Challenges to Branding

Even though branding is considered as a trend in the new marketing era, branding faces 02 major challenges and they are described below:

  • Pressure from generic products-

Normally branded goods charge a premium price for the brand name but there are generic products/unbranded products at a cheaper rate than the branded goods. Price conscious customers prefer unbranded low priced products to save their money. When it comes to Fast moving consumer goods (FMCG) consumers are price consious as they engage in repeat/routine purchase. Therefore branded FMCGs are heavily affected by the generic products sold at cheaper rate as consumer believes “All are the same anyway”.

  • Power of channels/distributors/retailers-

Middlemen such as retailers, supermarkets and distributors who are involved in the distribution process exert a pressure on the product brand as consumers tend to trust middlemen and become loyal to them. As an example, customer would be loyal to WalMart would buy whatever WalMart promotes as they become loyal customers to WalMart. As a result middlemen have started marketing private labeled goods which acts as a rival to product brand as customer prefer private labeled goods by supermarkets.

How to Overcome Challenges to Branding?

Companies uses tactics to over come above mentioned challenges to branding and they are explained below.

  1. Build partnerships with middlemen and issue private labeled goods for them. This will make sure that customers are happy with their proffered retailers, company earns the required profits and the retailer gets private labeled goods from a branded product creating an identity for them.
  2. Engage in heavy promotions to promote the brand/gain loyal customer base and increase the brand awareness. Incentives such as discounts/gifts can be provided to customers to capture market share.
  3. Develop and introduce unique products (with different features/usability) which can compete against generic products and differentiate themselves in the market.
  4. Promote brand values and increase the awareness of the exclusivity of the brand.
  5. Introduce flanker brands. Flanker brand is a low priced brand which is introduced by a firm to retain their market share while maintaining the high priced brand as the flagship brand. flanker brand will cater to price concerned customers and help to retain the market share and sales revenue.

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