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.
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 This can be reflected in outdated logos or slogans, inconsistent social media messaging, and other activities that are not representative of the brand.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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