Advantages And Disadvantages of branding

A brand provides distinct benefits to the consumers. It promises and delivers high level of assurance to
consumers. It is a mental guarantee that the product will deliver the desired value promise. It is a
mental patent as it promises certain amount of value to its customers. A brand serves as an assurance to
the customer about product performance. A brand helps the customers to identify the product on the
shelf and helps in making an informed choice. A brand as symbols of status and social significance give
psychological satisfaction to the consumers. A brand also serves as a medium of social stratification, as it
reflects a person’s choice and social class due to specific usage and value orientation. It essentially helps
in brand choice.

So the consumer has to make a choice between different brands of cola and he chooses Coke for
quenching thirst and for refreshment. The reason for making the choice can be taste, familiarity, an
assurance of certain standards and hygienic and ‘no Pepsi’.
The reasons for buying a BMW car can be reliability, speed, safety maneuverability, and driving pleasure.
The customers identify this set of values with the BMW brand and choose the brand over the others
available in the market.

A brand is a product then, but one that adds other dimensions to differentiate it in some way from other
products designed to satisfy the same need. They include both rational, tangible, symbolic, emotional
and intangibles also. More importantly, what distinguishes a brand from its unbranded commodity
counterpart and gives its equity is the sum total of consumer’s perception and feelings. The brand
speaks about the product’s attributes and how they perform, about the brand name and what it stands
for and about the company associated with a brand. So for a consumer, the brand aids decision making
by building trust, familiarity and assurance of a certain standard. It is a mode of expression of
individual’s personality and what they stand for. They meet aspirations of consumers.
The brand also provides benefits to the company. It develops a loyal customer base e.g. brands like
Starbucks coffee, Harley, Lux, Kellogg’s and Horlicks have a strong loyal consumer base. It extends brand
value to mew introductions e.g. Tat extending to different product categories. Consumers are willing to
accept variations and line extensions like Britannia and Intel. The companies can charge a premium for
the brand e.g. Mercedes Benz, Tanishq, De Beers. The brands also give pride to those who own them or
work for them like Infosys and IBM. Successful brands are relevant and different. For a brand to benefit
consumers and the company, it has to continuously grow and become successful. A brand has to remain
true to its original promise and it must constantly reinvent itself to remain relevant to its customer.

Rank Brand 2003 Brand Value in Billions

1 Coca Cola $70.45
2 Microsoft $65.17
3 IBM $51.77
4 GE $42.34
5 Intel $31.11
6 Nokia $29.44
7 Disney $28.04
8 McDonalds $24.70
9 Marlboro $22.18
10 Mercedes $21.37

Table: The Worlds Most Valuable Brands.

Brands that are consistent, have clarity in their proposition and enjoy market leadership are the most
valuable assets to the organizations. Branding helps the manager to create a niche for the company’s
products through differentiation. Over a period of time, the brand enjoys a monopolistic advantage due
to the name and develops a loyal set of customers. Brands also help in the overall improvement of
product quality in a society through healthy competition and make the company offer greater benefits
to the consumers. They help in faster dissemination of product knowledge, which helps the consumers
to decide in favor of the brand. It also brings improvements in the efficient use of scarce resources in the
society.

Branding is not free from the critique of creating disadvantages to the customer. Brand building is a
expensive process because of which the average cost of the product goes higher and in many instances
the consumer has to bear the cost. The manufacturer develops a tendency to compromise on the quality
over a period of time due to its strong brand image. Brand building involves a huge expenditure by the
firm and, if this fails, then the brand cannot sustain the pressure of additional expenses. In many
situations, a higher budget does not guarantee success and hence is a loss of resource for the firm. As
the expense to retain the brand in customer’s mind space increases, it becomes difficult to sell the
brand at a lower price.

Once the brand is perceived in a particular way, it is difficult to position it in an alternate way, though
due to change in macro economic environment, there may arise a need to do so. Expenditure on brand
promotion is considered a social waste. Such a wasteful expenditure will increase the cost of production,
leading to higher price of the brand. This is not considered good from the society point of view. It is also
felt that consumers become loyal to established brands and ma not be willing to shift to new brands.
This may ultimately prevent the new producers from entering the market and lead to consumer
exploitation by the market leader.