticism over the company’s low commitment
over environmental sustainability is founded on its past ardent criticism of
the global warming theories; its continued membership to groups (American
Petroleum Institute and the Business Roundtable) that have been vocal in
opposing the Kyoto protocol; and its alleged sponsorship of political campaigns
for American legislators that are known to have consistently voted against
stern environmental laws (CEO, 2012; Donavan, 2012; Shell, 2012). Campaigns by
environmental activists have also cast the company in dark light hence
overshadowing the expected impact of its marketing campaigns.
Description of management issue
The perception of the market towards a
brand is very central to the effectiveness with which advertisement messages
can be passed across to the consumers. Preconceived ideas about an organisation
or its brand create a distraction that inhibits the ability of the consumers to
embrace messages as projected by advertisers (Paciola and Mai, 2011). Cases of
consumer apathy are known to be on the increase in relation to advertisements
aimed at projecting products and companies as eco-friendly with many resorting
to past experiences to make the determination on whether to trust the companies
or not. Shell has been making efforts to overcome its image crisis by mounting
massive advertising campaigns over the mainstream media with an aim to portray
them as eco-friendly (Shell, 2012). However, its negative image persists with
attacks over the social media continuing to dent their image. The company
therefore needs to come up with more effective ways of improving its brand image
to enhance greater effectiveness its future marketing endeavours.
Literature review
The impact of a poor brand image can
greatly inhibit the effectiveness of the marketing communications and
promotional mix used by the organisation. The brand affects how an organisation
is viewed and informs a consumer’s predisposition towards the company and any
forms of messages that may be generated by them (Schultz and Wedel, 1998).
Analysts equate poor brand image to the prejudice that constitutes the noise
that interferes with the communication process. Shell has been involved in a
raft of controversies in the past that has cast doubts on its commitment to
environmental sustainability. To begin with, the company’s core business has
been described by environmentalists as highly harmful to the environment and in
need of urgent operational review (Facta Universistasis, 2009). The most recent
controversy involved the company’s planned drilling at the arctic, a
controversy that saw some environmental activists create spam in the social
media to turn the public opinion against the company. The company’s continued
association with groups such as American Petroleum Institute and the Business
Roundtable also casts doubts on its commitment to the sustainability agenda
(CEO, 2012). These groups have in many occasions been associated with
opposition to the enforcement of strict legislations aimed at protecting the
environment.
Business strategy
experts underline the importance of conducting adequate research to understand
the perceptions of the consumers and factor in their desires not only in the
marketing processes but also in the production processes (Aitken and Brendan,
2008). This outlook is consistent with the marketing orientation which
emphasises on the focus on consumers as the basis for determining choice of
products and marketing approaches. The adoption of this viewpoint has seen
organisations investing heavily in their research and development facilities
with many of the leading organisations such as Coca Cola known for its constant
research in both product preference and perceptions relevant to marketing and
advertising activities (Clayton and Heo, 2011). Analysts advise that the market
tends to be extremely harsh on organisations that fail to understand their desires
and act accordingly.
The sustainability agenda has been one
of the main points of concern in the market with fears over the likely impacts
of global warming driving consumers to shun organisations that are blatantly
negligent of the environment (Leonidou, et al., 2011; Cox, 2008). This aspect
grew in significance in the aftermath of the 2010 massive oil spill at the Gulf
of Mexico that highlighted the adverse impact that such companies could have on
the environment (Shell, 2012). This strong perception has however come with
some clutter as organisations appear to be in a rush to portray their products
and brands as environmentally friendly even where little progress has been made
in ensuring that such products are more sensitive to the environment. The
result has been the growth of consumer apathy where advertisement messages are
largely ignored and focus in put more on the brand image as a component of
sustained and proven record (Leonidou, et al., 2011). This new approach makes
it difficult for companies such as Shell whose record with environmental
sustainability has been less than impressive.
Apart from the
commitment to the conservation of the environment, the market tends to be
sensitive about the level of corporate social responsibility and ethical
approach to businesses with those that fall short of expectations tending to be
shunned (Tiwari and Singh, 2011). Some of the main management dimensions in
question include attitude and treatment of employees, relationships with
competitors and commitment to ethical practices. Shell has in the past been
accused of human rights abuses in some of its operations such as in the mining
activities in the Niger delta (CEO, 2012). This creates a negative image of the
company which is yet to be forgotten by consumers. The company has also been
accused of exploitation of the consumers by taking part in activities such as
price fixing and others to maintain high profits. These are negative
connotations that the company is yet to overcome even though it has been keen
work out of the negativities.
The challenge of
branding and changing of perceptions of brands is complicated further by the
fact that today’s consumers are active participants in the branding process. As
opposed to the prior years where consumers were passive participants in the
branding process, consumers today shape opinions about a brand through their
active participation over the social media and other forums (Yan, 2011; Jones,
Temperley and Lima, 2009). An example is the deliberate attempt by environmental
activists in 2012 with an aim to turn public opinion against the company in a
well-coordinated social media attack (Levy, 2012). Another influence of public
participation in branding is evident in the fact that Shell is yet to
successfully portray itself as environmentally friendly despite its
well-coordinated advertising and publicity campaigns over the mainstream media
that has seen negative sentiments about the company receiving little or no
coverage (Verity, 2005; Donavan, 2012; Shell, 2012; CEO, 2012). This is
indicative of the fact that the market relies less on mass media for gathering
information that in turn influences their judgement. Effective branding and
advertisement campaigns should therefore be designed in a manner that
encourages involvement of the market for them to be successful.
Analysts
have been keen to recommend ways in which organisations can overcome poor brand
perceptions. The main approach proposed has been rebranding where an
organisation opts to take a new brand identity which is often accompanied by a
change of name and launching of new products (Tiwari and Sigh, 2012). However,
this can be an extremely expensive exercise especially where large
multinationals are under consideration. The most acceptable alternative appears
to be the use of consistent marketing and branding campaigns which must however
be consistent with both the production and organisational attitudes in the
market.
Literature gap and significance
The importance of brand identity and
predisposition of the market in determining the effectiveness of advertisement
campaigns has received adequate coverage in literature. However, specific focus
on how to overcome negative brand image in the context of today’s reality where
consumer participation in the branding process cannot be ignored is necessary. Moreover,
studies on branding have rarely focused on organisations whose nature of core
business is in direct conflict with the kind of image they intend to project.
The study would therefore help in recommending to the company how they can
continue their business while ensuring that their core business does not
adversely impact their image and thereby suppress their performance.
Research question
The main question is: What strategic and
tactical approaches can Shell embrace to improve its brand image in
consideration of market realities and intense negative publicity by
environmental activists?
Subsidiary questions are as follows:
-
What challenges has the company faced in
improving its brand image and how can the same be overcome?
-
How would an improved brand image impact
the success of its marketing endeavours?
-
How can the company ensure that the
improved brand image is sustained?
References
Aitken, R.G., Brendan, L.R., 2008. Advertising
effectiveness from a consumer perspective. International
Journal of Advertising, 27(2), pp. 279-297
CEO, 2012. The
climate greenwash vanguard: Shell and BPAmoco. (Online) Available at:
http://archive.corporateeurope.org/greenhouse/greenwash.html (Accessed 8
November 2012)
Clayton, M., Heo, J., 2011. Effects of
promotional-based advertising on brand associations. The Journal of Product and Brand Management, 20(4), pp. 309-315
Cox, M.J., 2008. Sustainable Communication: A Study
of Green Advertising and Audience Reception within the growing arena of
Corporate Social Responsibility. Case Study: British Petroleum. Earth & E-nvironment, 3, pp. 32-51
Donavan, J., 2012. Shell and BP accused of a price-fixing racket spanning decades. (Online)
Available at: http://royaldutchshellplc.com/2012/10/25/shell-and-bp-accused-of-a-price-fixing-racket-spanning-decades/
(Accessed 8 November 2012)
Facta Universistatis, 2009. Corporate responsibility
in the globalisation era. Economics and
Organisation. 6(2), pp. 89-104
Jones, B., Temperley, J., Lima, A., 2009. Corporate
reputation in the era of Web 2.0: the case of Primark. Journal of Marketing Management, 25(9/10), pp. 927-939
Leonidou, L., et al., 2011. Evaluating the green
advertising practices of international firms: a trend analysis. International Marketing Review, 28(1),
pp. 6-33
Levy, G., 2012. Shell
‘let’s go’ campaign a brilliant elaborate hoax. (Online) Available at:
http://www.upi.com/blog/2012/07/17/Shell-Lets-Go-campaign-a-brilliant-elaborate-hoax-UPDATED/5651342541859/
(Accessed 8 November 2012)
Paciolla, R., Mai, L., 2011. The Impact of
Italianate on UK Consumers' Brand Perceptions of Luxury Brands. Advances in Consumer Research - European
Conference Proceedings, 9, pp. 360-366
Schultz, P., Wedel, M., 1998. Culture, Identity and
Image Consultancy: Crossing Boundaries between Management, Advertising, Public
Relations and Design. Corporate
Reputation Review, 2(1), 29-50
Shell, 2012. About
Shell. Investor Centre. (Online) Available at:
http://www.shell.com/home/content/investor/ (Accessed 8 November 2012)
Tiwari, K., Singh, R., 2012. Perceived Impact of
Ingredient Branding on Host Brand Equity. Journal
of Marketing & Management, 3(1), pp. 60-77
Verity, J., 2005. Interpreting the successful
transformation of Shell's advertising activity 1997-2002. Management Decision, 43(1), pp. 72-85
Yan, J., 2011. Social media in branding: Fulfilling
a need. Journal of Brand Management,
18(9), pp. 688-696
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