Billabong Research Report

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Evaluation of Billabong’s
Image & Reputation
Prepared by Melissa Bailey
For Chief Executive Officer Launa Inman, Billabong
17/8/2012
Executive Summary
Surf wear company Billabong Australia is currently dealing with issues including
financial difficulties, change of management and aligning with their target market.
This has led to the request to research and monitor online media coverage of
Billabong to assess whether this material may impact the company’s image or
reputation. Research methods include secondary research and personal
investigation to provide qualitative data. Sources include social media, newspapers,
blogs and public forums. Findings signify online coverage of Billabong is equally
positive as it is negative. Negativity arises from articles covering financial
performance, however numerous articles cover Billabong in a positive light from a
products and services perspective (coverage of events). Findings suggest a strong
emotional appeal for the brand. However, product performance is rated poorly as
Billabong products are viewed as overpriced. Their image or ‘surfie’ look appears to
be no longer desired among a modern generation. Evidence indicates high
unawareness among the general public of Billabong’s financial difficulties. The
conclusion made is that Billabong is suffering image difficulties due to low financial
performance, low product performance and the inability to modernise their image to
suit the changing environment and audience. Research is recommended to gauge
an insight to target market’s needs, wants and demands. Other recommendations
include communication tactics such as social media, promotional tactics for products
and events and celebrity endorsement. Strong internal company communication and
maintaining transparency with stakeholders are also identified as important
strategies to improve image.
ii
Table of Contents
Executive Summary………………………………………………………………..............ii
Table of Contents……………………………………………………………………………iii
Introduction………………………………………………………………………….............1
Research Methods and Findings…………………………………………………………..2
Conclusions and Recommendations………………………………………………………5
References…………………………………………………………………………………...7
Appendix 1 (Media Monitoring Table)………………………………………………….....8
Appendix 2 (Facebook Survey)…………………………………………………………….9
Appendix 3 (Public forums and feedback forms)……………………………………….12
iii
Introduction
Billabong’s financial difficulties (debt, reduced share prices, management problems)
became public in early 2012.
In February Gordon Merchant founder of Billabong, declined a $3.30-a-share
takeover, offered by US private equity firm TPG. He has since admitted this was a
mistake. Subsequently, Billabong has suffered public scrutiny and media attention.
The brand is also struggling to satisfy their target market (adolescents and surfers)
as it has been suggested they are out of touch with the contemporary environment
and Generation Y.
Online coverage of Billabong has been monitored, in particular the development of
financial issues. Sources include newspapers, blogs, social media and public
forums. The focus of the report will be interpreting this information to judge the
impact this coverage may have on the company’s image or reputation. Conclusions
are drawn from the analysis, interpretation and evaluation of the findings and
recommendations are suggested for future action.
1
Research Methods and Findings
The issue is whether online coverage of Billabong will influence its image or
reputation. Corporate image is made up of personality, identity and image (Riel C &
Fombrun CJ 2005). Image is how stakeholders perceive the company based on how
it presents these distinct features (Cornelissen J 2008; Fill C 1999).
Corporate reputation involves multiple images linking the company’s financial
performance, identity, innovation and relationships with stakeholders (Kitchen PJ &
Watson T 2010). This “collective representation” (Argenti & Druckenmiller 2004 cited
in Kitchen PJ & Watson T 2010) can only be developed over time (Kitchen PJ &
Watson T 2010).
The data collected was analysed using Fombrun’s model which outlines the six
dimensions of reputation; Emotional appeal, Products and services, Financial
performance, Vision and leadership, Workplace environment and Social
responsibility (Fombrun 2000 cited in Kitchen PJ & Watson T 2010, p. 281).
Online activity regarding Billabong was monitored to see what was been reported,
see Appendix 1. The tone of the article was highlighted according to Fombrun’s six
dimensions.
The key observations are that Billabong is rarely talked about negatively, however
given the situation; articles written about the financial situation portray the company
undesirably. Speculation on management issues and communication issues within
the company may influence customer thoughts of Billabong.
2
However, extensive online coverage focuses positively on Billabong’s products and
services performance. Billabong’s participation in the Australian music festival
Splendour in the grass, as well as their Billabong Bro Down competition and their
Design for Humanity fundraising event has received just as much media coverage as
their financial situation. This demonstrates to the public that Billabong is staying true
to their surf/snow identity.
It has been highlighted that Billabong’s image may be out of touch with their target
audience, namely a youthful and surfer demographic.
Personal investigation was undertaken to gauge the reality of this. A Facebook
survey was conducted to provide qualitative research of the public opinion of
Billabong. The limitation of this research is the sample size. As there were only a
small number of respondents it may not adequately represent the opinion of a larger
population. The respondents were mainly young adults and university students.
Questions were shaped to fit the first three dimensions of reputation; emotional
appeal (how much the product is liked, admired and respected), products and
services (perceptions of the quality, innovation, value and reliability) and financial
performance (perceptions of the company’s profitability, prospects and risk)
(Fombrun 2000 cited in Kitchen PJ & Watson T 2010, p. 281).
Questions included:
1. Do you like this brand? Own it? Would buy it? (Emotional appeal)
2. What do you think of their products? (Products and services)
3. Are u aware of the financial difficulties they are currently facing? (Financial
performance)
3
The answers to the Facebook survey are provided in detail, see Appendix 2. The
majority of the results were positive, indicating Billabong still has a strong reputation
among Generation Y.
Emotional appeal was high; most respondents liked and currently own and wear the
brand. However, evidence suggests the ‘surfie’ look or image is longer fashionable.
Most agreed the quality of the products is high, yet also believed they are overpriced.
An overwhelming 86 % were unaware of the financial difficulties Billabong currently
encounters, responding with surprise and sometimes supportive comments.
Furthermore, response to the online media articles in the form of forums and
feedback forms presented in Appendix 1 has been compiled, see Appendix 3.
These produce different results to the Facebook survey, as strong negative
emotional appeal towards Billabong is evident. Products were viewed as having
decreased in quality over the years and increased in price. The data suggests that
those who are aware of the financial difficulties tend to have a more negative opinion
of the company. However, a sympathetic tone was also detected.
Hill & Knowlton, Inc. a leading international communications consultancy conducted
a survey in 2003 on CEO’s to gain their perspective on threats to corporate
reputation. Results indicate unethical corporate behaviour (50%), product/service
problems (50%), customer criticism (40%) and media criticism (33%) as the top 4
threats (Hill & Knowlton 2003).
According to viewpoints presented in Appendix 1, 2 and 3 Billabong have problems
in the last 3 of the 4 areas. Their products are described as overpriced. Customer
criticism is apparent, especially in public forums and media criticism is evident
through some media outlets.
4
Conclusion & Recommendations
Studies indicate that ‘online coverage’ does not provide a meaningful metric for
accessing reputation; rather ‘custom research’ and ‘informal feedback’ is a more
powerful indicator (Kitchen PJ & Watson T 2010, p. 279).
The custom research and informal feedback research implemented for this report
show a high emotional appeal for Billabong, indicating a strong reputation.
Although the data also illustrates Billabong have problems within the areas of
‘product performance’, ‘customer criticism’ and ‘media criticism’ the level of negativity
in these areas is minimal; not significant enough to affect reputation.
Billabong’s image is an issue. Although they have remained true to their personality
and identity (surf and snow orientated) customers are no longer relating to this
image. Data suggests the ‘surfie’ look is out-dated and unappealing to a young
audience.
Proactive strategies are recommended to improve this issue. Implementation of
qualitative research is advised to gain an understanding of what the target market
want from the brand.
A higher use of communication tactics such as organisational media is required, for
example social media (Facebook, Twitter etc.) to reconnect with the target market.
Celebrity endorsement is another consideration, for example renowned Australian
actor Liam Hemsworth who has an interest in surfing.
5
Promotional tactics are recommended for products and services. For example,
Billabong’s participation in the Australian music festival ‘Splendour in the Grass’
could have been promoted better to generate brand awareness and demonstrate a
strong image.
In response to financial performance, mixed emotions arise from the public
feedback. Tones of sympathy, support and condemnation are evident in the data.
Billabong would benefit from trying to separate financial performance from their
product and service performance to avoid negativity in the latter area.
Total transparency with all stakeholders is recommended. Strong communication
within the company is needed as to deliver consistent messages to the media and
provide a united front. The CEO is recommended to be the message source for all
future communications with stakeholders.
6
References
Cornelissen J 2008, Corporate Communication: A guide to theory and practice, 2nd
edn, Sage Publications, London.
Fill C 1999, Marketing Communications: Context, content and strategies, Prentice
Hall, London
Hill & Knowlton 2003, Corporate Reputation Watch Survey, Korn/Ferry International,
accessed online 2nd August 2012,
http://www.sel.eesc.usp.br/informatica/graduacao/material/etica/private/2003_corpor
ate_reputation_watch_survey.pdf
Kitchen PJ & Watson T 2010, ‘Reputation Management: Corporate Image and
Communication’, in Strategic marketing management: A process-based approach,
eds L Moutinho and G Southern, Cengage Learning, Andover, Hampshire, UK.
Riel C & Fombrun CJ 2005, Essentials of Corporate Communication, Routledge,
New York
7
Appendix 1: Media Monitoring Table
See attached Word document
8
Appendix 2: Facebook Survey
Emotional Appeal Products and Services
– like it? Own it? Would
buy it?
Financial
Performance
- are u aware of the financial
difficulties they are currently
facing?
Positive
Negative
Like it, own it
and wear it
Positive
Aware
Like it, own it,
wear it.
I like it, wear it
and own it!
Realistically priced,
good material.
I like it, own it
and wear it
some of their stuff is
good and some isn't - i
don't buy for the brand
i buy if I like it
These days I’ve
realised it’s too
expensive! Good
quality tho.
2. I think they have
nice products, great
quality, lasts a long
time.
Mainly buy trackies n
hoodies but the
occasionally have
some nice more
feminine items. I have
a gorgeous blue n
white billabong
blazer/jacket.
Products are well
suited to their target
demographic,
performance surf wear
and casual clothes
following the same
theme.
I like it, I own
some clothes
of it, I would
buy it
Like it, own it,
wear it.
Not my style
however. Used
to wear it in my
younger days.
Love the brand
always buy it
doesn't surprise me
their having
financial difficulties
Was not aware of
financial difficulty
no not aware of
their financial
position
had no idea of their
financial situation
No idea! Thought
they were doing
well?
..
I was aware
they were in
financial trouble!
Read an article
a while back on
adelaidenow
website
Didn't know of the
financial problems
products are normally
good value but lately
can be hit and miss
I don't mind
the brand,
Not Aware
Was not aware of
financial difficulties
It’s more created for
casual "surfy" people
or younger teens. A lot
of trends have
changed and a lot of
their clothing seems to
have stayed the same
over the years
I would never
be seen
wearing the
billabong
brand
Don’t mind it
Negative
I like their range of
products, I think they
have original designs
no wasn't aware at
all! :)
And their financial
problems is news to
9
kinda old
school now
though;
however I own
several items
that I still wear
today including
my Hat!
Like it,
own/wear a
couple of
items
I like the brand
billabong I
think the origin
of it is very
representative
with that of
both Australian
and surf
culture,
Yes, because I
was a surfer
when
Billabong
originated
Some things
are ok ... I
think I might
own 1 or 2
billabong
things.
Have a couple
of t shirts and
some boardies
me, I assume they
are Australian so I
wish them luck.
products are usually
good quality
some of it can be a bit
pricey for what you get
no idea about
financial trouble
However I own
no billabong
items nor would
I buy it.
Their product caries a
surf discourse that
connotes the people
that wear the brand as
hip, laid back, surfie
They carry a hefty
price (when compared
to bulk retail stores kmart Big-W) which is
really counter cultural
to the surf culture
which is a nonmaterialistic and a
simplistic/basic/cheap
culture. (it costs
nothing to ride waves)
I am aware of the
financial difficulties
of the company
been following it on
the press
I don't like it and
wouldn't really
wear it, not
really into the
surfy look.
The products they sell
would be very
appealing to the type
of people who like
those sorts of clothes.
Not as much as
I used to as a
kid.
I like some
billabong
clothing. I
used to wear it
heaps when I
was in high
school. Now I
just have the
odd piece.one
nice t shirt and
a hoodie
Like it, own it
and wear it
I think the clothes are
quite good quality
Good quality and
priced well considering
the quality
10
Had no idea about
the financial
difficulties.
Their clothing used to
be good quality and
cheap, however now I
find them overpriced
and overrated
I can see the appeal of
having surf brand
name clothes, but I
don't think they are
worth the price.
Yes, I heard
about it on the
radio
Definitely a "surf"
brand and rather
expensive, so
generally buy off
season.
Am aware of
their financial
difficulties, think
they put off a
heap of staff a
couple of
months back.
maybe a little over
priced but it's expected
when u buy a "surfie"
brand
Had no idea about
the financial trouble
I was completely
unaware of their
financial difficulties.
Wasn't aware of the
financial difficulties
Owned a
couple of
things e.g.
bag, wallet,
hoodie in high
school
I like it, own
some items
and wear it.
Brand is ok but
not my style.
Products generally for
a younger generation
or more casual style
Expensive for casual
clothes.
Find it kind of pricey
but are good quality so
i guess you pay for
what you get.
No, I didn't know
they were in any
financial problem.
Do not focus on
different brands,
it means nothing
to me, I own it
yes, but not by
brand but
because I
needed jeans.
Its ok, can't tell
the difference
between that
and other
brands.
Only wear the
boardies.
No
good quality
.
11
No. But it doesn't
surprise me as
there are lots of
surf brands
Can be expensive
didn’t know they
were in struggle
town
Appendix 3: Public forums and feedback forms
Emotional Appeal
It’s amazing how far they
have fallen
Billabong really needs to go
back to their roots. It seems
they have lost touch with
their core market 'surfers'.
I wonder if there's much
difference between flogging
easy-to sell-items for a huge
company which provides a
massive TV advertising
campaign and trying to flog
over-priced surf wear for a
company which betrayed the
surfing culture by turning it
into an ugly commercial
enterprise rather than a fun
sport. Something tells me
that Ms Inman will regret
having this on her resume.
Products and Services
Don't know if anyone has
noticed the new lows Mambo
has been taken to since it
was acquired by Big W. Not
content with regurgitating its
old range they decide to use
it on their cheapest and
nastiest items of teen wear.
Completely trashing
whatever threads of quality
left in the brand. It actually
makes brands like Mango,
Piping Hot and Lightning Bolt
look classy by comparison.
Will this happen to the Bong?
They need to ditch all this
high street fashion!
Financial Performance
FFS Gordo feels bad -- he
made a monumental stuff up
– I can imagine lawyers
rubbing their hands together
with the chance of action
against the director
Totally agree with Gordy.
The quality of Billabong
clothing particularly tee shirts
has decreased dramatically
in recent years while the
prices just keep on
increasing. People don't
mind paying top dollar for a
quality item that will last. The
reputation of Billabong
clothing was once high - it
would be good to see it get
back to quality clothing.
Poor ole Gordon, was paying
$3.15 a share when they are
only worth $2.25 today He
really got gyped trying to
prop up the price. They
should have taken TPG's
offer of $3.30 any
day...sometimes it pays to
cut your losses especially
when it affects other
shareholders!
CEO is a snow skier not a
good start- but 1.3mill prob
is . Just one observation 8090 BUCKS for a pair of
boardies too much ...
Oops, there goes another
mates head, eh Gordon! Bad
luck Derek. Nice payout
though. Total control says
Gordon will never sell. Public
company controlled by
shareholders, sure?
At the end of the day, after
all that's said and done. The
balance sheet reflects the
true value of a company and
its shares, especially to the
downside!
As a former buyer/wearer of
billabong tee shirts I can tell
you that over the years the
price has increased and the
quality has decreased. If Ms
Inman can reverse these
trends she can save the
brand and hopefully some
Gold Coast jobs. So let’s all
give the girl a go!
12
That new CEO could be the
shortest serving ever
13
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