What Is Brand Dilution? (And How Can You Avoid It)
By Indeed Editorial Team
Published May 16, 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Companies employ various strategies to establish and maintain a good brand reputation. They make sure to study the market when they develop and release a new product, and carefully consider their partnerships with other businesses and individuals to avoid harming their brand. Learning about excessive brand extension can help you make sound business decisions to achieve the organization's goals. In this article, we define brand dilution, discuss the factors that lead to it, and provide tips on how to avoid it and what you can do when it happens.
What is brand dilution?
Brand dilution is similar to excessive brand extension. It's the weakening of a brand due to the release of a product that doesn't align with its original mission or goal. This can also occur when a company is unsuccessful in reaching a market segment that's not a part of its target market. This usually happens when they develop a product or service that's outside their area of expertise or that consumers don't associate with their brand.
It's common and at times necessary for companies to introduce new products and enter new market segments because these can increase their profit and market visibility. In the process, they may include a product in their line that may diminish the consumers' trust and loyalty, especially if it's of a lower quality or deviates from the brand in terms of its appearance or features. An example is a car company introducing perfume as an addition to their product line. This may confuse consumers because it seems incongruous with products that people associate with the automotive industry.
Factors that lead to brand dilution
The weakening of a brand usually happens when a new product or service fails to meet the company's expectations. It may also occur when there's a disconnect between the new product and the original messaging of the brand. There are other factors that may lead to it, including:
Licensing refers to an organization authorizing another company to manufacture, use, or sell products or services with their trademark or which they own through rent or lease. An example is when a coffee company partners with a milk company to produce a coffee-flavoured milk drink. While this business move isn't harmful in itself and often produces positive results, in some cases, it may negatively affect the company's brand, especially when the licensed product doesn't reflect the brand's image and values.
Consumer loyalty and trust mainly depend on a brand's consistency in quality and its core values. It's important for many consumers that a company is consistent with upholding the principles upon which they built their brand. A business that people know for professional and high-end products may experience their brand weakening when they start producing middle-range or low-end products for the purpose of reaching consumers who value affordability. Brand dilution may also happen when a company puts its name on a product line with the same brand that consists of products that differ in quality and price range.
In franchising, different owners or franchisees handle and market a brand under the same company. In this setup, it's often difficult for a company to set a standard and maintain control because the franchisees may differ in their management style, values, and individual goals. Opening a brand to franchising may affect it negatively if the quality of the products or services varies across franchises.
How to avoid diluting a brand
It's important for organizations to maintain and improve their brand's reputation to achieve their business goals. How consumers perceive a brand and its accompanying products and services can affect the company's performance. Carefully planning and managing brand extensions may help companies maintain the integrity of their brand and avoid diluting it. Here are other ways that you can prevent the weakening of a brand:
1. Perform market research
Before releasing a new product to the market, it may help to conduct research regarding the demand for it and the target market to prevent the venture from failing. Preliminary research can provide you with valuable insight that allows you to assess the probable performance of the product you want to introduce. It can also help you identify possible issues with the product that may result in the weakening of the company's brand, such as if it doesn't fit the brand's image or deviates from the organization's values.
2. Prioritize the flagship product
In planning business expansions, it's important to be selective with regard to what brand to expand and on which market segments to focus. It's also crucial to prioritize or protect the brand's core or flagship product to maintain its reputation and customer base. You can do this by continuously developing the product to ensure that it remains relevant and profitable, even when you introduce new products to the market. Another way is to create another brand for the company's latest ventures, especially if the new products or services don't align with the brand where the core product belongs.
3. Keep product quality consistent
While expanding the product line of a brand is often a sensible and profitable business strategy, it may strain the company's capacity to perform optimally. This may lead to a decrease in the quality of their products and weaken their brand. To avoid these, it's important to assess the company's capability to expand before developing and introducing a new product to the market. It's also crucial to ensure that the quality of existing and new products and services remain consistent because this promotes customer loyalty.
4. Introduce new products slowly
Create a timeline for launching the company's new products. This ideally includes the phases before you introduce them to the market, such as development and creation, and the details for each marketing strategy. This helps in ensuring the quality of the products and maintaining the brand's integrity because the company follows a process instead of rushing into a product rollout without careful planning.
5. Listen to the company's customers
Conduct market research by gathering information on the needs and demands of your target consumer groups. Obtain feedback from them regarding existing and new products through surveys and other data collection tools. Use these and the customers' perception of the company's brand as a guide to design new products that align with the brand's image and values. This strategy can help you in retaining customers because they feel that the company understands their needs and values their opinion.
What to do when a brand weakens
It's important that you identify early when the company's brand is weakening so you can determine the necessary course of action to stop it. Some of the signs are a shrinking customer base and decreasing sales revenue. Here are several tips you can follow when excessive brand extension occurs:
This strategy may result in a feeling of connectedness with the brand among consumers, which can help you stop if from weakening. There are many ways to use nostalgia in marketing, such as reverting to an old yet recognizable brand logo, reviving a catchy jingle, or using vintage packaging. This can remind the customers of their connection with the brand and may result in an increase in loyalty or renew their interest in the company's products and services.
Reboot the brand
One of the more radical strategies that companies employ when a brand weakens is to reboot it. There are many reasons for doing this, including to steer the brand away from the negative perception of consumers, emphasize a different business direction that the company took, or update it in an effort to remain relevant. This often involves changing its name and logo, and the design and packaging of its product line.
In doing an overhaul, your primary goal is to reflect the values of the brand while appealing to the target market. This is often an effective way to address dilution because it allows the brand to start anew.
Contact existing customers
Loyal customers are crucial to the success of a business. When a brand weakens, one of the easier methods to address the issue is to contact your consumer base to maintain and promote brand loyalty. You can do this by sending personalized messages through email or direct mail, asking for feedback on your products and services, and offering rewards such as coupons and vouchers.
Connect with new customers
The customer base of a brand typically becomes smaller when it weakens. A direct way to handle this is to establish a connection with consumer groups that aren't originally part of the company's target market. Focusing your marketing efforts on them can help the brand recover by improving its performance.
Use multiple marketing channels
In today's digital age, it's often not enough to use traditional marketing strategies to reach consumers. If you want to widen the company's reach in an effort to reverse the negative effects of a brand weakening, it may be necessary to use both traditional and digital marketing methods. Conducting market research can help you determine which media platforms are the most effective and accessible to your target market.
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