Advantages and disadvantages of branding

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Advantages and disadvantages of branding

This article aims to explore some of the advantages and disadvantages of branding. As marketplaces are extremely competitive now-a-days, drawing the attention of prospective customers, and retaining them in the long run are very difficult jobs. However, one of the ways organisations can deal with this is by turning to branding for assistance. Branding makes a product or service identifiable in the marketplace.

What is branding?

‘A brand is a name that is given to a particular product or service or range of products and services. It basically exists to distinguish a particular product or service from its competitors’ (Kotler et al. 2009, p.425). There is no doubt that a brand is not automatically and easily established as it is a time-consuming and complex process. The process of creating a unique name and image for a product or service in the consumers’ mind is called branding. According to Kotler & Keller (2009) branding is endowing products and services with the power of the brand.

Advantages of Branding

Customer awareness

Organisations can create customer awareness through branding. The more they work on branding, the higher the awareness they are likely to create. For instance, whether customers drive through Middle Eastern or African deserts, Mexican rural areas or South Asian villages, it will not be surprising for them to see big brand names such as McDonald’s, Coca-Cola, Pepsi, and many others displayed on billboards. Imagine, if this is what happens in remote areas, what happens in urban areas and city centres? Distinctive logos and signs instantly remind customers of what these products are and their functionalities.

Consumer loyalty

Some customers are absolutely brand conscious. They often do not explore what alternatives are out there in the market. By creating a strong brand identity, a company can make those brand conscious consumers loyal in the long term. It is not hard to see that some consumers prefer Coca-Cola to Pepsi and vice versa. However, it is worth noting that organisations need to have very well-executed branding programmes to create customer loyalty.

Competitive advantage

Consumer loyalty through branding helps an organisation achieve competitive advantage as customer loyalty is seen as a weapon to fight competitors. If consumers are satisfied with a product or service, a strong brand identity makes it easy for them to make repeat purchases without much reconsideration of prices and features. Branding also helps organisations charge higher prices which brings in greater profits.

Protection from competition

As brand names can be legally protected through trademark, it helps organisations fight competition and counterfeiting. For instance, Apple’s apple is a trademarked item. Having a strong brand name helps companies create barriers for new competitors to enter the market.

Disadvantages of branding

Expensive

Creating a brand identity is expensive. It usually costs companies a huge amount of money for using marketing communications tools such as advertising, publicity and others in order to establish their brand identity. Brand identities cannot be created overnight either.

Negative Attributes

If a product or service suffers from a negative experience, consumers may attach that negativity to the brand and reduce or stop buying that product or service. For instance, massive product recalls by Volkswagen have severely damaged the company’s brand identity. Likewise, General Motor’s recall of 30.4 million cars and trucks in 2014 damaged its brand name (Isidore, 2015).

Challenges in rebranding

Brand identity can be a barrier to rebranding. For instance, a discounter may find it extremely difficult to reposition itself as a very good quality provider. Even big brands face challenges to bring about changes to some of their features. For instance, Gap clothing company introduced a new logo in 2010 in the USA. However, the company had to ditch it within a week due to an online backlash. Customers called the new logo cheapy, tacky, and ordinary (Geoghegan, 2010).

We hope the article ‘Advantages and disadvantages of branding’ has been helpful. You may also like reading Advantages and disadvantages of sales promotion and Brand identity and brand image. Other relevant articles for you are:

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Last update: 15 September 2019

References:

Geoghegan, T. (2010) Lessons to be learnt from the Gap logo debacle, available at: https://www.bbc.co.uk/news/magazine-11517129 (accessed 10 September 2019)

Isidore, C. (2015) GM’s total recall cost: $4.1 billion, available at: https://money.cnn.com/2015/02/04/news/companies/gm-earnings-recall-costs/index.html (accessed 25 June 2019)

Kotler et al. (2009) Marketing Management, 1st Edition. UK: Pearson Education Limited

Kotler, P., Keller, K. (2009) Marketing Management, 13th edition, Prentice Hall

Photo credit: Pixabay

Author: Jo David

Jo David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.