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Advantage and Disadvantage of Branding

Branding is the process of creating a name, design or symbol that identifies and differentiates a company from its competitors. A good brand reflects the benefits of a product or service and builds recognition and loyalty in customers. However, branding is an expensive process and is difficult to undo if the company’s direction changes.

When a company looks to establish itself in the marketplace, it often turns to branding to help. The concept of branding and identity is to create a look and feel immediately identifiable and recognizable in the marketplace. Good branding can increase the value of the product and the company itself. A company’s identity in the marketplace can easily make or break its profitability as a whole.

Advantage of Branding:

  1. Awareness

The harder a company works on its branding and identity, in most cases, the more awareness it creates. For example, Coca-Cola is known worldwide for its product. A consumer can see it in a foreign county, with labeling in a foreign language and know it is a Coca-Cola product. The red color and shape of the bottle is an immediate trigger in many minds as to the fact that the drink is a Coca-Cola product. This is branding and identity at its best.

  1. Consistency in the Marketplace

The more often a customer sees your brand in the marketplace, the more often he will consider it for purchase. If the brand and identity are truly kept consistent, the customer is more likely to feel that the quality is consistent and to become a loyal follower of the brand. However, this means that the product must maintain a consistency that reflects the image as well.

  1. Customer Loyalty

Well-executed branding helps create customer loyalty by reinforcing the purchase of merchandise in the consumer’s mind. For sporting products, a campaign focused on physical fitness and not on a particular product helps establish the brand as a leader in the industry for both previous and future customers. When the product is associated with a lifestyle, it keeps consumers pursuing similar goals coming back.

  1. Protection from Competition

Brands offer a certain amount of legal protection from the competition because of trademark law. A trademark can be any unique word, device, or symbol that distinguishes a company. Nike’s swoosh and Apple’s apple are both trademarked items. Companies can trademark their business name as long as they use it when advertising to customers. Registering a brand as a trademark allows the holder to bring legal action against any competitors that try to infringe on its branding.

Disadvantage of Branding:

  1. It’s Expensive

One major disadvantage of branding is the expense. Designing a brand involves significant research, naming development, graphic design and brand identity integration, which aren’t cheap. Business owners may feel pressured to increase the price of their products to compensate for the increased expense, which could cause customers to switch products. The increased expense of wages and professional fees to develop a brand may or may not exceed the financial benefits of branding.

  1. It’s Tough to Change

One of the major benefits of a brand is that it creates a strong product association for customers. However, this can also be a disadvantage in several situations. If a company wants to change direction with its products or target a new segment of consumers, an established brand can make it difficult to change the image of the company. If a company undergoes a public scandal, a strong brand only makes it easier for consumers to associate the business with past wrongdoings. While brands and even company names can be changed, it’s an expensive and time-consuming process.

  1. Can Become Commonplace

Many brands strive to be No. 1 in the minds of consumers. For example, in many parts of the U.S., people request a Coke when they go to a restaurant, not necessarily meaning a Coca-Cola product, but any soda. While it is the goal of branding to become the standard, it is not the goal to become the generic term of a line of products.

  1. Negative Attributes

If a product or service experiences a negative event, that will become attached to the brand. For example, a massive recall or unintentionally offensive ad campaign can tarnish a company’s brand and image, causing the company to need to build a whole new brand and identity to recapture its place in the market.

  1. Pigeonholes

Sometimes establishing a strong brand identity can backfire when a company needs to pivot in response to changing market conditions. A bakery known for sweet cakes may find it hard to rebrand as a purveyor of gluten-free goods when its name calls to mind images of pastries, frosting and sprinkles.

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