Question One: Justify the assertion that ‘every organization, no matter how large or small, ultimately depends on its reputation for survival and success.
Reputation is a character that defines a person or an organization. It has a long term effect on the perception of the public, customers, employees, suppliers, investors, regulators, journalists among other stakeholders. This is because human beings react differently to a positive reputation just as it would be with a negative reputation. Whereas the latter would push away people, the former has the effect of attracting people to an organization because of a formed opinion about the organization with which they associate. Additionally the perceived opinion by the public will determine decisions regarding working, trading, or purchasing with a given organization. Given the competitive free trade markets that have been facilitated by liberalization of the economic markets and globalization, a good reputation has proved to be an essential asset for organizations operating either domestically or in international markets. Therefore the need for a good reputation has been a driving factor towards improvement of public relations which has seen organizations manage their communication channels as a way of establishing and building productive relationships with not only the potential customers but also with the public at large (McQuail 2005).
The Chartered Institute of Public Relations (CIPR) identified that reputation is directly proportional to the level of public relation initiatives instigated by an organization (Tench and Yeomans, 2006). This is because public relations is a function of strategic management that deals with building a reputation by establishing and maintaining profitable long-term relations among all its stakeholders. For an organization to effectively create a good reputation, it is advisable that their public relations strategies should be invisible to the public but it should have a desirable influence on the public. By so doing the organization will brand itself as well as its products, create a pleasant perception among the public and facilitate the communication process. This means that public relations, often abbreviated as PR is a determinant factor in the success, survival and posterity of a business. The procedure for initiating PR into the teams is by briefing the team members on the need for change. Involve the teams in setting targets for the public relations objectives as well as ensuring that the objectives are parallel to the organizational goals. By training the work teams into a changed attitude towards PR, the employees will be aware of the implications of a good PR on reputation and success of a business.
Research conducted by the Economist Intelligence Unit on 210 companies in the United States identified that 90% of the organizations interviewed supported the claims that reputation embodies a primary asset for any corporate while reputational risks represents a significant threat to the sustainability and success of a business. Courtesy of the research conducted by the Economist Intelligence Unit, there emanates the need to analyze the building blocks for good reputation. According Regester and Larkin, (2002) corporate reputation is composed of personality, identity and image. Merging these three components elucidates that organizations should be take responsibility of their value chain as well as their value proposition. The process begins with consistency which improves the image of an organization. Any business intending to operate in both the domestic and international markets for a longer period of time should develop initiatives aimed at making it better than its competitors. This is only possible when the organization serves the interests of its stakeholders with due attention that it requires.
In order to justify the assertion made in the question which demands evidence on the need for corporate reputation management on ensuring the sustainability and success of a business. The impact of poor reputation was felt by the Hoffman La Roche pharmaceutical which was a reputable company committed to developing and manufacturing high quality drugs for the international markets. Even though the company remains a forefront in manufacturing drugs among other medical appliances with more than 70000 employees in 100 international markets, it’s being listed by the Corporate Crime Reporter as a leading criminal in the 1990s greatly affected the success and posterity of the company. The Corporate Crimes Reporter is a legal consumer newspaper that highlights on the reputation of organizations. The listing of Hoffman La Roche Pharmaceutical among the first 100 corporate criminals had the immediate impact of damaging the image and also the reputation of the company to its international customers (Gregory 2004).
Based on this example, there arises the need to initiate a corporate reputation management strategy which is concerned with integrating communication functions and reputation as a prerequisite to creating a suitable corporate identity. This need arises from the realization raised among corporate leaders such as the President of Hill and Knowlton Company in the United States. According to the organizational CEO, reputation greatly impacted on market capitalization and share prices. Steve Miller, CEO at a Waste Management Company states that reputation is the measure upon which suppliers, customers, employees and all the other stakeholders weight the possibility of success of a business. Researches by consumer groups further illustrate the need for corporate reputation has been triggered by an increasing pressure on businesses. Wilcox, Cameron, Ault and Agee, (2003) support that the pressure mounted upon a company by stakeholders to initiate cost cutting strategies and increase profitability indices has encouraged managers into stretching their goals. It is because of the internal pressure to perform that employees have embraced strategies aimed at achieving short term financial gains which compromises quality of goods and services, social disintegration, financial practices and the morale of employees. The end result is strained relationships which negatively impact on the reputation.
The need for Social Corporate Responsibilities is shadowed in the need to satisfy societal concerns. Companies need to foster their public relations by involving themselves in voluntarism, charity, philanthropy and social responsibilities. According to Harris Associates, the advent of the internet demands that organizations invest in creating public relations as a way of advancing their reputational quotient (Hochbaum, Moreno-Centeno and Yelland 2011). The emergence of market analysis groups such as Harris Associates have brought in more pressure on the need for corporate reputation as they rank companies based on factors such as financial performance, workplace environment, social responsibility, vision and leadership, goods and services and emotional appeal. The reasons behind such ranking is the reality that reputation affects survival and success of companies thus ranking will enlighten managers on the fundamental strategies to instigate in their organizations so as to win customers among other stakeholders.
The attribute of maintaining a good reputation has been reflected in companies such as Coca-Cola where the management has invested in bettering customer services by improving the marketing process, quality control and distribution. Johnson and Johnson company has been reputed for ethical practices across the world, Royal Dutch Shell Company enjoys a balanced financial report courtesy of its concern with environmental management as a CSR initiative while Unilever has a good reputation marked with its interactive customer care services, good human resource management and competent employees (Choo 2006). Thus it is noticeable that each and every organization has a unique feature on which their reputation is build. These features range from employee attitude, innovations, customer experience, environmental conservation initiatives, and customer loyalty.
As illustrated by Di Virgilio and Ludema, (2009) corporate reputation is dependent on several factors. These factors form the strategies upon which employee and the organization will institutionalize public relations as the best strategy for winning over potential customers from competitors. The idea of public relations can be used to initiate corporate reputation since it is pegged on the need to create a mutual understanding between the public and the organization. The simplest way to use PR entails the use of publicity where a firm attracts public interest by being in the news headlines paying for it. The use of PR as a strategy to attaining corporate reputation has in the past managed to expose organizations, their leaders, political decisions and products to the public thus gaining much more acceptance in the eyes of the customers.
PR is supported by several factors among them being the organizational initiative in protecting the environment. Psychologists identified that organizations that showed willingness to invest in corporate social responsibilities and environmental initiatives were more likely to win customers. In order to attain a good reputation, organizations can undertake management policies aimed at saving the environment from adverse pollution. Among the initiatives that have been undertaken by industries include manufacture of products that are compatible to the environmental initiatives that have been initiated around the world. The Kyoto treaty has played a pertinent role in shaping organizations towards environmentalism (Cornelissen 2004). With the ecological compatible strategies, organizations take the initiative of producing goods and services that will be cost effective, differentiated and focused on attracting a certain market segment. The targeted markets under this strategy are market niches that are sensitive to environmental conservation. As much as industries use packaging materials so as to improve the image of their products or as a brand, organizations have reverted to the use of ecological friendly materials such as the use of organic bio-degradable materials.
In addition to packaging materials, organizations have embarked on drastic measures to transform their operations, supply chains, public education and population or community impact. The reason behind the transformations is prompted to educate the public on the need for environmental conservation. Organizations have taken a leading role in being agents of change by aligning their supply chains towards a direction inclined to cause least environmental pollution. Their industrial processes have also been made to include more automation and use of technology as a way of ensuring efficiency while at the same time creating an organization that is vigilant about its impact on the ecology. The trend has been marked by European companies which are currently using Eco labels to differentiate their goods from the rest of the continents (Dobkin 2009). The use of the label is impressive in the eyes of the consumer and the government which helps the company gains a competitive advantage in addition to gaining reputation among customers. Moreover an organization committed towards educating the public and being agents of ecological revolutions is likely to impress the public who are made by the media to believe that the organization is not only responsible but also reliable.
The success of any organization is partially dependent on reputation. Firms that have gained the trust of suppliers and customers easily gain market share and a balanced financial performance. Reputable firms on the other hand put in efforts by innovating new products and deliver quality goods and services. Coca-Cola has enjoyed increasing dominion of the beverage and soft drinks markets because of its good reputation attained through accountability and responsible industrial practices. The multi-national company has been a market leader courtesy of its being able to abide by government regulations. The other aspect embodied in public relations that add up into determining corporate reputation is communication. Both intentional and unintentional communication impacts an organization either positively or negatively. This is because corporate reputation is affected by all activities a firm engages in. These activities are a form of communication passed through advertisements, direct marketing, personal selling, promotions, trade relations, community relations, and public relations (Dobkin 2009). Communication further makes the stakeholders view differently because they have diverse interests.
Even though stakeholders view the organization differently because of their varied interests in the firm, corporate reputation created by corporate branding, marketing communication and advertising affects all stakeholders in equal measure. This is justified by the reality that reputation plays the role of determining the success of an organization by influencing its books of accounts. Corporate reputation management is therefore a practice of management that calls upon managers to use sound corporate practices, theories and management practices so as to achieve unison in their use of organizational assets to boost reputation (Di Virgilio and Ludema 2009). The practice of prompting reputation that will be a long lasting asset in sustaining organizational posterity as well as long term success is a strategic process that starts with the application of strategic leadership. Strategic leadership focuses on the need to empower employees through training and motivational rewards. After training the workers, organizations need to keep them as a resourceful asset capable of determining the reputational quotient of the firm. Appreciating employees is a prerequisite towards gaining credible approval from investors who will want to associate with the long term success of the organization.
The second step after investing in appraising employees is maintaining the organizations commitment towards ethical practices. Ethics will not only help the management in its goal of attracting and retaining employees but it will also reduce their hostility towards the management. Assuming that an organization is using the commitment based marketing theories; the employees will be instrumental in expressing themselves and their ideas which will help increase productivity as well as the reputational quotient. This also means that sustaining a good corporate reputation will win the good will of the employees who will have to work harder and participate in activities that will help the business to be more successful. The knowledge sharing aspect promoted thought the application of commitment based theories will be helpful in winning ore customers and convince more investors into investing in the organization (Edwards 2006). In order for the management practices to be easily accepted by the employees and the customers, the management has to ensure that the new corporate strategies are potent of boosting reputation and improve the corporate image.
A good example entailing the institutionalization process was exhibited in the year 1980 when the Chemical industry was brought under scrutiny for alleged negligence. These accusations came after the media leaked information to the public claiming that the chemical industry was leaking toxic wastes into water bodies. Furthermore there was a general increase in chemical accidents which was blamed on engineering works and general laxity among managers and regulatory bodies such as the Chemical Manufacturers Association (CMA). The responsible care management strategy that was designed by the CMA was tailored to self-regulate organizations in the industry; among the industries that benefited from the initiative were Dow, DuPont, Monsanto, BASF and Bayer AG (Edwards 2006). Since the year 1988 when the responsible care management was introduced into the chemical industry, most companies transformed their behavior and began practices aimed at environmental conservation. The public changed their perception towards the industry which had changed from being a polluter into an environmental activist.
It is further appreciated that proactive communication helps a big stride towards gaining corporate reputation. Communication not only reduces the negative impression created by prejudiced information but also helps organizations set up knowledge systems that are reliable. In addition to the various strategies discussed on the potent ways of driving public relations and reputation, technology also plays a role in justifying the question on the success and perpetuity of a business. Technology entails the use of social media as an advocatory tool that could either taint or improve the reputation of the organization (Dev & Don 2008). Technological advancements have led to the rise of social media and networks which pose a major reputational risk to organizations. As much as media provides the cheapest way to reach out to consumers and market goods and services, misuse of the internet could impact the image of an organization.
Question Two: When CSR mattered little, it was okay to let public relations run it. But now that CSR is emerging as an essential element of corporate life, it is time for more valued disciplines, such as marketing, to take control.’(Coombs & Holladay 2010:270).
The statement made by Coombs and Holladay can figuratively be interpreted as stating the pertinence of the role played by corporate social relations abbreviated as CSR as well as the role played by marketing and public relations in determining organizational activities (Curran & Morley 2006). The veracity of this statement will be analyzed by drawing widely from the marketing school of thought as well as public relations and the emerging role played by CSR in determining the place of relationship marketing in modern organizations. Apparently the assertion stands out in supporting that relationship marketing has superseded the role previously played by public relations and corporate social responsibilities. This statement is majorly supported by the current developments that have been realized as organizations are switching from traditional forms of marketing and embracing the novel philosophies supported by relationship marketing.
It is obvious that during the industrial age organizations mostly depended on public relations to attract customers and make sales. As the years progressed, corporate social responsibility took a center stage in managing organizations but today the new concept propagated by marketing philosophies has taken the central part of determining the success of modern organizations. The American Marketing Association defines marketing as a deliberate action undertaken by any organization to create, communicate and deliver goods and services to customers while at the same time managing the relationship in such a way that it benefits all the parties involved (Edwards 2006). The original concept behind relationship marketing emanated from the Homeric Greece who found out that developing interpersonal relationship could help a long way into curbing increased competition caused by liberalized global markets, advancing communication over international markets and sustaining sales. Relationship marketing abbreviated as RH as it came to be called later on became applicable into the academic domain in the year 1980 and in the 1990’s when researchers identified that RM would present a new perspective into marketing.
The application of the modernistic marketing strategy displaced the transactional marketing by shifting the focus of the definition and principles that defined the 4P’s of the marketing mix (Dev and Don 2008). The application of relationship marketing means adjusting the 4P’s of marketing in that the company will have to customize its products so as to match the customer’s preference. Also the company will have to work closely with suppliers and distributors while designing new products. The aspect of pricing could be accommodated in such a way that the company will have to price its bundles of products depending on their relationship with the customers and the bargaining power exhibited by the customers. Relationship marketing also means that distribution or positioning will favor direct marketing so as to create a lasting bond with customers and also the customers will have power over distribution channels. The last P regarding promotion will be affected by communication channels used. Relationship marketing has a preference for personal dialogue with customers aimed at improving the image of the organization.
The need for communication both as a media for marketing, public relations, and corporate social responsibility resurfaces at this point. Immy Holloway and Christine Daymon in their book on “Qualitative Research Methods on Public Relations and marketing communications” illustrate why it is essential for an organization to establish its communication protocol. Furthermore the book stipulates the impact of communication on public relations. According to Holloway and Daymon, (2011) marketing communication and public relations are correlated. This is because both of them are focused on persuading the stakeholders into doing something for the firm. The media too takes an active role in amending, reconstructing and creating meaning in advertising or passing any form of messages to the consumers. The reason for communication relationship is aimed at changing the perception of people towards organization just like marketing, CSR and public relation. Thus communication stands out as the media through which organizations advance their agenda to the stakeholders who are made up of the public, consumers, governments, suppliers and even competitors.
Specifically communication represents a force that promotes the organizational image in addition to being an unseen power that entices people into making purchases. Organizational culture is spread from the management to the employees through communication channels in the sense that communication triggers understanding between two or more parties. The organizations have to go through cultural and social realities before they construct themselves into gaining much advancement in marketing, CSR and public relations. In the second chapter of the journal by Russell Lawson on “The public relation buzz factor: How using public relations can boost your business” the author supports the need for communication in enhancing public relations after which he emphasizes on the need to integrate PR into CSR and relationship marketing (Lawson 2006). According to the Charter Institute of Public Relations, the term PR is described as a managerial exercise tailored to influence the behavior of the public, the government and the customers through enhanced relationships and communication.
It is from this journal that we learn of the value creation purpose that had been traditionally imposed on public relations. The concept of public relations, corporate social responsibility and marketing as postulated by Coombs and Holladay are integrated into the marketing mix because of the fact that they both drive at increasing the visibility of the organization as a brand (Clow and Donald 2009). Furthermore the three concepts are all aimed at increasing sales by creating mass awareness which in return increases demand for goods and services. The role played by communication in highlighting these concepts is liberally controlled by the business itself as well as other third party viewers among them being the users of social media and media houses. The impact of their messages and advice to people goes a long way into determining the benefits accrued from relationship marketing which has become the new fad in organizational management because it integrates both PR and CSR.
Lawson, (2006) consequently summarizes the role of PR into covering the following points. PR forms a strategic alliance between CSR and marketing thus it is appropriate for small businesses operating in domestic markets because a positive public relation backs up the authority and credibility of a firm. It further helps in propagating positive information about a firm. PR enhances the application of cost effective production strategies because of the endorsement received from media advertisements and publicity. PR does a twofold task that could have been actively done by marketing or CSR. Even though CSR is limited in scope as it will be discussed in the last section of this paper, it is prudent to simplify the role played by public relations. The roles are raising awareness of the existence of a brand, communicating to audiences, differentiating from competitors’ and positioning the organization and its products (Fawkes 2004). The same roles are implied in relationship marketing under the 4P’s of marketing thus marketing becomes the overall blanket that embeds both CSR and PR.
For a company to understand what the customers need so as to target the right kinds of customers for its products, the marketing manager needs to appreciate that people are skilled at stereotyping and holding certain beliefs. For example a person holding the belief that a given product produced by company A is much superior to that produced by company B, it will be very hard for a marketer to dissuade him or her from that belief (Brown 2009). This means that personal beliefs affect both the process of creating a working public relations, corporate social relations and marketing. Thus it is prudent for an organization to realize that offering a lot of positive information alone is not enough to win over adept customers. It is necessary that the organization involves itself into other activities so as to change the attitude of such people and this is believed to influence their change of attitude and behavior towards a company and its products. This two fold goal that can be done by public relations aims at driving both the marketing initiative and CSR into attracting more good will which will impact the attitude of the customers towards a product they did not prefer in the first instance.
In order to undertake this process seamlessly, the marketing manager and the organization at large need to institute the Uses and Gratification Theory. This theory supports that the consumers or users of information are selective in identifying the advertisement content that best suits their needs. Assuming that a customer is reading a company’s AGM booklet, then they will be selective in reading information that regards them and they might fail to notice the financial reports made in the newsletters. This is because human beings have a tendency of wanting to fulfill specific psychological and social needs within the shortest time possible. This theory draws from the Abraham Maslow’s theory defining the hierarchy of needs. The Maslow’s hierarchy of need identifies consumers into strata that if well analyzed could be a directive towards the type of market segment to target. Abraham Maslow identified five levels of need which are motivated by different factors. For instance we have physiological needs, safety needs, love, self-esteem and self-actualization (Miller 2004). All these stages make people to revere certain things and it is because of this that a company must structure its marketing strategies so as to develop lasting relationships between the company and customers who are seeking to attain self-actualization.
Recent studies have added three more needs in support of the uses and gratification theory. These three include the need for information. Businesses require information in terms of consultancy, advice, learning or orientation to different segments of their business environments. The second need is that of personal identity which is relatively equal to that postulated by Maslow. It illustrates the need for self-knowledge, finding models that define personal behavior and reinforcement of personal beliefs and values. The third need is social interaction and integration (Foster, 2001). This is the instinct that drives people into competition because as people socialize, they begin comparing themselves to their peers; it also reinforces the need for self-discovery in comparison to other people and it also enables people build social circles. A marketing manager must therefore utilize the user gratification theory so as to know when CSR, PR or marketing will help drive profitability indices (Cornelissen 2004).
The applicability of relationship marketing to modern organizations is supported by the inter-firm relationship marketing theory (Watts 2004). This theory acknowledges the existence of a relationship between employees, employers, customers and firms as well as all the other stakeholders. The theory supports that an organization has a chain of relationships which require to be sustained at all times. The firm-to-firm relations are so diverse and can be affected by the networks of communication selected as well as the perception of people towards the organization as a whole. The inter-firm relationship marketing theory is supported by the network theory developed by sociologists. The network theory provides a valuable understanding of structural characteristics inherent in the networks of interactions created to act as a link between multiple entities such as organizations and customers in the modern society (Simons 2001). The network theory comes in handy when explaining the efficiency of inter-firm relationships.
Connecting the concepts stipulated regarding relationship marketing to corporate social responsibility illustrates that the marketing depends on CSR but CSR can never depend on marketing. This statement justifies why organizations are willing to move on and advance their marketing programs by introducing modernistic concepts but they are not willing to let go of the aspect of public relations and CSR. In theory CSR can be defined as activities in which an organization participates in voluntarily (Holloway and Daymon 2011). With the application of CSR, organizations operate as self-regulating units that are required to take responsibility of its actions by ensuring compliance with the law, ethical behavior, ensure morality in its operations and stick to regulations. This is to mean that CSR supersedes public relations which are only aimed at painting a positive corporate image. CSR on the other hand entails a lot of responsibilities which further implies that one of these two cannot be substituted for the other. For instance, neither public relations nor SCR can be substituted for the other but they can work in unison towards marketing the organization.
Looking at the place of corporate social responsibility in modern organizations, it is acknowledgeable that CSR is continuously becoming an important concept for companies aimed at marketing themselves as well as their goods and services. From a conceptual point of view, CSR acts like an implied contract between a firm and the neighboring society. Therefore the concept of social responsibility goes a long way into limiting multicultural contrast as well as attaining the career objectives for the neighboring communities (Chahal 2013). With the increasing awareness on the need for growth of ethical consumers and the moralized brand-scape, organizations are marketing themselves as being oriented towards environmental conservation. Organizations that have in the past shown active participation in saving the environment have had an easy time luring customers to its products. The world seems to be revolutionizing the traditional forms of production and forms of energies which polluted the environment leading to such negative effects as global warming (Hochbaum et al 2011). Environmental conservation organizations have brought up the green issue so as to promote corporate consciousness as well as driving corporates into ethical dealings as a way of earning a reputable brand name.
From this discussion it becomes inevitable that Coombs and Holladay viewed organizations as a matter of growing concern. This is because they state the transitional processes that have marked the resurgence of marketing as the main tool towards leveraging organizations against competition. The veracity of their statement can be explained in the sense that public relations and corporate social responsibility is not sufficient to boosting the visibility of an organization. Neither can marketing alone achieve this goal but combining PR, CSR and relationship marketing could help attain desirable performances among organizations. The idea behind such integration lies in the realization that once the organization institutionalized public relations, it advances with creating a good image by endorsing its CSR and finally it makes its products known by marketing them to the final consumers. Specifically organizations have found the need to incorporate pertinent theories in support of CRT. The Uses and Gratification theory supports that consumers or users of information are selective in identifying the advertisement content that best suits their needs while Maslow hierarchy of needs theory illustrates the specific needs to why an organization needs to know when either CSR, relationship marketing or PR is applicable. The other theory is inter-firm relationship marketing theory which integrates the network theory to acknowledge the existence of a beneficial relationship between employees, employers, customers and firms as well as all the other stakeholders.
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