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Benefits and disadvantages of branding

In this information, I will introduce what's branding? How come branding? and analyze both the gain and drawback of branding. In addition, I'll use a few examples to aid my critical viewpoint. First part, it presents about "what is brand", branding is something combine with this regular life, and exactly how to recognize it. Second part, it elaborates a few examples to support the examination of the good thing about branding. The advantages can be explored from both company area and customer part. Third part, it'll talking about the disadvantage, therefore i using some reference to support drawback.

A meaning for a brandname has been proven in the Journal of Marketing Management by Teacher Peter Doyle of Warwick University: "A name, symbol, design, or some combo which identifies the product of a particular group as having a substantial, differentiated edge" (O'Mally, 1991, p. 107). Besides, company use branding as an instrument to engage the clients buying their goods, also doing some promoting value, making some branding image, or add consumers' lifestyle (Rooney, 1995). Alternatively, customer use branding as a advantage to receive the benefits from the brands. As Ronny (1995) said that "branding is a method to create a sustainable, differential benefit by playing on the nature of humans".

Brand offer service to customer through advertising, advertising, and some e-media. Therefore, organizations use these tools as a advertising to appeal to consumers doing some monetary and business active in the trade market.


Both branding and no branding have two-sides result, the fundamental problem is how it has been done. For example, branding may help the brand promote their brand images in the trade market, also could earn some brand commitment and increasing some brand value. On the other hand, no brand could has lower creation cost, lower marketing cost, and lower legal cost than branding.

After the business joining the trade market, using the branding to communicate with their customer, they could get benefit from branding. Such as for example reputable brand name, possible brand commitment, brand value, maximum marketing efficiency, and even reduction of advertising costs (Onkvisit and Shaw, 2001).

"Branding name is a thing, an instrument which companies use in the trade market. They admit that brand name may not set up or breakdown the organization but it might be an important factor in their success or inability" (Ronny, 1995). Normally, the organization use their brand as part of their product even feature, for example: Coke Cola, they use their brand name as the selling point, sales their products. Coke Cola is a famous brand across the world, furthermore, in Chinese the "Cola" means "could be fun", so that in Chinese language culture the brand plays a way in the trade market.

It is not hard for public to believe Microsoft, Apple, Asus and Acer as examples of famous brand. Actually, in marketing, brand has wider meanings rather than only a name of a product. Within the other hand, the easiest example to says is that a chocolate is some sort of food formerly, however, if the company gives delicious chocolate a name as "Godiva", it becomes a branding name, therefore, the brand ideals comes show up, too. Moreover, matching to Millward Dark brown Optimor website(2010) statistic, that technology sectors brand value top 5 are Google($114260million), IBM($86383million), Apple($83153million), Microsoft($76344million), and HP($39717million), in addition, their brand value has evolved about 14%(Google), 30%(IBM), 32%(Apple), 0%(Microsoft), and 48%(HP). Originally, those names contain ordinary alphabet words. But due to the branding activity where the owners put great source, those names, in itself, obtain wonderful values

Generally, branding isn't just a product that reselling from business to customers, however, near the top of trade market, "brand" is actually a product that selling and purchasing between business to business. Normally, small companies may merger other brand value and advantage. The most famous example is the fact "Lenovo" merged "IBM's PC department", following the merger, Lenovo is just about the third top of pc manufacturers. Also their brand value has increased a whole lot. Another case in this aspect is Cisco. Cisco internet company in 20th century, through the acquisition over a huge selection of time, their products created by a straightforward router long their product line from simple router to 25 types of network equipment. Each product has been positioned first or second in its industry.

Brand loyalty is one of the benefit, too. Normally, we use go back customer rates as away to test brand loyalty. For instance, relating to Ishii (2008) said that people could tracked a customer's purchased information, if we would found that they had bought some products from same company more than three times, then we could think this is a devotion customer. But, in higher price product, for example, car, laptop, and house etc, we couldn't expect that customer would do do it again purchase frequently. So, we might use brand image to be a solution to test the brand loyalty. "the competitive durability of a global brand is that it tends to be associated with position and prestige, while providing convenient id for international travelers" (Onkvisit and Shaw, 2001).


Obviously, branding, of cause, not only has advantages, but also down sides. In examination above, the power for small enterprise to merge a large company with famous brand is noticeable. Nonetheless it always is combined with high risk. Concentrating on economic advantage, market talk about and production functionality, companies involved in merger and acquisition usually dismissed divergence between different corporate civilizations. Also, the new business line may well not be correctly melt into of these existing products categories. What's worse, even the venture are constrained with limited financial source of information to take care of the merger and the following painful adjustment, that could be fatal to both companies for the reason that merge case. The best well-known example is the convergence of BenQ and Siemens. BenQ has spent Siemens over six billion (EUR). But by the end of the investment, BenQ has declared the cessation of all investment for Siemens. Due to the unmatched business range and commercial culture, BenQ, without possessing proper knowledge and potential of merger, has made a major lost on these investment, leading an loss of both BenQ and Siemens' brand value.

Another downside of branding is its high legal cost. From your electronic to real, ideal to design, and picture to imageso on, the intellectual right are everywhere, though it is only a word, all associated with legal cost. As Onkvisit and Shaw (2001), said that " a brilliant brand is worthless, unless it is lawfully protected". For brand, the slogan, emblem, even the look, these all will be the part of brand value. If someone copies it without agreement, or in a illegitimate way to earn money, then your legal cost has appeared. Business would lost plenty of income, because of the illegal product possessed made an appearance in the trade market. Normally, the against the law products are far cheaper than the genuine ones, because they don't really have any R&D cost. So in the trade market, lower priced pirate products usually are more popular among consumers. For instance, computer software is easily to replicate. The biggest sufferer is Microsoft House windows systems. Their brand income are lost almost more than ten billion per calendar year.

Nevertheless, while the brand conducting business activities, marketing cost and product cost are two things that they need to considerate. It could be the disadvantage, because from the beginning, the company is just set up, that they had to spent some cost on advertising and launches some advertisement to increase their branding image and attract new customers. Every make produce their product, not only original cost, but also involve labor cost, transfer cost, established costso on, these cost are their necessary make cost. Extra money have to be brought up for marketing and branding, which causes more pressure to companies who already are heavily concerned with developing cost.


Finally, to brand or no to brand is the first question of the new company which is just set up. Whichever way the business has chosen, it may have effected of company. To branding, the maker would face some problems to deal with. For example, they have to think a advertise to market their brand at the beginning. Then they want to do some strategies to contend with their competitors. They need to render advantage to customers, therefore they could obtain some brand royalty of customer.

Another way for company to increase its brand value is to buy other company. First of all, they might need to take the culture under consideration. Secondly, they could concern whether company may take the high-risk in investment or not. Thirdly, they might think of the marketing cost and product cost.

However, the most important thing is the legal cost, it might performs an important role of the branding, because the value of the whole business lost, have affected the enterprise great deal. The cost of unlawful product might impact the company's income, the brand value and even brand image. Customer might favor lower price of product of high quality. Furthermore, if the business could offer top quality of service and same quality of number, customers would still be commitment of the brand.

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