Brand Dilution, and how to Avoid it.

In today’s fast-paced consumer-driven environment, it is understandable that companies are feeling the pressure to stay ‘on top of the game’ and increase their market audience by creating and delivering a range of products that not only expand their brand presence but also, potentially, their sales. However, the temptation to expand your range can quickly turn into jumping into a new market with little to no alignment with your original brand. This loss of core identity or original quality of work can lead to brand dilution. In this article, we will explore what brand dilution is, how it can and has occurred in even some of the most well-known brands and, most importantly, what your company can do to avoid it. 

What is Brand Dilution?

Brand dilution is when a brand’s identity and perceived value loses its strength in the eyes of the consumer. By stretching itself too thin, a once strong brand with consistent core values becomes weakened, often as a result of poor brand extension or marketing strategies. Brand identity and value is reduced and customers become confused about what it represents or offers. Consumers then begin to negatively perceive the brand’s quality and authenticity, which dilutes the brand’s value.

How Does Brand Dilution Occur?

Brand dilution can occur without a company even realising that it has compromised its own integrity and position in the market, until it is too late. There are several reasons that this can occur, from poor brand extension to over exposure. We examine all the ways brand dilution can occur and how brands can lose their power and value in the marketplace.

1. Launching products outside the brand’s core offering: The main reason for brand dilution is when a brand launches products that are not within its core offering. Launching new products within the brand is known as brand extension. When done right, brand extension can leverage a strong parent’s brand recognition and successfully expand the offering while maintaining core values and identity. However, when done wrong, brand extension, or launching a new product outside the brand’s usual offering, can be disastrous. When consumers view the new product or service as inconsistent, irrelevant, or inferior to the core brand identity and values, loyalty will diminish and sales will likely start to decline.
2. Inconsistent messaging: Brand dilution can occur due to inconsistent messaging. A company must maintain a level of consistency with brand messaging so that a customer is clear on what a brand stands for and what is being offered. When messaging is poor and inconsistent,  there is no brand continuity. Customers become confused and the brand identity is watered down and diluted. Sometimes when multiple agencies work with a brand doing PR, advertising or marketing, messaging can become inconsistent if there is no clearly defined strategy or brand guidelines.
3. Over exposure: Over exposure or “over marketing” occurs when your message is repeated to your target audience too much. When a brand constantly bombards customers with advertising over multiple channels without any meaningful content, it can begin to appear laborious. Customers can  become fatigued with the messaging, annoyed and begin to think negatively about the product or service offering, which adversely affects the brand equity, and leads to brand dilution.
4. Negative publicity: If a business is discussed negatively in the media, it will affect customer’s perception of the brand. Reports on how supermarkets are tricking customers with food items on sale will make the customer no longer trust the supermarket brand and be less likely to purchase from them.
5. Licensing: If you licence your brand to another company, you are not only trusting the new company to represent your company to the same degree as you do, but you are also potentially diminishing your brand perception by the collaboration.  
6. Poor quality: Quality control is a must for any business. If a customer associates a brand with poor quality, that will become their view of the brand, regardless of how you improve the quality of the product in the future. 
7. Experimentation: If a company decides to experiment with their ‘true and tested’ product, outside of their area of expertise, it can result in brand dilution. Creativity and experimentation are important factors in evolution, but if the experiment is released to the market without proper research and fails, it will do damage to your brand.

Examples of Brand Dilution

Whenever brands make decisions on the types of product to add to the brand, marketing and messaging, they are constantly putting their brand on the line. These decisions can turn out well or can lead to an issue like brand dilution. We look at examples of brand dilution and how they have occurred.

Tropicana’s 2009 redesign. A classic example of a brand dilution occurring from inconsistent messaging is Tropicana’s 2009 redesign. The original packaging always had an orange on the container which had become a recognisable image of the brand. When they replaced the iconic image with a glass of orange juice, sales dropped by 20 percent. 

Cadbury’s ‘Smash’ Instant Mash Potatoes. This is a classic example of brand dilution that occurred by poorly planned brand extension. Cadbury introduced instant potatoes which confused consumers who related to the product as chocolate flavoured mash potatoes. They were, however,  just normal instant mash in a canister. Although there were allegedly sales of the Smash Mash in the 1960s, likely due to sheer curiosity, the Cadbury chocolate brand began to suffer. This is a classic example of where excessive brand extension and experimentation does not pay off.

Harley Davidson Perfume. Harley Davidson is iconic. It has a masculine energy that attaches to its name and all that it touches, until it drove its motorbike into the nearest perfumery almost 20 years ago. Despite Harley Davidson’s promise to make its customers look and smell good, the step away from the company’s core principles was not well received. The perfume was only on the market for a few years until it was discontinued. Harley Davidson’s sojourn into extending the brand to perfume did not take off and is another example of adding a product to the brand that does not align with its core values and identity. 

Colgate beef lasagne. While Colgate had successfully pulled off brand extension from just toothpaste to toothbrushes and mouthwash, the extension to frozen foods was not well received by customers. Brand extensions need to be consistent with custom perceptions and expectations, and nobody wanted to eat minty flavoured lasagne.

BIC’s disposable pantyhose. In 1976 BIC, famous for ballpoint pens and other stationary goods, decided to brand out into disposable pantyhose. The product was very quickly discontinued. 

McDonald’s Supersize Me. The Supersize Me documentary from 2004 is an example of how bad publicity can cause brand dilution. When customers viewed the documentary, which focused on a man eating nothing but McDonald’s for a month and the resulting health issues. After customers viewed the documentary sales of McDonald’s dropped dramatically. McDonald’s now promotes itself as having healthier food options.

Tesla founder controversy. Owning a Tesla was once associated with forward thinking innovation and caring about the environment. Now Tesla faces a branding crisis as it becomes more associated with Elon Musk and his controversies. Consumers no longer want to have anything to do with Musk and what he represents. Tesla stock has lost ground because of his erratic behavior, public spats, conspiracy theories, and political entanglements..

How to Assess Brand Dilution 

If you are concerned about your company’s brand identity or its position in the market, there are several methods a company can use to assess whether brand dilution has occurred or is occurring. These methods make up a multifaceted approach to examining key indicators of brand dilution and will highlight the areas for improvement. These methods include:

Sales and Revenue Analysis: Is brand dilution making an impact on your bottom line? Review recent sales and revenue and compare to a point in time, before the potential brand dilution began. If there is a decline in sales or revenue has stalled, it might be a sign of brand dilution. Financial performance and profitability analysis will quickly show the true economic impact of brand dilution. 

Consumer surveys / focus groups: Surveys and focus groups are a fantastic way to get real time data on individuals views and preferences in the market. As a company, you can decide the exact parameters of your target audience to ensure you are capturing only what is relevant to your business model.

Market share analysis: Compare your business to other similar businesses in the market to ensure your company is staying competitive (i.e. how much of the market share does your company occupy compared to its competitors). A decline in market share may indicate that the perceived value of your company from the market is trending down.  

Brand equity models: There are several brand equity models including Keller’s Brand Equity Model, Brand Asset Valuator (BAV), or Aaker’s Brand Equity Framework, which can provide proven a structured approach to assessing the elements that make up the brand equity and therefore allow you to pinpoint where the brand dilution is occurring. 

Brand tracking studies: By utilising brand tracking studies, you are constantly monitoring a set of brand metrics like brand awareness and loyalty, so that you can see movement of when the market’s perception of your brand begins to shift. 

Social media monitoring: This is a low cost option where you can monitor and set alerts for your company’s name or ‘catch words / phrases’ to obtain insight into conversations or posts about your company. 

Effects of Brand Dilution

Among other things, brand dilution causes feelings of disappointment. Brands, regardless of the brand itself, are intrinsically developed to evoke trust and reliability in the market and to resonate with its customers. When brand dilution occurs it weakens the brands perceived core values and this effect can be quite significant. Effects of brand dilution can harm the company’s reputation and include: 

Weak brand equity: This occurs when customers develop a perceived lower value of the brand’s reputation when compares to its peers. 

Negative brand association: Customers will have negative feelings associated when they see an advertisement or someone mentions the brand. 

Decreased market differentiation: Your brand will be lost amongst its competitors and your company will fail to stand out. When this continues to occur, people will stop recognising your brand completely and there will be no difference between your brand and your competitors. 

Decreased brand loyalty: Customers will cease remaining exclusively using or prioritising your brand and will likely place their loyalty elsewhere. 

Decreased product value: If there is no supply/demand tension and customers stop exclusively using or prioritising your brand, it can lead to decreased value of the product or service as the customer will not want to pay for the brand. 

How To Recover from Brand Dilution

Quick action to recover from brand dilution is paramount to keeping your brand afloat and remediating any damage that has occurred. The first thing to note is that recovery is all about, and therefore should be focused on, regaining the customer’s trust.

If you believe that your business has suffered brand dilution, there are ways to endeavour to recover and get back to your original position. The business will need to develop and implement a strategic plan to refocus their image and messaging with the core values, including:

Reinstate core values. Use nostalgia and reiterate the brand’s core strengths and values to create a feeling of connectedness with your market audience. This will also remind your customers of their original feelings and comfort them that your brand’s fundamental principles have not changed. In 2019, Nintendo added old school super nintendo games like super mario and mario kart to the new switch console. For many people, thinking back to the old days of playing super mario will give comfort and reengage them with the brand.

Be transparent with clear communication. If you have made a mistake, don’t just ignore your customers and pretend that it didn’t happen. Creating this emotional connection between the brand and the customer will promote brand awareness and be the first step in maintaining a strong customer base. As per the study conducted by Headstream, 55% of customers buy from brands of which they love and can resonate with its story. And of that 55%, 44% will tell that brand’s story with others. 

Use multiple platforms to reiterate your messaging. In today’s digital age there are multiple marketing channels that a business can use to reach their target audience to relay their messaging. It is recommended to get your message on as many platforms as you can so that you can reach as many of your customers as possible and as quickly as possible. 

How To Prevent Brand Dilution

In order to allow a company to expand its clientele and market presence without succumbing to the risks associated with brand dilution, there are a few methods you can use to assist and support the company’s growth mindset. They are: 

Strategic brand extension: You can extend your brand without diluting it. If you do it strategically, you can use your brand name and the customer trust that you’ve built and bring that to your new product or service. The strategic brand extension can help the brand stretch into new territory without over-extending or experimenting on that growth. 

Introduce new products slowly: By slowly extending your range in the market that is known and trusted for your product, you can achieve brand extension and avoid brand dilution.  

Maintain brand consistency: It is important that as your brand grows the quality of the product does not change. This will keep customer trust and show that your brand is reliable, regardless of which product under that brand is being considered.  

Prioritise flagship product: If you have a flagship product that is a market leader or has a good and loyal customer base, it is important to keep quality and marketing of that flagship product as a priority in your business. 

Extensive market research: Research, research, research. The more research that a company can do prior to growing their business, will put them in the best position. This research should be continuously conducted at all stages of development. 

Customer feedback: Customer feedback and surveys will help you know if the extension you are considering for your brand is in line with what the customer perceives to be the brand’s core values. If what your business is considering is well received by customers, it would be a positive indicator.  

Consistent brand management and legal protections: If brand management or legal implications are new to you, consider outsourcing and obtaining legal advice. 

Brand dilution is an issue that all companies need to have at the front of mind when considering how to expand their business without causing unforeseen adverse consequences. While brand expansion and targeting new audiences is usually necessary for a brand to stay competitive in today’s market, research and strategies should be employed to ensure increase in revenue without decrease in reputation. While this article has provided you with some insight as to brand dilution, how to assess it, how to avoid it and how to come back from it. If you have any further concerns on whether your company has experienced brand dilution or you want guidance as to how to navigate this complex field, contact us at Brandwell.