In this study, Eugene Pavlov and Natalie Mizik developed the construct of a brand’s political positioning (PP)—that is, the extent to which a brand’s image aligns with the perceptual profile of a major political party. These researchers utilized the 48 personality traits in Young & Rubicam’s Brand Asset Valuator (BAV) to compute PP scores for 367 corporate brands. They then used these scores to assess to what degree each company aligned itself with either Republican or Democratic images during the 2016 US presidential election. The researchers found that a company’s financial performance corresponds with how the party with which they were aligned did during the election.
We (the authors) propose a mechanism to explain the observed performance effects—consumers’ shifting preferences toward (away from) the brands perceptually associated with the winning (losing) political party.
While past research has attributed this correlation to eventual, special treatment by the winning party, Pavlov and Mizik find that companies realized an average 1.7% increase in their financial market valuation immediately after the election and before such treatment could take place, if they aligned with the winning party. The researchers argue that the positive impact is a result of changes in consumers’ perception of a brand, which results in changes in purchasing behavior. These findings highlight the role of brand positioning within the context of a highly politicized and polarized social environment and the importance of understanding and proactively managing a brand’s political positioning.
Read the full working paper here.