Last Updated 25 May 2020

Advabtage and Disadvantage of Branding

Category Brand
Essay type Research
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Everyone from countries to political parties to individuals in organisations is now encouraged to think of themselves as a brand, in which have seen the obvious success of the brand concept in past years (Geoffrey R. , 1997). Why the brand is significant? And what make the brands so attractive and successful? This article will explore the role of the brand and critically analyse the advantages and disadvantages of branding. 2. Brands and Branding Some analysts see brand as the promise of something.That something is intangible, but it could be a guarantee of quality, a sense of prestige, or of heritage.

Everything the customer experiences in the process of evaluation, trial, purchase, and adoption is a verification of the original promise (Chuck Brymer, 2003) (see Figure 1). Over time, brands have become important as they set an expectation of quality or price. Figure 1. The promises and verifications of a brand Source: Chuck Brymer (2003) Brands and Branding-What makes brands great. P. 69 Today brands represent more than a product, service or brand identity.As Melissa Davis pointed out that a brand is synonymous with the business and the style behind the product or service; it involves the people working for the company and a philosophy and spirit that sustains.

Bands offer sets of values, a vision and even an attitude. The interaction between the brand and consumer is at the heart of managing the brand perception. This is where branding happens: it is the communication that aids create and sustain a relationship between the organisation and its customer (Melissa Davis, 2005).Thus good branding should engage. Branding is very important because its relationship and impact on the world we live in. To each company, it is particularly important in helping position the product in the minds of the product’s target market. The combined value of the world’s biggest brands is fundamental to the global economy that brands are now one of the most powerful tools in the world and account for one-third of the world’s wealth.

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The statistics has shown that the annual income of the five largest business corporations are more than double the combined Gross National Product of the 500 poorest countries (Rita, C. and John, 2003). It is hence that brands have the influence and power to change society, as the role of branding has increased in scope and significance. The most well-known company to brand components is Intel (Ranked No. 7 in Table 1) with its famous "Intel Inside" slogan. Intel’s success has led many other business-to-business companies and even non-profits to incorporate branding within their overall marketing strategy.In terms of marketing value of a brand, known as brand equity, is constituted of five main factors: brand awareness, perceived quality, strong brand associations, high brand loyalty and other assets such as legal protection and a good distribution network (Aaker, 1991).

The following Section will describe how branding strengthen brand equity for enormous benefits. RankBrandCountryIndustryBrand Value in Millions 1 United StatesBeverages$70,452 2 United StatesBusiness Services$64,727 3 United StatesComputer Software$60,895 United StatesInternet Services$43,557 5 United StatesDiversified$42,808 6 United StatesRestaurants$33,578 7 United StatesElectronics$32 ,015 8 FinlandElectronics$29,495 9 United StatesMedia$28,731 10 United StatesElectronics$26,867 Table 1. Best global brands 20100 Source: Interbrand 2010 Website 3. Advantages of Branding Branding can carry different benefits for all parties involved in the exchange process and in theory branding makes it easier to buy and to sell a product (Brassington & Pettit, 2003).It is therefore important to look at the benefits of branding to consumers, organizations (manufacturers and retailers) and society respectively. In today's competitive and crowded marketplace, branding creates customer value because it reduces both the effort and the risk of buying. It helps in faster spreading of product knowledge, which helps the consumers to decide in favor of the brand over the others available in the market.

When someone goes shopping at Morrison for example, strong brand names make it easier for the customer to locate and identify the suitable product needed.It promises and delivers high level of assurance to consumers. Branding may also enhance the customer’s experience aesthetically and psychologically (Melissa Davis, 2005); through branding, consumers can form some sort of attitudes and feelings towards the product. This builds brand loyalty towards the brand by the consumer, which assists decision making by building trust, familiarity and assurance of a certain standard. It is the way of expression of individual’s personality and what they stand for. To some extent it meets the aspirations of customers as well.That is why people regularly ask for a ‘Coke’ rather than a cola.

Furthermore, Branding increases the innovation potential of manufacturers, and leading to more variety and consumer choice. From a manufacturer's perspective, branding has distinct advantages in many ways. By observing the brand equity and benefits of branding listed in Table 2, the main interest of branding to a manufacturer is that it builds a high brand loyalty; in turn generate higher and more stable sales and profits. High brand loyalty can help the consumer to overcome any price change of the product.In recent years, Nike and Sony have been able to establish such strong brand loyalty that price changes for a particular product might not matter too much in the consumer's mind. Brand loyalty also can reduce the marketing cost, because it is cheaper to retain an existing loyal customer than to attract a new one. Meanwhile, branding raises brand awareness which gives the manufacturer and the brand a sense of trustworthiness and the image of commitment.

Well-known brands also bring about more interest and trust by retailers, and make easier access to the distribution channel. It ill be more support from the distribution and makes the manufacturer hold power to competitive actions. Brand equity componentsBenefits Brand awareness? Brand in evoked set ?Influence on attitude and perceptions ?Anchor for associations ?Signal of substance/commitment High brand loyalty? Reduced marketing costs ?Trade leverage ?Attracting new customers ?Time to respond to competitive threats Perceived quality? Price premium ?Differentiation/positioning ?Channel member interest ?Brand extension potential Strong brand associations? Differentiation/positioning ?Memory retrieval potential ?Brand extension potentialTable 2. Brand equity components and branding benefits Source: Patrick D. P. and Maggie G. (2004) Marketing Communications.

P. 57 Another important advantage of branding to the manufacturer is that it helps the marketing manager when determining a competitive strategy for the product. Branding makes product positioning efforts more effective. When customers link benefits with a particular brand, the brand may have attained a significant competitive advantage. In the other words, a brand can stay in the crowded market longer and more profitably because it has been created properly by effective branding.Simultaneously, manufacturers can charge a premium for the brand such as Mercedes Benz, Louis Vuitton, De Beers, because the valuable product they provided can be reliability, safety, and more pleasure with prestigious services. Moreover, manufacturers that develop a successful brand can extend the brand by adding new products under the same “family” brand.

Such branding may allow manufacturers to introduce new products more easily as the brand is immediately recognised by the consumer since the brand is already accepted within the market. Successful brand - Kellogg’s is a good example of this.It has a range of breakfast cereals all under the Kellogg’s brand umbrella. Each product has its own marketing budget and often competes for a similar consumer. Over time each of these products became a brand in its own right. Each of these Kellogg’s brands has taken on a life of its own to such an extent that they have been extended into the growing breakfast snack bar market (Melissa Davis, 2005). For the retailers, branding improve the image of the store, and attract customers.

And as branded products are advertised and promoted, they can benefit from lower selling costs and a higher inventory turn. . Disadvantage of Branding Apart from the power and attractiveness of branding, while there are some disadvantages of branding as well, This Section will examine those drawbacks and challenges. In fact, branding can be very expensive because costs of marketing and advertising tend to increase. It leads to the average cost of the product goes higher and in many instances the consumer has to bear the cost. The large companies have huge branding budgets in the millions and tens of millions, but they are relatively large for most small businesses.The branding process must be outstanding and professional, or a few things will happen: prospects will pass on the products or services and go to the competitors.

The company may not earn the price they are worth. And the company will have a very hard time building reputation. Most importantly, the company cannot sustain the pressure of additional expenses. Take Nissan case for example, in 1982, Nissan decided to change the name of its U. S. entry from Datsun to Nissan, the name by which the car was marketed in Japan. Over $240 million was spent on name change advertising campaign.

By 1984, the Datsun name had completely disappeared. But a national survey in the spring of 1988 found that the Nissan name was no stronger than a brand name that had been dead for 5 years. It seems likely that the advertising for name change was much less effective that prior advertising. In addition, $30 million was spent just on changing dealer’s signs. The biggest cost, many hundreds of millions during these years, was the lost sales caused by name confusion. In total, the name change surely cost over $500 million and very likely it involves well over $1 billion (Aaker David, 1993).In many situations, a higher budget does not guarantee success and therefore is a loss of resource for the company.

As the expense to retain the brand in customer’s mind space increases, it becomes difficult to sell the brand at a lower price. And a strong brand is memorable, but people still need to be exposed to it, this often requires a lot of advertising and public relations over a long period of time, which can be very costly. The process of branding will usually take a long period of time to reach full effectiveness.As well as creating a brand and updating the signs and equipment to expose it to the potential customers, it is commonly shown that people need to see an advert at least three times before they accept it, which means the company will need to advertise and promote the brand for a considerable amount of time before it will become well known. It is also felt that consumers become loyal to established brands and may not be willing to shift to new brands, which may prevent the new producers from entering the market and result in consumer exploitation by the market leader.Branding tends to increase product price, and may lead to decreased product quality eventually. Some companies disturb what made their brand great in the first place and run risk of breaking its promise.

This causes erosion of the original brand idea that marginalises the customer experience. The result is that standards of products and services all go down. The expectations of loyal customer and new customer can not meet. Once a brand loses touch with its customer or ignores a potential new audience, it has lost relevance.Often the lost leadership is taking the brand for granted which treat the asset as a cash cow (Melissa Davis, 2005). 5. Conclusion Brands now play to people of every generation, social class and culture.

Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service. A brand with strong brand equity is a very valuable asset. Branding is the long haul making business sustainable. It marks the future of the product and service and is the mirror of its success or failure (Melissa Davis, 2005).It is the mirror that reflects the reason of the corporation existence; it is how people perceive the corporation and it is what makes their product different and desirable by customers. But branding is not everything; companies may spend millions on creating a brand and millions more on maintaining and sustaining a brand, but equity in the brand can be lost more quickly if a brand consistently fails to engage its consumer, or if its behaviour is inconsistent with its message and values. Even so, the advantages of branding are more outweighed than its disadvantages.

The key point is how to manipulate proper branding strategies under the feasible environment. Successful branding is paramount to a company's success. Branding has been in existence for hundreds of years and has developed into modern concept that can be applied to anything from products and services to companies, not-for-profit concerns and even countries (Rita, C. and John, S. , 2003). Today most of the world’s greatest brands are American owned (as showed in Table 1), may because of America’s political, commercial and social system.But the knowledge and practice of what creates great brands can be (and is now increasingly being) applied around the world.

Additionally, in this “globalised” world, nations need to compete with each other for the world’s attention and wealth. Active and conscious nation branding can help them do this, and at its best, it presents an opportunity to redistribute the world’s wealth more fairly in the future (Rita, C. and John, S. , 2003). 

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Advabtage and Disadvantage of Branding. (2019, Feb 26). Retrieved from https://phdessay.com/advabtage-and-disadvantage-of-branding/

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