Branding is the process of communicating the value of your company and its products to a target market. This is normally done through various marketing and communication approaches, including advertising and public relations. Typically, it takes time and consistency in messages and performance for branding to work.

High Profit Margins

Successful branding normally leads to strong profit margins. As opposed to low-cost providers who target price-conscious consumers, companies that invest in branding usually focus on quality and service benefits. By building a brand image that is valued by quality-concerned customers, you can command higher prices in the marketplace. When combined with effective cost-control measures, your profit margins are optimized in this scenario.

Long-Term Emphasis

Branding is intended to offer a company stability and longevity. By consistently delivering messages about your value proposition and presenting products and services that fulfill those commitments, you assimilate your brand into society and culture. Over the long run, customers tend to migrate toward brands that are easily recognizable and trusted. Strong branding also aids word of mouth as customers share their own experience with others. This long-term emphasis insulates you from some of the risks of a slumping economy or industry.

High Costs

A primary drawback of branding is that it costs money to develop and promote a strong brand. Ideally, your investment provides ample return to justify the costs, but this is not guaranteed. As noted, companies that build strong brands do so over time through regular investments in advertising. Additionally, they invest in market research and product development to be able to offer high quality. These costs leave little room for error in buying, pricing and forecasting sales.

Limited Flexibility

One necessary evil of thoroughly defining a company or product's brand is that it can limit your flexibility moving forward. Kleenex, for instance, has struggled in some of its attempts to develop and promote products beyond facial tissue. The company is so ingrained as a leader in that product category that it is difficult for customers to see the company as a marketer of anything else. Companies have been able to extend brands in some cases by emphasizing company strengths over product attachments.

What Can Be Gained

Effective branding will give your business a better chance at getting noticed in a sea of competitors who are trying to do the same. These days, most consumers will do online reconnaissance before they go to a restaurant, buy a product or hire a service. First impressions work in your favor if done right. From your logo and language used in your marketing materials to the appearance and attitude of your social media pages, you are sending a clear message to prospective customers who can become actual ones. Not all of your competitors will get this right and you could benefit from their lack of effort.

What Can Be Lost

The reason for ineffective branding is often linked to inconsistency. Website fonts, color pallets and verbiage that don't match the ones found on emails or online advertisements indicate inconsistency that make it difficult for consumers to verify the authenticity of your communications. They may also be hesitant to trust your professionalism. If you can't decide what colors or word style best represents your business, how can you expect potential customers to trust the consistency or quality of your goods or services?

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