Is It All A Question of Reputation? The Role of Branch Identity (The Case of an Oil Company) Klement Podnar University of Ljubljana, Slovenia ABSTRACT This paper aims to demonstrate that a good cor- porate reputation in itself does not ensure the successful introduction of a new product or brand when it is a case of brand extension. In this paper, it is argued that good corporate repu- tation is not a decisive factor in the consumer’s perception of a product, if the product does not match the company’s identity. The paper intro- duces a concept of ‘branch identity’, which can be seen as a preliminary condition for building corporate identity. The findings presented in this paper are based upon the case study of a Slovenian oil company. THEORETICAL BACKGROUND Issues concerning the meaning and impor- tance of reputation are undoubtedly the leading questions in the field of corporate identity and reputation management. The main belief is that reputation creates wealth (Fombrun, 1996). This is based upon the premise that reputation as an intangible asset can enhance the perception of an organization’s reliability in the process of alternation with various stakeholders. Reputation from the organization’s point of view represents a competitive advan- tage. Therefore many authors (Fombrun, 1996; Srivastava et al., 1997; Roberts and Dowling, 1997; Gregory, 1997, 1998) try to demonstrate the importance and role of a company’s reputation (for a review of the relevant literature, see also Fombrun and Shanley, 1990 and Yoon et al., 1993). Fombrun argues that ‘a good reputation enhances profitability because it attracts customers to the company’s products, investors to its securities, and employees to its jobs’ (Fombrun, 1996). A company’s reputation is considered to have an influ- ence on the sale and price of the products produced by that company. Gray and Balmer think that ‘if customers develop a negative perception of the company or its product, its sales and profits assuredly will decline’ (Gray and Balmer, 1997). On the other hand, the more reputable the com- pany, the higher the product price and sales rates. A good reputation can also help a com- pany when launching a new product into the market (Garud and Lampel, 1997; Kap- ferer, 1997; Waarts, 1999). In this context Fombrun’s statement that ‘the combination of lower prices and a strong reputation will generally attract the most customers to an offering’ (Fombrun, 1996) sounds very appealing to the man- agement of a company when launching a new product. Reputation as defined by Fombrun however, as ‘the overall estimation in which a company is held by its constitu- ents’ (Fombrun, 1996) shows the nature of the concept, which raises the question of whether a good corporate reputation as the overall estimation is sufficient for consu- mers to adopt the product. Corporate Reputation Review Volume 6 Number 4 Corporate Reputation Review, Vol. 6, No. 4, 2004, pp. 376–387 # Henry Stewart Publications, 1363–3589 Page 376