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What is Brand Dilution?
Brand dilution happens when a company develops a new product or enters new markets, and its brand strategy for the new venture is not well thought out, resulting in damage to the existing brand image.
Brand dilution is when a company’s Brand is used in too many different products or services and as a result, the Brand becomes less distinctive. When a company first starts, they usually have a very clear Brand identity. They know exactly what they want to be known for and they stick to that. However, as the company grows, they sometimes start to produce other products or services that are not necessarily in line with its Brand identity.
For example, let’s say you have a company that makes luxury handbags. You’ve worked hard to build up a reputation for being high-end and exclusive. But then you decide to start selling wallets and keychains. Now, all of a sudden, your Brand is not just about luxury handbags anymore. It’s about luxury handbags, wallets, and keychains.
The problem with this is that it can make your Brand less distinctive. Instead of being known for just one thing, you’re now known for three things. And, as a result, your Brand becomes less special. To avoid Brand dilution, it’s important to be strategic about the products or services you offer. Make sure they are all in line with your Brand identity and that they complement each other. This way, you can maintain a strong and distinct Brand.
Brand dilution can also occur when a company’s brand promise is not kept, or when brand messaging around is inconsistent. New markets and products can also present challenges for a brand manager in terms of managing and protecting the company’s image.
When companies experience brand dilution, it is often because they have not put enough thought into their brand strategy for the new venture. Brand managers need to be aware of the risks associated with launching new products or entering new markets, and take steps to protect the company’s image.
Brand Extension & Brand Dilution
Brand extension is when a company uses its already-established Brand to launch a new product or service.
For example, let’s say you have a clothing Brand called “Jenny.” Jenny has been selling clothes for years and has built up a strong Brand identity. People know Jenny as a high-quality, affordable Brand.
Now, Jenny decides to launch a new line of shoes. The shoes are in line with the Brand’s identity (high-quality and affordable), so this is considered a Brand extension.
Brand extension can be a great way to grow your business. It allows you to leverage your already-established Brand to launch new products or services. And, if done correctly, it can help you attract new customers and grow your Brand.
However, a Brand extension can also be risky and cause brand damage. If your company launches a new product or service that is not in line with your Brand identity, it could backfire. Customers might not be interested in the new product or service, and it could damage your Brand’s reputation.
In a situation of unsuccessful brand extension, brand dilution occurs. Brand dilution is when a company’s Brand is used in too many different products or services and as a result, the Brand becomes less distinctive and the company’s brand equity diminishes.
Reasons behind Brand Dilution
There are a few reasons why Brand dilution can occur
1. Doing too Much at Once can Strain Your Resources
Overstretching is always a recipe for disaster. At the core of every Brand is a certain set of values, and a focus on a particular market or type of product.
Once you try to do too much, your Brand will suffer, as will your bottom line.
2. Offering Unrelated Services or Products
As time goes on, you might be tempted to offer other services or products that are unrelated to your Brand. Maybe you think it will be a good way to make some extra money, or maybe you think it will help you attract new customers.
However, offering unrelated services or products is almost always a bad idea. Not only will it strain your resources, but it will also dilute your Brand. Instead of being known for one thing, you’ll now be known for two (or more) things, and your Brand will become less distinctive.
3. Losing Autonomy Over the Brand
If you’re not careful, it’s easy to lose control over your Brand. This can happen if you allow other people or companies to use your Brand without your permission.
For example, let’s say you have a Brand of luxury handbags. You’ve worked hard to build up your Brand, and it’s now well-known and respected.
But then you allow a company to sell knock-off versions of your handbags. Suddenly, your Brand is associated with cheap, imitation products. As a result, your Brand becomes less valuable and less distinctive.
How does brand dilution happen?
Brand dilution can happen in a few different ways
1. Brand Extension
As we mentioned before, Brand extension is when a company uses its already-established Brand to launch a new product or service. But this may cause dilution if the new product or service is not in line with the Brand’s identity.
2. Mergers and Acquisitions
Another way Brand dilution can happen is through mergers and acquisitions. When two companies merge, their Brands will also merge. And, often, one Brand will be chosen as the primary Brand while the other Brand is phased out.
Licensing is when a company allows another company to use its Brand in exchange for payment. This may cause Brand dilution if the company that is using the Brand does not maintain the same level of quality or standards.
4. Brand Name Changes
5. Brand Overuse
Brand overuse is when a Brand is used in too many different contexts. This can happen when a company uses its Brand in advertising, on social media, on its website, etc. Brand overuse can make a Brand seem omnipresent, which can be off-putting to customers. It can also make a Brand seem like it’s trying too hard, which can damage its credibility.
How to avoid brand dilution?
There are a few things you can do to avoid Brand dilution
1. Stick to Your Core Values
The first and most important thing you can do is to stick to your core values. These are the values that your Brand was built on, and they should guide everything you do.
2. Don’t Overstretch Your Resources
As we mentioned before, overstretching is a recipe for disaster. So, don’t try to do too much at once. Focus on one thing and do it well.
3. Give priority to the Core Brand
If you have multiple Brands, make sure you give priority to the Core Brand. The Core Brand is the Brand that is most important to your company, and it should be the one that you focus on the most.
4. Be Careful with Licensing
Licensing can be a great way to expand your Brand, but it can also lead to Brand dilution if you’re not careful. So, make sure you choose your partners carefully and set strict guidelines for how they can use your Brand.
5. Introduce New Products Slowly
If you’re introducing a new product or service, do it slowly. Start with a pilot program or a limited release. This will help you gauge customer reaction and make sure the new product or service is in line with your Brand.
6. Do clear Brand Communications
Every time you communicate with your customers, make sure you’re clear about who you are and what you stand for. This will help them understand your Brand and what it represents.
7. Monitor Your Brand
Last but not least, monitor your Brand closely. Pay attention to how your Brand is being used and perceived. This will help you catch any Brand dilution early on and take steps to fix it.
Examples of Brand Dilution
Some of the brand dilution examples you should pay heed to are
1. Gap: The Gap brand is a clothing Brand that started out selling only clothes for men and women. But in the early 2000s, the Brand decided to launch a new line of children’s clothes. The problem was that the children’s clothes were not in line with the Brand’s identity. They were cheaper and of lower quality than the Brand’s usual clothes. As a result, failed brand extension occurred and the Brand faced a diminished brand value situation.
2. Hewlett-Packard and Compaq: In 2002, Hewlett-Packard (HP) merged with Compaq. The two brands had very different identities. HP was seen as a high-quality Brand while Compaq was seen as a lower-cost Brand. As a result of the merger, HP’s Brand was diluted.
3. Harley Davidson Perfume: In the 1990s, Harley Davidson tried to expand its Brand by selling a line of perfume. The problem was that the perfume had nothing to do with motorcycles or the Brand’s core values. As a result, the Brand was diluted and the perfume was a flop. It was a brand extension mistake by the brand.
4. Amazon Fire Phone: In 2014, Amazon released the Fire Phone. The problem was that the phone was not up to par with other smartphones on the market. It was also very expensive. As a result, the Brand was diluted and the phone was a flop.
5. American Apparel: American Apparel is a clothing Brand that is known for its sexy ads. The brand decided to launch a new line of children’s clothes. The problem was that the ads for the children’s clothes were just as sexy as the Brand’s usual ads. As a result, the Brand was diluted and the children’s line was a flop.
6. Crystal Pepsi: In the early 1990s, Pepsi launched a new type of soda called Crystal Pepsi. The problem was that the soda was clear and had no flavor. As a result, the Brand was diluted and the soda was a flop.
7. Virgin Water Filtration System: In 2007, Virgin introduced a new water filtration system. The problem was that the system was not very good and it was very expensive. As a result, the Brand was diluted and the product was a flop. The Virgin water filter does not reflect the brand’s image well and makes Virgin look foolish. Think about it: would you want to fly with a company whose business is making water filters? Not so much.
8. Coca-Cola Clothing: In the early 1980s, Coca-Cola launched a clothing line. The problem was that the clothes were not very stylish and they didn’t fit well. As a result, the Brand was diluted and the clothing line was a flop.
9. Microsoft Zune: In 2006, Microsoft released the Zune, a music player. The problem was that the Zune was not as good as the iPod and it was more expensive. As a result, the Brand was diluted and the product was a flop.
10. Google Glass: In 2013, Google released Google Glass, a wearable computer. The problem was that the glasses were very expensive and they were not very practical. As a result, the Brand was diluted and the product was a flop.
Tips for handling Brand Dilution
- Keep your Brand focused: When it comes to Branding, less is more. It’s better to have a focused Brand that is known for one thing, than a diluted Brand that is trying to be everything to everyone.
- Incorporate an expert research team: If you’re thinking about expanding your Brand, it’s crucial to do your research first. Hire an expert Branding research team to help you determine if the expansion is a good idea and how to do it in a way that won’t dilute your Brand.
- Don’t try to be everything to everyone: Trying to be everything to everyone is a surefire way to dilute your Brand. It’s important to know your target market and focus on serving them.
- Be careful with Brand extensions: Brand extensions can be a great way to grow your Brand, but they need to be done carefully. Make sure that the extension is a natural fit for your Brand and that it won’t dilute your Brand.
- Doing thorough testing and listening to the feedback: Brand dilution can be costly, not just in terms of the mistakes that were made but also in terms of the damage to the Brand’s reputation. That’s why it’s so important to do thorough testing before launching any new Brand extension or product. And once it’s launched, listen to feedback from customers and make changes if necessary.
Brand dilution can occur when a company’s brand name becomes associated with low-quality products, services, or ideas.
As a result, the brand may lose market share and reputation. To avoid brand dilution, companies should carefully control how their brand name is used. They should also monitor how it is perceived by the public. Brand dilution can have serious consequences for a company, so it is important to take steps to avoid it.
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