Advantages and Disadvantages of Branding

When we go to school and colleges the professor often asks us to give an introduction of ourselves so that all others can know our name and background in the same way in the corporate world there is branding. Branding is the marketing term that is often used when one is talking about companies introducing and establishing themselves in the minds of the consumers. In order to have a better understanding of this term one should look at some of the advantages and disadvantages of branding –

Advantages of Branding

Awareness about the Company

Branding makes the customer aware of the product or service because without branding how will customers recognize the product, just imagine if there was no branding then all cold drinks would have been the same but due to branding many customers prefer to use the coke brand while some others prefer to use Pepsi and so on.

Premium Pricing

Branding helps the company in charging a premium price for their product because a good brand commands a higher price than its competitors which in turn leads to higher profit margins for the company. An example would be Sony charging a higher price for their LED televisions than Samsung and Philips because customers have that brand image that Sony has the best quality picture when it comes to televisions.

Long Term Sustenance

Branding also helps the company in sustaining in the market for the long term because just imagine a company which has no brand and if the owner dies or some major problem happen in the company then the company will be in trouble, however, if the company has brand then company will keep running because brand goes on and on for ages and it negates majority of problems happening in the company.

Disadvantages of Branding

Huge Costs

The biggest disadvantage of branding is that it involves huge costs because brands are not created overnight and companies have to spend huge sums on advertising and publicity. Advertising has to be done consistently as doing it occasionally does not result in producing the desired result of creating a brand image in the minds of the customers. In simple words just like a tree does not become big overnight rather it takes years of sunlight and water to grow in the same way a brand requires years of money and effort on the part of the company to become a big brand.

Irreversible Damage

Another disadvantage of branding is that there is always the risk of a brand getting a bad name or reputation which in turn can lead to irreversible damage to the company which is very difficult if not impossible to regain and that is the reason why companies should ensure that if they are not able to get good image then they should ensure that at least negative branding is avoided. In simple words just like a broken mirror cannot be repaired in the same way a negative branding event will cause irreversible damage to the brand of a company.

Lack of Flexibility

Another disadvantage of branding is that company’s scope becomes limited or in simple words company losses flexibility to some extent as consumers tend to associate a particular brand with a particular product only and if the company sells some other product then it is not sure that the other product will perform equally well in the market.

As one can see from the above that branding has both advantages as well as disadvantages, however, its advantages outweigh its disadvantages and that is the reason why companies go for branding and makeover if the company is in financial trouble or it wants to establish itself in the market.