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?

There is no doubt that a brand is not automatically and easily established as the process is time-consuming and complex. This process of creating a unique name and image for a product or service in the consumers’ mind is called branding.

 

The term ‘branding’ refers to the act of giving a company a particular design or symbol to advertise its products and services (Cambridge Dictionary, 2022).  It is in fact the process whereby a business makes itself known to the public and distinguishes itself from its competitors (Indeed, 2022).

 

When many people think of branding, they probably imagine a company’s logo and its advertising campaigns. That is why they assume that branding is synonymous with marketing. However, branding is much more than that. It is an essential part of any business or even a non-profit organisation.

 

According to Ogilvy (n.d.) cited in Sullivan (2022), branding is the management of all the brand features and the associated activities that shape the total perception of a brand in the minds of its main target audiences.

 

Gaz (2022) states that branding is about strategies. It is about understanding what triggers human behavior. A company may have the most beautiful logo in the world which may not be able to help it generate significant revenue; however, a great strategy can do so efficiently.

 

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

One of the key advantages of branding is customer 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. For instance, massive product recalls by Volkswagen have severely damaged the company’s brand identity. Likewise, Mercedes-Benz has recently issued an immediate recall of almost one million cars worldwide over safety concerns around their braking system (Allan, 2022).

 

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 several years back in the USA. However, it had to ditch it within a week due to an online backlash. Customers called the new logo cheapy, tacky, and ordinary.

 

Most valuable brands in the world

According to Statista (2022) the most valuable brand in the world is Apple with an estimated brand value of about £355.08 billion followed by Amazon with a brand value of about $350.27 billion. Other top brands are Google, Microsoft, Walmart, Samsung, Facebook, ICBC, Huawei, Verizon, China Construction Bank, Toyota, We Chat, Agricultural Bank of China, Mercedes-Benz, State Grid, Deutsche Telekom, TikTok, Disney, Home Depot, Ping An, Taobao, Shell, Bank of China, and Tmall.

 

Summary of the advantages and disadvantages of branding

Having a strong brand is essential for businesses of all sizes. This can help them build trust with customers and create a more memorable experience. Branding is a long-term investment, and certainly it is worth the time and effort, though there are some challenges that can be associated with it.

 

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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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SWOT analysis of Coca-Cola

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PESTEL analysis of the European Union (EU)

 

Last update: 20 June 2022

References:

Allan, M. (2022) Mercedes-Benz recall UK, available at: https://www.nationalworld.com/lifestyle/cars/mercedes-recall-2022-brake-failure-check-models-affected-3720811 (accessed 20 June 2022)

Cambridge Dictionary (2022) Branding, available at: https://dictionary.cambridge.org/dictionary/english/branding (accessed 20 June 2022)

Gaz, D. (2022) Everything you need to know about branding In 7 easy steps, available at: https://www.forbes.com/sites/forbesagencycouncil/2022/02/08/everything-you-need-to-know-about-branding-in-7-easy-steps/?sh=2f8f5ec1e840 (accessed 18 June 2022)

Indeed (2022) What is the definition of branding in marketing? available at: https://www.indeed.com/hire/c/info/definition-of-branding-in-marketing (accessed 19 June 2022)

Statista (2022) Most valuable brands worldwide 2022, available at: https://www.statista.com/statistics/264875/brand-value-of-the-25-most-valuable-brands/ (accessed 22 June 2022)

Sullivan, B. (2021) Does branding really matter for a small business? available at: https://www.forbes.com/sites/forbesagencycouncil/2021/06/10/does-branding-really-matter-for-a-small-business/?sh=fab944b39e29 (accessed 18 June 2022)

Author: Joe David

Joe David has years of teaching 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. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.