Names, Brands, and Reputation

What’s in a name?


That’s what Juliet asks in the famous “balcony scene” in Romeo and Juliet. She had fallen in love with Romeo, but Romeo had the wrong family name. Tragically, they couldn’t escape their families’ heritage of violence and vendettas.

On the other side of the coin, companies put billions of dollars annually into creating names and brands that we can trust. Retailers like Amazon and Target, health care companies like Johnson & Johnson or Pfizer, and global firms like Rolex and Lego all live and die by their reputation.

34 years ago Johnson & Johnson faced a crisis after someone tampered with its Tylenol packages in order to commit a series of murders. Over seven people died in the Chicago area when they took pills that had been laced with cyanide. The company acted immediately and decisively, spending hundreds of millions of dollars to recall all of its over-the-counter pills, and compensated customers who threw away their bottles. They revamped their products to make them tamper-proof. This was costly. Tylenol sales represented 20% of J&J’s total revenues.

Photo: Roger Ressmeyer. Source: Time

A year later, Tylenol was once again the top-selling pain reliever, and J&J was one of the most trusted companies in America. Their response to the Tylenol murders is still discussed in business schools as a model of crisis management. Johnson & Johnson spent hundreds of millions, but preserving its global brand was worth hundreds of billions.

Brands matter. They convey quality and commitment. A brand is a promise that customers can expect long-term security—that a company is willing to put its reputation on the line every time someone uses their product or service. It’s a shame when firms forget this—or throw their good name away.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:21:42+00:00 September 28th, 2016|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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