Brand Dilution definition

verb.
1. the act of making a brand weaker via overuse.
“There is brand dilution when the Star Wars brand is on a dog collar.”

What is Brand Dilution?

Executive Summary | Abstract | TL;DR
Brand dilution happens when a brand loses its value from excessive use. Value is lost when a product or a piece of media does not meet the expectations customers have of the brand. Line extensions can lead to brand dilution if the new product does not live up to the brand promise of the original product. Licensing is the biggest cause of brand dilution; poor quality or unrelated products with the brand name on it can take away the brands meaning. Brand managers need to protect the meaning of a brand to maintain it’s value.
4 minute read | 1000 words.

Brand dilution is when brands are made less effective and less valuable through excessive use.

But how can a brand be excessively used? Doesn’t the brand just grow through use?

The definition of brand dictates that there are preconceptions that come with brands that can lead to more sales in the future. That creates brand equity; there is a value to a brand because it is an asset generates future revenue.

Brand dilution or overuse of the brand is when those preconceptions are lost or changed. Brands come with expectations, and when a product or piece of media does not live up to those expectations, the customers’ minds adjust.

Put in another way, customers can be disappointed or confused when something does not live up to a brand’s promise, and that diminishes the power of the brand in their minds. It makes the brand less meaningful. This effect multiplied over many customers is brand dilution.

Which dilutes the Sony brand: the PS4 or their clock radio?

Sony is a great brand. The Sony name comes with a promise of a high-quality electronics that are a pleasure to use. Some products fullfill that promise and exceed expectations, like the Sony PS4.

But I have, and I suspect many people have had, a Sony product that is just a dud. I had a Sony alarm clock for a long time that was hard to program, to bright, and had poor quality speakers for the radio function. It was clear that this product just wasn’t a priority for them, and it diluted their brand in my mind.

If they make this crap clock radio, what does it mean to be a Sony product?

A line extension too far.

Sometimes a company builds a brand with one product or service and starts making a new type a product. That can be great if the brand promise brings something to the new category and they have the technology and the expertise to do well in the new market. This is a brand extension or line extension.

Red Tesla Semi Truck on desert highway.

Brand extensions are a grand strategy for growth. Beats started with headphones and do well with portable speakers. Tesla started with electric cars and now are making electric semi-trucks. There is nothing wrong with those line extensions.

But sometimes companies overextend themselves and run into brand dilution. This happens when the original brand promise is not applicable or not upheld by the new product.

What is Apple started making apples? The best, most perfect, innovative, spherical apples with no stem. That’s absurd! It is a little over the top, but the point is we wouldn’t expect that from them. Seeing that would have us question what the Apple brand really means. That questioning in peoples minds would be brand dilution.

That example was intentionally absurd, but there are real-life examples that are almost as absurd (Business Insider). Arizona Ice Tea making nachos. Zippo lighters making a perfume. Smith and Weston making a jacket. All of these line extensions make customers ask: if they make this, what does the brand really mean? They make the brand meaningless.

I was a Mini Cooper driver for years. When they started making the Mini Cooper Countryman, a light SUV more massive than a Toyota RAV4, it made me ask: what does the Mini brand mean when they build large cars? Porsche also faced similar questions when it extended their product line into SUVs with the Cayenne. Both cases caused brand dilution; the brands have less meaning.

Brand dilution can be a cost we don’t realize we are paying. Incremental revenue from line extensions is immediate, but the cost of brand dilution happens over the long term.

Dark grey Mini Cooper Countryman beside Mini Cooper

Photo credit: AutoEvolution

Be careful who you license your brand to.

Licensing is the biggest cause of brand dilution.

Christopher Penn of the Marketing Over Coffee podcast uses Wolfgang Puck as an example of brand dilution, but this can be applied to more of the food entertainment celebrities. Rachel Ray, Jamie Oliver, and Gordon Ramsay license their brand to manufacturers of cookware and food ingredients, and if these products are of poor quality or taste, then that can dilute their brands.

There is nothing wrong with licensing in theory; it is a great source of profit if you have a strong brand. You just have to make sure that you are licensing your brand to good quality manufacturers and that the products have at least something to with your brand promise.

Brand Dilution is different from Brand Damage

Brand dilution should not be confused with brand damage. Brand damage is when a brand is irreparably harmed by a news story, failed product or corporate irresponsibility.

For example, Volkswagen did damage to its brand when it used a software subroutine to fool emissions tests while polluting more than twenty times more on the road. Volkswagen’s brand will have a black mark in terms of environmental friendliness and honesty for more than a generation. This is far more severe, more immediate and harder to recover from than brand dilution.

Conclusion

Brand dilution is something you need to be vigilant against as a brand manager. You need to be a steward of your brand’s meaning; if a brand is meaningless than it has no value.

Black and white photo of Colin FinkleColin Finkle is a brand marketer and designer with ten years of experience helping Fortune 500 companies tell their story at retail. You can see his work at Colin Finkle’s portfolio site. You can connect with him on LinkedIn or Twitter. He is also the author of the book series, the Neverborn Saga.

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Categories: Branding Definitions

Colin Finkle

Colin Finkle is a brand marketer and designer with ten years of experience helping Fortune 500 companies tell their story at retail. You can see his work at finkle.ca

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