What Is Branding ?
Branding is a process of giving unique name, logo, symbol, mascots, design etc. to products or services which helps to differentiate them in the market. Branding provides identity to the products which helps to create customer awareness. Coca-cola, Sony, Adidas, Nike, Puma etc. are some examples of successful brands in the market.
Benefits Or Advantages Of Branding
Main advantages of branding products can be highlighted as follows:
1. Branding Creates Customer Awareness
The main benefit of branding is that it helps create awareness by providing identity and differentiation of products and services. Customers can easily recognize and distinguish branded products in the market. For example, people can easily distinguish Coca Cola or Pepsi from other soft drinks.
2. It Promotes Customer Satisfaction And Loyalty
Branding ensures stability in taste, price, quality , design etc. of the products. Producers also give focus on regular supply of spares and parts of products so the customers cannot be cheated by low quality counterfeit products. So, stability in the price and quality and regular supply of necessary parts helps to increase customer satisfaction which leads to customer loyalty.
3. Branding Helps To Increase Profitability
Branding increases the image and goodwill of the company. So, a firm may charge premium price for its products and services. For example, price of iPhone and Macbook (products of Apple company) are higher than the price of mobile phones and laptops of other companies. So, high selling prices increases the profitability of the company.
4. Barrier For New Competitors
Because of customer satisfaction, social prestige and goodwill of the branded products, new companies hesitate to enter the market. So, strong brand creates barrier and discourage new competitors.
5. Easy To Introduce New Products
Established brand helps the company to introduce new products in the market easily because of loyal customers and strong image of the company. For example, PepsiCo (producer of Pepsi and Miranda) introduced Mountain Dew easily in the market because of the goodwill and reputation of Pepsi.
Drawbacks Or Disadvantages Of Branding
The main disadvantages of branding can be highlighted as follows:
1. Requirement Of Huge Investment
Company has to invest huge amount of money for research and development purpose. It requires money to advertise the product in different media such as print media, radio, television, internet etc. Proper publicity strategy and promotional activities should be conducted to attract potential customers which needs adequate money. So, branding involves huge investment that leads to increase in the price of the products.
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Advantages And Disadvantages Of Brand Extension
2. It lacks Flexibility
Customers become loyal and pay premium price because of specific quality, design, taste etc. of the branded product. So, company cannot alter or modify design, quality or composition of the product.
3. It May Create Monopoly
As we know that strong brands discourage other competitors to enter in the market. New companies don not want to compete with established brands. So, it may create brand monopoly in the market.
4. Consumes More Time And Effort
Branding process requires more time and effort to establish the product in the market. It consumes both time and effort to make market research, to design product and to influence or attract potential customers with the help of different promotional tools like advertisement, publicity, public relations etc.
Pros:
- It provides unique identity to the products and services which helps the customers to recognize them easily
- Because of the stability in the quality, it helps to increase brand image and customer loyalty
- Company may charge higher price for branded products which increases the profitability of the firm
- It discourages new competitors/companies to enter in the market
- Branded products can be easily distinguished from other similar types of products in the market
Cons:
- It is very expensive because it requires huge investment
- There is a chance of brand monopoly in the market
- Branding process consumes more time, effort and resources
- It lacks flexibility because it is difficult for the company to change the quality of the product
