Global Branding and Organizations
- Branding provides an opportunity to reach new groups of consumers.
- An efficient strategy promotes brand awareness which, in turn, can help achieve superior profits.
- In combination with an appropriate pricing strategy, branding can support the realization of a product as an asset and contribute to the growth of brand equity. The more valuable the brand or the firm will be, the greater barriers to market entry for new competitors it will create. It means that branding is essential to gaining a leadership position.
- With the increase in brand awareness at the global scale, the number of cheap and illegitimate product substitutes grows proportionally (with approximately 1-to-8 ratio). These fake brands take a significant share of profits and jeopardize the integrity of genuine brands.
- Sometimes the outcomes of branding may be counterproductive − customers become more and more suspicious of big brands as they impact the local environments forcing “a grey cultural homogeneity on the world” (“The Case of Brands”). As a result, consumers may prefer smaller brands over the global ones.
Global Branding and Customers
- Since branding implies the development of customer loyalty and trust, by purchasing goods produced by famous brands, potential consumers can obtain such values as quality.
- Global branding provides more consumer choice options and, in this way, allows potential consumers to fulfill a plethora of their needs and interests.
- The adverse effects of globalization accelerated by branding include ecological deterioration, inability to sustain in the market for local small businesses, promotion of cultural homogeneity, informational pollution, etc.
- Brands tend to sell “superior lifestyles” along with their physical goods (“The Case of Brands”). When brands play on the psycho-emotional needs of customers, sometimes they tend to buy unnecessary items.
Brand image is more than just a complex of logos, color solutions, and labels. The brand is also a message conveyed to consumers. It comprises both tangible and intangible values. Therefore, the influence of the brand on a person is tremendous. Moreover, the very fact of buying a particular product often demonstrates what interests and qualities the buyer may have because every purchase can be regarded as an act of self-identification.
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Thus, if branding is carried out correctly, the influence of the brand on consumers may be powerful. For companies, branding can help gain such advantages as increased brand awareness and greater customer loyalty which, in turn, can result in better financial performance. Moreover, branding is core to successful international market entry. Efficient branding (i.e., product localization, etc.) can help a firm to address the needs of local consumers much better and reduce the risks associated with entering new markets. However, along with raising brand awareness, companies may contribute to the development of counterfeiting and piracy.
The illegitimate goods are always produced as replicas of the most successful premium products. Since the fake items are cheaper, they attract the lower-income buyers who cannot afford the genuine goods. As a result, the brands suffer losses in terms of finances and brand value as well.
When speaking of consumers, the major advantages of branding they receive include the opportunity to purchase products of higher quality. Global trade largely contributed to product diversification in most parts of the world, and now consumers can find a brand that meets their peculiar interests based on the price, authenticity, exclusiveness, etc. However, from another point of view, global branding does not allow local firms to succeed as it is hard for them to compete with international giants.
Other adverse effects of branding are associated with globalization and international trade as such. They are environmental deterioration, human rights’ abuse, unfair business practices, etc. which negatively influence the social welfare. Moreover, to increase product demand, marketers identify the emotional and psychological needs (e.g., self-enhancement, etc.) of potential consumers and develop images which, as they suppose, may promote the desired purchasing behavior. In a way, the given approach is unethical.