According to inbound marketing platform HubSpot, brand dilution occurs “when a company’s brand equity diminishes due to an unsuccessful brand extension, which is a new product the company develops in an industry that they don’t have any market share in.” Brand dilution, therefore, occurs when a brand decreases in value after the company releases a product that does not align with its vision, mission, or skillset.
|Definition||– Brand Dilution is a concept in branding and marketing that refers to the weakening or degradation of a brand’s strength, identity, or value due to various factors, actions, or circumstances. It occurs when a brand’s core attributes or associations become less clear, distinct, or consistent, which can result in reduced brand equity and consumer perception. Brand dilution can have negative consequences on customer loyalty, market positioning, and long-term brand success.|
|Causes||– Brand dilution can occur due to several factors, including: – Brand Extensions: When a brand extends its product or service offerings into unrelated or poorly aligned categories, it can dilute the brand’s original meaning and confuse consumers. – Licensing Agreements: Licensing the brand to various products or businesses without strict quality control can lead to inconsistent brand experiences. – Inconsistent Marketing: Changing the brand’s messaging, logo, or visual identity without a clear strategic reason can dilute brand recognition. – Overexposure: Overusing the brand in marketing campaigns or promotions may reduce its exclusivity and impact. – Negative Publicity: Scandals or controversies associated with a brand can tarnish its image and lead to brand dilution.|
|Effects||– Brand dilution can have several negative effects on a brand: – Reduced Brand Equity: Dilution can erode the brand’s perceived value, making it less attractive to consumers. – Consumer Confusion: When the brand’s identity becomes unclear due to dilution, consumers may be unsure about what the brand stands for. – Loss of Trust: Inconsistent quality or messaging can lead to a loss of trust among consumers. – Market Positioning: Dilution can affect a brand’s ability to maintain a strong position in the market. – Financial Impact: A weakened brand may result in decreased sales and revenue.|
|Prevention||– Preventing brand dilution is essential for brand longevity and success. Strategies to prevent brand dilution include: – Strategic Brand Extensions: Ensure that brand extensions are aligned with the core brand identity and values. – Licensing Control: Implement strict quality control measures when licensing the brand to third parties. – Consistent Messaging: Maintain a consistent brand message, visual identity, and values in all marketing efforts. – Customer Feedback: Listen to customer feedback and adapt branding strategies accordingly. – Crisis Management: Handle crises and controversies proactively to minimize their impact on the brand.|
|Mitigation||– If brand dilution has already occurred, mitigation strategies may include: – Rebranding: Consider repositioning or rebranding to restore clarity and relevance. – Quality Improvement: Focus on improving product or service quality to rebuild trust. – Effective Communication: Communicate changes and improvements transparently to customers. – Consumer Engagement: Engage with consumers to rebuild brand loyalty and trust. – Legal Action: In cases of unauthorized use or brand misuse, legal action may be necessary to protect the brand.|
Understanding brand dilution
Brand dilution occurs when a business releases a product that is closely related to the product consumers most associate it with. When the new product does not live up to the brand promise of the original product – perhaps because of poor quality or unrelatedness – the brand becomes devalued among consumers.
What causes brand dilution?
Here are the top four reasons for a brand becoming diluted:
- Licensing – this describes a trademark or copyrighted asset that is rented or leased for use in a product or service. Brand dilution occurs when the product in the licensing agreement does not reflect the image or expected quality of the brand itself.
- Experimentation – brand dilution also occurs when a business enters a market where it has no presence or expertise. Some businesses release unrelated products that have no connection to their core products. Others release incompetent products because they lack the required industry experience. While expansion is a necessary evil to some extent, businesses that stray too far from what they know best run the risk of dilution.
- Lack of brand control – sizeable companies with hundreds or even thousands of employees representing the brand may also experience dilution. This can be reflected in outdated logos or slogans, inconsistent social media messaging, and other activities that are not representative of the brand.
- Inconsistency – if, for example, consumers associate a brand with premium, hand-made products, dilution will occur if the company decides to release mass-produced products that are of poorer quality.
Brand dilution examples
Some of the more famous examples of brand dilution include:
English chocolatier Cadbury is a brand most consumers associate with premium quality chocolate and candy products. However, for over 20 years, the company sold instant mashed potato mix. While the product was reasonably successful, it diluted the perceived quality of the Cadbury brand.
While motorcycle manufacturer Harley-Davidson also sells helmets, bandanas, shirts, and jackets, the company went too far when it released a perfume and cologne range in the 1990s. The products were attractively packaged but did not reflect the values the brand had cultivated over many decades.
Microsoft released the Windows Phone in 2010 at a time when the market was oversaturated with similar products. The move, which involved the creation of new teams and partnerships with mobile brands, took important resources away from Microsoft’s software development and was abandoned a few years later.
When NBA superstar Michael Jordan decided to retire from basketball and play baseball instead, his brand suffered. Jordan was for the most part unsuccessful as a baseballer and returned to the NBA to restore his brand image.
- Brand dilution occurs when a brand decreases in value after the company releases a product that does not respect its mission, vision, or skillset.
- Brand dilution is caused by improper licensing agreements, experimentation, a lack of brand control, and inconsistency.
- Real-world examples of brand dilution can be seen in companies such as Cadbury, Harley-Davidson, and Microsoft. NBA star Michael Jordan also damaged his brand when he retired from the sport and started playing baseball.
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