Branding should be helpful in advertising and identifying. A brand is name, term, symbol or design to identify the goods or services and to differentiate them from those of the competitors.
Limitations or Disadvantages of Branding
Following are the demerits or disadvantages or limitations arguments against branding.
1. Discourages from Trying other Products
Brand loyalty discourages the consumer from trying out other new brands which possibly be more satisfying.
2. Leads to Monopoly
It leads to some kind of monopoly known as brand Monopoly.
It is created by gradually creating brand loyalty and image of the product and the manufacturer in the minds of consumers.
3. Create Confusion
Consumers are often confused in in product selection on account of the methods of plethora offered in the market.
The situation becomes all the more difficult when all the brands carry as Assurance of similar quality and value satisfaction.
4. Commands Premium
The popularity of brands renders them out of the common man’s reach because they command premium prices, such as Hercules Cycles, Crompton fans, etc.
5. Substandard Goods
When the brand name becomes popular, manufacturers sometimes place in inferior and substandard goods in the market.
6. Imposes Responsibility
Brand imposes responsibility for maintaining consistent quality and delivering proclaimed value satisfaction.
It fails to do so, the customer will easily identify the brand owner and file the complaint under the relevant law, such as the Consumer Protection Act.
7. Some Products Do Not Lend Themselves to Branding
Some products, such as raw materials, pins, fruits, and vegetables, do not lend themselves to branding on account of their very nature.
8. Switch to Another Product
If the quality deteriorates or supply of adulterated goods is increased due to brand popularity, the customer may switch over to other similar product.
Building up brand recognization and loyalty is very expensive. Particularly, small sized companies cannot afford it.
It might promote market monopolies also.
10. Increase Cost
Branding needs heavy and widespread Advertising, attractive packaging and effective sales and widespread Advertising, attractive packaging, and effective sales promotion.
This raises the retail prices of branded goods given by 22 to 30%. It affects the cost adversely.
11. Opposition of Middleman
The retailers and the wholesalers may not be willing the stock the goods if the brand is not popular.
On the contrary, in the brand is very popular, they may refuse to stock and sell the goods on the ground that their margin of profit has been reduced considerably due to an increase in competition.
They even prepare to sell adulterated and inferior goods at a lower price.
On the basis of the above criticisms, it will be entirely wrong to conclude that brands are socially undesirable.
If we honestly compare the overall advantages with the disadvantages of branding, we make conclude that its advantages and much more powerful.
It certain more legislative measures are undertaken to improve the situation, such as strict enforcement of consumers Protection Act, Trademark act, etc., the brand name may prove more useful to consumers, distributors and the producers alike.
Thus, now you know the Limitations or Disadvantages of Branding.