The Disadvantages of Consumer Branding

by Stan Mack

Branding involves developing a name, symbol or design to represent a product in consumers' minds. For example, a company might feature its trademarked logo on packaging and in advertisements. The goal is for consumers to instantly associate that company’s logo with its product, allowing them to differentiate that product from its competitors. Consumer branding helps businesses maintain a valuable image, but the technique also has disadvantages.

Higher Retail Prices

Branding efforts can be expensive. Product and packaging design, widespread advertising campaigns and in-store sales promotions, for example, are costly endeavors but necessary to adequately develop a company’s reputation. As a result, the retail price of branded products can be 20 to 30 percent higher, according to the book “Principles of Marketing,” by Ashok Jain. This is a disadvantage for consumers, who must pay higher prices. It's also a disadvantage for producers, who must justify higher prices to the public.

Fleeting Benefits

The benefits of branding dissipate rapidly. For example, suppose a company invests heavily in product quality and customer service, developing a stellar reputation. As a result, many consumers will be loyal to the brand. But those same consumers will depart rapidly if the company fails to maintain its reputation, for example, by neglecting quality control. In other words, branding is not a one-time effort. It requires steady attention to detail to ensure that all corporate efforts -- from manufacturing to advertising to customer support -- continually support the brand’s image.

It's Sometimes Pointless

When shopping for certain categories of products, many consumers will buy the cheapest option that fulfills their needs, regardless of the name brand. For example, Jain points out that in his book that vegetables, fruits, nails and other interchangeable items are hard to differentiate from competing products, making branding nearly pointless.

Competitive Disadvantage

Developing a brand to be competitive with major brands exceeds the capabilities of most small businesses. Heavy advertising, for example, is cost prohibitive for many small businesses, as are custom package designs and comprehensive sales promotions. Also, once a company develops a brand, it must hire an attorney to register and protect a trademark or service mark to reserve the exclusive right to that brand. Large, well-off companies thus have a significant advantage. But a small business can start developing its brand on a small scale, for example, by targeting a narrow niche of consumers in a small geographic region. Later, as revenues increase, the business can widen the scope of its branding efforts to acquire increasingly large segments of the market.

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