Evaluate the Advantages and Disadvantages of various branding strategies.
Branding strategies refer to the pattern of actions to be taken by the firm to brand its products. Following are some important Advantages and Disadvantages of various branding strategies:
- Family brand vs. Individual brand.
- Manufacturers brand vs. Distributors brand.
- Local brand vs. Global brand.
Family Brand vs. Individual Brand:
When a company sells more than one product, it must decide whether to sell such under a separate (or individual) brand or to use a family brand. In case of similar products family brands are used. Products lacking common marketing attributes are usually marketed under individual brand names because little benefit becomes from jointly associating them.
Following are the advantages of family brand strategy:
- Family brand strategy is simple.
- Family brand strategy is economical. When a new product is introduced, the company does not have to spend costly resources to build brand recognition.
- Family branding achieves instant recognition and company is not required to educate customers from the scratch.
- Using one brand reduces the advertisement expenditure.
Following are the disadvantages of family brand:
- The effect of failure of one product spreads to the other products also.
- Family branding cannot be used if the products lack common marketing attributes.
- Family brand is useful only when an article is sold to industry and then to consumers with the same brand.
Following are the advantages of individual brand:
- A company is in a position to create distinct image for each of its products.
- Failure of one brand does not damage the chance of success of another brand.
- Individual brands may stimulate competition within the organization since each brand is a responsibility of a different group. It contributes to the total efficiency of the firm.
- Individual brands facilitate exploring different market segments.
Following are the disadvantages of individual brand:
- Using separate brand for separate product increases the advertisement expenditure.
- Products of the same manufacturer will compete with each other.
- Individual branding is a costly strategy.
- Individual branding does not build customer franchise and does not pave the way for the introduction of other products.
The decision of a manufacturer to choose a family brand or individual brand depends on the following factors:
- Name of the product.
- Varieties manufactured.
- Promotional aspects.
- Nature of the market for which the product is intended.
- Consumer’s attitudes and sentiments.
Manufacturers’ Brand vs. Distributors’ Brand:
Manufacturer’s brand is one which is sponsored by the manufacturer. Manufacturer’s brand is used by the producers that enjoy wide geographical distribution. Distributor’s brand is one which is sponsored by the distributors. It means that every distributor will be free to market the product under his own brand.
Following are the advantages of manufacturer’s brand:
- Better price prevails due to more price in-elasticity. Hence, manufacturer earns more profit.
- Manufacturer builds his sales promotion for the entire range of his products. He will not face any promotional problem. There will be uniform promotional strategy.
- Manufacturer’s brand ensure better control of distribution.
- Manufacturer’s brand improves brand of loyalty.
Following are the disadvantages of manufacturer’s brand:
- Manufacturer’s brand creates difficulty for small manufacturer because it requires huge financial resources particularly when company or brand is unknown.
- Manufacturer’s brand requires promotional activities and its high expenditure.
- The negative effects associated with a poor product may affects very much the sales of the manufacturer’s other products.
Following are the advantages of distributor’s brand:
- Distributor’s brand ensures better margin for dealers or distributors.
- There is possibility of larger market share for the manufacturer.
- Since distributors brands are generally expected to be sold in limited areas, the cost of promotion of the brand may be less and consequently the distributor may be able to sell the product cheaper. Product can be more easily tailored to the requirements of the customers.
Following are the disadvantages of distributor’s brand:
- Distributor’s band leads to severe price competition between the manufacturer’s brand and distributor’s brand in the same product.
- There is lack of market identity.
- Distributor’s brand is feasible when distributors are expected to generate
sufficient sales volume in a product.
Local Brand vs. Global Brand:
Local brand means different brands for the same product in different markets due to differences in the cultural and other factors. Hence, it is not always possible to use same brands in all the markets. Global brand means a single worldwide brand. Building a global brand is inherent in using a standardized product.
Following are the advantages of local brand:
- Local brands have meaningful names to suit different segments of the market.
- Product has local identification.
- Tax may be avoided on international brand.
- Local brand ensures quick market penetration by acquiring local brand.
- Local brand allows variations of quantity and quality across markets.
Following are the disadvantages of local brand:
- Local brand leads to higher marketing cost.
- Local brand leads to higher inventory cost.
- There is loss of economies of scale.
- There is diffused image of the product.
Following are the advantages of global brand:
- Global brand creates uniform worldwide image, i.e., culture free image.
- Global brand facilitates easy identification and recognition of the product. It eliminates brand confusion.
- Global brand ensures maximum marketing efficiency.
- Global brand reduces advertising costs.
- Global brand ensures good sales since the very beginning.
Following are the disadvantages of global brand:
- Global brand does not take care of local tastes and preferences.
- Global brand may be costly for the firm from developing countries.
- There is problem of negative connotation of brand name.
- Global brand is feasible when there is homogeneity of markets.
- Global brand requires quality and quantity consistency.