Benefits and drawbacks of branding

Branding is a issue which has received much academic attending due to its prevalence within modern industry. Branding embeds itself within public comprehension, but its benefits and possible drawbacks are better understood by faculty members within the selling field. This essay will set up an apprehension of stigmatization and will later critically analyse the advantages and disadvantages of branding. Consequently, this analysis will let for a sound decision as to the place of stigmatization as a whole.

Before we can efficaciously discourse the issue, it is indispensable to set up an apprehension of what a trade name really is. Jobber ( 2007, 996 ) defines a trade name as “ a typical merchandise offering created by the usage of a name, symbol, design, packaging, or some combination of these intended to distinguish it from its rivals ” . This comprehension allows for a stronger analysis of the possible benefits and drawbacks of branding. It must besides be understood that branding does non entirely refer to transnational administrations, but to any company that has established a believable trade name individuality.

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One possible obstruction is that any advantage or disadvantage may be perceived otherwise depending on the reader ‘s position. To antagonize this and to offer a more comprehensive and critical apprehension of branding itself, this essay will sketch and measure merely two cardinal advantages and three key disadvantages which will in bend permit a better critical rating and hence a better apprehension.

Constructing an effectual trade name is frequently entirely juxtaposed with success and it is hence indispensable to measure up and measure merely the key advantages which are synonymous. While the list of possible benefits is extended, for the intents of this essay the two critical advantages to be analysed will be chiefly consumer trueness and consciousness and secondly, competitory advantage. These two specific advantages are highlighted due to their expansive influence. These two advantages could be categorized as branding benefits affecting the consumer and branding benefits for the organisation. However, these issues need farther probe and critical analysis to to the full measure their effectivity.

Customer trueness and consciousness refers to consumers going faithful to a certain trade name, mostly due to the easiness of merchandise designation. A trade name merely becomes effectual it is able to distinguish itself from its rivals in a meaningful mode ( Rahman and Areni, 2010,59 ) . A strong illustration of merchandise distinction is that of Apple, who have prioritised fashionable and alone design and therefore deviated from the normal processs within the computing machine market. If a trade name is able to bring forth a merchandise that non merely meets a client ‘s outlook, but exceeds it, the client is likely to return and therefore demonstrate trueness and hence an consciousness of the trade name itself ( Ofir and Simonson, 2007, 164 ) . Consumers may see disagreement when it comes to a purchase, but an effectual trade name can re-enforce reassurance and cut down disagreement by set uping itself as a dependable trade name ( Dall’Olmo-Riley et al. , 1997, 446 ) . If a trade name earns the trust and trueness of its wider client base, it is likely to enforce and beef up its place within the market which will relay favourably on gross ( Herrmann et al. , 2010, 1027 ) . An effectual trade name besides plays a cardinal function in the self-concept of consumers, assisting a client to construct and underpin their ego construct in the long term ( Fournier and Yao, 1997, 468 ) . Trade names are able to use self-concepts by alining them with the trade name personality to assist foretell consumer behaviour ( Grohmann, 2009, 106 ) . For illustration Ford ‘s advertisement schemes frequently portray household and leisure life styles which a client can easy associate to. However, there are cardinal drawbacks with this advantage including the negative impact of client consciousness and public dealingss. Carpenter et Al. ( 1994 ) highlight public dealingss as a potentially of import driver that can mostly act upon trade name public presentation ( Herrmann et al. , 2010, 1019 ) . If a trade name enjoys big trade name consciousness, any negative media attending can be highly detrimental. For illustration, in 2010, British Petroleum ( BP ) received much negative media attending due to an oil leak off the Gulf of Mexico ( Telegraph, 2010 ) . The BP trade name suffered public, political and media disapprobation as consequence of the incident which enormously damaged the trade name image.

A competitory advantage by definition is “ an advantage over rivals gained by offering consumers greater value, either through lower monetary values or by supplying more benefits that justify higher monetary values ” ( Kotler et al. , 2004, 494 ) . A trade name can assist accomplish a competitory advantage by distinguishing a merchandise from its rivals and therefore assisting to accomplish greater market portion and net incomes ( Homburg et al. , 2010, 209 ) . The branding itself and the communicating of a trade name ‘s personality are used to better a competitory advantage ( McEnally and De Chernatony, 1999, 3 ) . This distinction coupled with selling and advertisement schemes that branding can accomplish necessarily consequences in high barriers of entry to any given market which makes it peculiarly hard for new rivals to come in into the market ( Scott-Morton, 2000, 1086 ) . Marks and Spencer have achieved this through extended selling of their ‘quality ‘ run which has in bend reinforced their trade name personality which has in bend limited the impact of possible rivals. These schemes endemically lead to a stronger market place and hence an improved market portion which improves an organisations power over its retail merchants. Conversely, if the competitory advantage is partially dependent on trade name personality, the stigmatization procedure can go hindered. Making a trade name personality is highly hard and mensurating it can do farther jobs which forces the competitory advantage of branding into quantitative uncertainty ( McEnally and De Chernatony, 1999, 10 ) .

At this point it becomes indispensable to discourse two of major comparative disadvantages to branding in order to accomplish a more balanced point of view. The two key disadvantages that are most outstanding in branding are high costs and the comparative power of retail merchants. In order to construct a strong trade name, selling and operational costs in the early phases are huge and necessitate big investing to guarantee that the trade name is successfully implemented ( Krasnikov, 2009, 154 ) . To reenforce this, Rosenberg and Czepiel ( 1983 ) suggest that the costs of pulling new clients have been found to be six times higher than retaining old 1s ( Dekimpe et Al, 1997, 405 ) . However, the initial injection of financess can non prolong a trade name and even household trade name names are forced to reenforce their image with regular selling and communicating tools. For illustration, Kotler et Al. ( 2004, 567 ) suggest that McDonalds have an one-year advertisement spend of $ 660 million. However, keeping a trade name image is non publicizing entirely, trade names are forced to use other selling tools. For illustration, legion administrations such as Visa and Acer are puting immense amounts of money into the London 2012 Olympics in order to aline their trade name name with the event. This hence leads to highly high costs in both the execution and care of stigmatization.

The 2nd disadvantage of branding involves retail merchants and the power that they set up over the trade names themselves. A critical facet of retail merchant power lies in the procedure of selling ‘private-label ‘ merchandises. Simmons, Bickart, and Buchanan ( 2000 ) suggest that carrying trade name names non merely better the retail merchant ‘s image, but besides help retail merchants better their private label public presentation ( Davis and Mentzer, 2008, 440 ) . While the trade name may be seen as the premium merchandise within a given industry, a retail merchant can offer ‘own-label ‘ merchandises at a relatively lower monetary value. Supermarkets frequently use private label merchandises to vie with trade name merchandises, such as ‘Tesco Value ‘ or ‘Asda Smartprice ‘ . Trade names are forced to publicize and advance their merchandises in order to stay as the premium trade name and to guarantee that the retail merchant continues to stock the merchandise ( Kim and Parker, 1999, 153 ) . For illustration, private label cheese merchandises offer cheaper options to the trade names which consequences in regular advertisement runs from administrations such as Cathedral City. While branding can build barriers to entry for alternate trade names, a trade name is vulnerable to retail merchants and is forced to vie with lower monetary value options. However, Davis and Mentzer ( 2008, 440 ) argue that the trade name trueness and awareness itself helps trade names achieve their power over retail merchants who depend on the trade name merchandises for their ain image. Therefore, while the retail merchant exhibits cardinal influences over trade names, they are mostly reliant on the trade names themselves. The impact of private label is besides diluted as the retail merchant must still sell the trade name merchandises in a profitable coexistence ( Kim and Parker, 1999, 143 ) .

In decision, pulling upon the grounds, it is clear that branding is endemically linked with both strong advantages and ample drawbacks. Successful stigmatization relies to a great extent on client consciousness and edifice which helps accomplish a strong competitory place. However, accomplishing a strong trade name place leads to high costs as aforesaid and the procedure of constructing client consciousness leaves a trade name vulnerable to negative public dealingss and a weak public image. Trade names are besides susceptible to retailer power and private label merchandises. However, the mutualism of trade name and private label merchandises is indispensable for the retail merchant which limits the impact of their power. While bing is inevitable, a trade name can avoid negative public intensions with good concern pattern and a consistent selling scheme. Therefore, branding can be highly advantageous to any administration that is draw a bead oning to construct a trade name name, but the drawbacks must be measured and controlled within the procedure.

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