Schapiro Group: Changing how stategy happens
June 2008
In This Issue

TSG Study: Bad Reputation Hurts Corporate Bottom Line

General Motors would sell 3.7 million more cars a year and book an extra $16.3 billion in revenue if consumer opinion held the quality of GM vehicles in the same regard as that of Honda or Toyota. Closing the "favorable opinion" gap to within five points of Honda would provide a $2.5 billion annual revenue lift for GM.

These findings from The Schapiro Group come from the firm's latest round of leading-edge work to quantify the value of corporate reputation in its different dimensions. Last year, TSG studied the impact of a corporation's community involvement profile on how likely consumers are to be aware of and consider buying from that company.

In the latest reputation study, TSG developed a formula for the dollar value of sales lost due to negative consumer perception of a company's product quality. The formula translates to any product for which sales and opinion data are available. TSG focused mainly on automakers because of the marked contrast in favorable/unfavorable ratings in that industry.

Using data reported to the federal Securities and Exchange Commission, TSG calculated the value of each 2007 sale for several leading car companies. The firm analyzed consumer favorable/unfavorable ratings for each company's product line. Then a percentage increase in sales was assigned based on the degree to which a "favorable" consumer reported being more likely to buy from a given manufacturer, versus the purchase intent of an "unfavorable" consumer. From this, a sum of lost sales opportunity was determined.

To illustrate, the biggest US car seller – GM – had an "unfavorable" rating of 21% last year. This translates to a lost sales opportunity equal to $22.8 billion, or 5.2 million vehicles. Honda, with an "unfavorable" rating of just 5%, had a lost sales opportunity of $2.8 billion, representing 600,000 vehicles.

TSG Senior Strategist Alex Trouteaud led the study. He observed, "Because a high unfavorable percentage shrinks the pool of potential buyers, that company has to be very effective in converting favorable consumers, in order to stay in the game with competitors." Citing mobile handset manufacturers, Alex described the case of two competitors which had roughly equal sales, both in units and revenue – but had a 30% gap in favorable/unfavorable perceptions. The company with high unfavorable perceptions was losing more than 7 times as much sales opportunity as the competitor with low unfavorables.

"How prospective customers think about your quality has a bigger impact on the top line than many companies realize," said Alex. "There are no smarter investments a company can make than those which give consumers a high opinion of the quality of your product."

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TSG Approach Gives State Bar Association More Bang for Buck

As many corporate and institutional clients know, The Schapiro Group (TSG) has a distinctive analytical approach that emerged from its origins in political polling and campaign planning. The State Bar of Georgia is the latest to benefit from TSG's well honed ability to dissect public opinion and respond with an effective communication strategy.

Last year the State Bar engaged TSG to evaluate the impact of TV spots created for the Bar's "Foundations of Freedom" campaign. "Foundations of Freedom" has defended judicial independence as a pillar of civic life since the late 1990s. After several unusually politicized judicial elections in recent years, as well as legislative threats to tinker with the courts, the Bar intensified the campaign with TV spots. A total of 13 ads were created to run on cable stations favored by key demographic groups.

According to Bar President Gerald Edenfield, "We needed to know which specific messages resonated with specific audiences in heightening public awareness of the importance of maintaining an independent judiciary. And just as helpful, which messages failed to resonate."

With the ads already running, TSG had to devise a method of obtaining clean "before and after" responses. To keep costs reasonable, the response universe needed to be carefully managed. TSG determined that the best known tool of qualitative research – focus groups – was not right for this particular challenge. "Focus groups tell you how people react within a social context," says Alex Trouteaud, Senior Strategist of TSG. "That is not how most people watch TV these days."

Considering multiple solutions, TSG devised a way to mimic TV viewing through a web-based survey with the ads embedded in the questions. Not only was this method close to respondents' typical behavior as a TV audience, it meant that responses could be tracked immediately. "We could follow responses going up and down in real time," Alex says.

The result was a clear and precise analysis of the messages, pictures, tonalities and icons that encourage people to value judicial independence. Viewers were moved by powerful symbolic imagery, such as the Bill of Rights on tattered parchment. They reacted positively to messages linking judicial independence with the idea of government operating more effectively.

The research also confirmed the value of keeping the ads straightforward and basic. Bar President Edenfield notes, "The Schapiro Group's findings revealed that simplifying the ads to deliver the most effective message would have an impact on public understanding and confidence in the justice system."

Using the research, the State Bar has shifted to a more targeted approach. The ads were retooled and reduced in number. The media buy has been expanded to include metro Atlanta broadcast stations, even though this increases the expense. With heightened confidence in the revised campaign's persuasive power, the State Bar is certain that its increased investment will reach target demographics in the greatest possible numbers.

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We're Proud of our Clients

Health Access America, a national pilot program of the Healthcare Leadership Council (www.hlc.org), sponsored a successful Cover the Uninsured Week to link uninsured Americans with existing health coverage resources.

The Gwinnett Convention and Visitors Bureau (www.gcvb.org) sponsored another successful Barefoot in the Park fine arts festival.

Faye DiMassimo has joined Kimley-Horn and Associates (www.kimley-horn.com) as Transportation Planning Practice Builder.

Steven G. Hall of Baker, Donelson, Bearman, Caldwell & Berkowitz (www.bakerdonelson.com) won the Daily Report Guardianship and Elder Law Pro Bono Award.

Penelope McPhee, President and Trustee of the Arthur M. Blank Family Foundation (www.blankfoundation.org), was inducted into the 2008 class of the YWCA Academy of Women Achievers.

Alicia Philipp, President of The Community Foundation for Greater Atlanta (www.atlcf.org), received The Atlanta Women's Foundation's Shining Star award presented at AWF’s Summit on Women and Girls.

Kathleen Womack (www.kwomacklaw.com) has been elected to the Atlanta Bar Association Board of Directors

As a longtime Downtown business, we thank and congratulate Central Atlanta Progress (www.centralatlantaprogress.org) on the organization's outstanding crisis management and communications in the aftermath of the March tornado.

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TSG Welcomes New Talent

Randi Hooker has joined the TSG team as Project Analyst. An Atlanta native, Randi is a recent graduate of Mercer University with a BA in Business Management and Communications.

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TSG Serves the Community

Lunch and a Performance... TSG is proud to have sponsored the always-entertaining annual lunch of the Metro Atlanta Arts Fund (www.metroatlantaartsfund.org).

Dream team... TSG President Beth Schapiro is an active member of Club 13, the volunteer marketing force for the Atlanta Dream – Atlanta’s new WNBA team. For more info about this exciting addition to Atlanta’s sports scene, visit the team’s website (www.atlantadream.net).

Leading indicator... Beth was selected to serve a 3-year term on the Leadership Atlanta Board of Trustees (www.leadershipatlanta.org). She also serves on the organization’s Alumni Membership Committee.

Speaking of alumni... Senior Strategist Alex Trouteaud is serving as Atlanta Chapter Representative of the Eckerd College Alumni Association

...Project Analyst Randi Hooker is serving on the Alumni Chapter Board for Krimson Kourts Incorporated National Service Organization (KKINSO - www.krimsonkourtsincnso.org). She is also is one of the founding Alumni members of this national service organization.

A family affair... Alex and his family are hosting a political refugee family from Myanmar (Burma). Refugee Resettlement and Immigration Services of Atlanta (www.rrisa.org) is the sponsoring organization.

String music... For the third year in a row, Project Analyst and accomplished harpist Liesl Hagan will be performing at a benefit event for Mercy Flight Southeast (www.mercyflightse.org).

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