Business

Advantages and Disadvantages of Branding

Branding has become a major part of the modern-day marketing and brand-building exercise for companies. The traditional way of building a brand is not a practical solution as there are different aspects and varied consumer bases that you need to cater to. This changing and competitive business landscape has made branding an important foray for companies looking to penetrate the market and build a good customer following.

The overall exercise of branding goes through varied steps like strategy, execution, implementation, and tracking for performance-oriented aspects. That in itself is a large task and hence brands now approach branding as a standalone important part of the company’s growth. We here take a look at the top advantages of branding below whilst also discussing a few drawbacks of it. Read along.

Branding

Advantages of Branding

1. Building of recognition and trustworthiness

Branding creates a distinct identity and brand building for the companies. It helps to spread awareness of the brand and create a recognition factor that with time can be built into trustworthiness and long-lasting brand recall. Even a simple approach of pushing your brand identity and logo for recognition helps build a great customer base and following. Over time, brands that can help keep up the branding aspect and cater to the trust factor with the customer base last longer and have a longer line of revenue aspects.

2. Loyalty and Advocacy

Effective branding can help foster a loyal customer base with quick recognition. This helps create a positive image for the brand and coupled with good services and approach, it can help translate into a long-lasting customer relationship which can help the brand generate long-term revenue and even reduce the marketing efforts and costs in the future. A good and loyal customer base also helps to create an advocacy for the brand which always triumphs over the aspect of cost-based marketing in expanding your customer base.

3. Market positioning and price premium

Strong brand positioning and brand recall aspect helps in building premium branding and helps the company stand out against its competitors in the market. It also helps in boosting the trust factor and increases the association of the customer with the brand. With this caveat, brands can seek price premiums for their products and can get a mark-up in revenues and profits. That aside, with such a strong positioning, they can build products that will have higher selling value and demand in the market.

4. Consistency and reliability

With a brand that is well endorsed via consistency and overall branding exposure, there’s a trust factor and also a consistency about the brand. Consumers can be well aware of the aspects and the product line that the brand will bring and also have a consistent customer experience. The overall growth of the company isn’t just about selling products but creating a well-oiled mechanism where the brand’s product offering and customer experience are top-notch. This can boost the brand in retaining customers for a long.

5. Diversification and Brand Extension

These days brand extension or diversification comes with a lot of costs in terms of marketing, gaining a new customer base, and more apart from the production aspect. This for a small brand can be a hard thing. But if a brand has a greater brand recall factor and good branding, it can extend its business and even go into diversification without the need to go through extensive branding and marketing costs. Diversification for a brand already well-endorsed and loved in the market is a relatively easier task as you can offer the customer base a wide range of options and can count on them to relate to it.

Disadvantages of Branding

1. High Initial Cost

Branding activities and marketing come with a large initial cost that can eat up the budget from other fractions of the company. Creating consistent branding across all major touch points and running an omnichannel presence requires a large upfront cost, which can be deemed out of budget for a normal brand with low spending power. That along with the basis that branding won’t result in immediate exposure but will require a consistent effort over time means it can be a tough ask at times.

2. Image vulnerability

Branding helps in creating a wide aura and image of the brand and helps it become more recognizable. But at the same time with the advent of social media and other quick connectivity aspects, it doesn’t take long for a negative controversy or publicity to occur. Even a single misstep or product issue can tarnish the brand image as people can use social media to amplify the effect and hamper the brand. That makes branding a thing to tread carefully at times.

3. Highly Competitive

The branding space is highly competitive with almost all companies and industries indulging in a form of branding one way or another. With such a large competition around, setting the right caveats and marketing your brand in the fierce market can be tough aspect. There’s also the trend of imitating the brand approaches and replicating certain aspects of the brand by your competitors. This can lead to your competitors knowing your strategy and plans.

4. Rigidity at times

Certain brands prefer a tonality that they want to channel and communicate across all their branding voice and outgoing communications. That is a good thing as it helps convey the same message all across. But it also creates a rigidity and lack of flexibility for brands. Branding in this current social media and digital age isn’t something that should be strictly confined to one single note if you’re tapping into a trendy market as your customer base and their taste are often varied and tapping into trends is one way to do it. For say, B2B brands can focus on being a strict tone but B2C brands need to cater to options like creating a fluidity and trend-based branding.

Final Words

Branding is a powerful tool and helps businesses to build a large customer base without the traditional expensive marketing means. It is also known to create a lasting impression and boost the brand recall factor. That alongside various factors like being at the forefront of the digital and social aspects makes branding a major force. Harnessing branding in the right manner will yield a great boost for the business. That being said, there are a few aspects that need to be taken care of for the right branding approach. We hope this take on both sides of the coin helped clear the matter on it.

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Sumit Kumar Yadav has experience analyzing business and finance of big to small companies. Loan, Insurance, Investment data analysis are his key areas.