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