Final answer:
Repositioning a brand, such as moving upscale, can be challenging due to early design decisions, the difficulty of achieving product differentiation, and the substantial marketing efforts required to build a recognizable brand. This often entails overcoming the established power of dominant brands and barriers to market entry, making rebranding a complex and risky endeavor.
Step-by-step explanation:
Difficulties encountered by trying to "reposition" a brand in the market, such as moving "upscale", are examples of marketing and branding challenges that businesses face when they attempt to change the public perception of their products or services. Often, these challenges emerge from poor design decisions made early on, which can limit the ability to meet customer needs effectively as the brand evolves. Additionally, the marketing efforts involved in creating a recognizable brand name are substantial, particularly in a context of monopolistic competition, where product differentiation is key.
Large advertising budgets can act both as a tool for establishing a brand and as a barrier to entry for new competitors. Brands like Coca-Cola and Pepsi have become entrenched in the market with well-known names and customer loyalty, making it a daunting task for new entrants to compete without a significant investment in marketing. The necessity to spend copiously on advertising to achieve a similar level of recognition, and the economies of scale involved, contribute to the landscape of oligopoly wherein a few large firms dominate the market.
The difficulties in rebranding or moving a brand upscale can reflect broader industry trends, such as an industry where economies of scale are very small compared to market demand, or the presence of well-established firms with a reputation for slashing prices in response to new entry. This is further compounded by the value of a well-respected brand name built over many years, highlighting the significant uphill battle that repositioning a brand can entail.