Companies can avoid brand dilution by staying within their markets of strength, extending their quality standards across all of their new products, and ensuring they still are operating with the customer in mind.
Updated October 7, 2022
Brand dilution is an effect of a company expanding into too many marketplaces with various brands.
The core company can experiment in new markets of interest this way. However, if new brands aren’t distanced from the core brand, a failed new product could severely damage reputations.
Additionally, extending the core brand name to too many products can generate overuse and confusion about what your brand really stands for. Companies won’t achieve success by spreading themselves thin across an abundance of brands.
Brand dilution happens, but if your company is smart about brand management, you can launch new products while keeping a clear image of your company’s brand.
Aim to follow these 3 simple guidelines on avoiding brand dilution and its negative consequences within your own business.
Hire a branding agency to assist with your company’s brand image.
Focus on Familiar Markets
The first rule on combating brand dilutions is to put your time and energy into brand extensions and products that make sense for your company.
This requires you to assess the fit between a new product and the core brand. Brand associations consistently stick in consumers’ minds with strong brands.
If the new product class is entirely different from anything your company has ever tried before, there’s a chance that customers will find your presence in that market confusing.
If your new brand isn’t a natural fit for your company, it can diminish the brand image and cause customer distrust.
For instance, Dr. Pepper launched a series of marinades and barbecue sauces in the early 2000s as a line extension. While the idea may have been fun internally, consumers did not respond well to the product line.
Widely, customers agreed that Dr. Pepper and A&W root beer flavors just weren’t meant for their steaks. While some outliers did enjoy the products, their release ended up confusing more consumers than it impressed.
This watered down and tarnished the brand. Instead of trusting the company for various high-quality soft drinks, people saw the Dr. Pepper brand on the opposite side of the grocery store. While the new product line didn’t make the company’s beverages any worse, it may have damaged their authority in the food and retail industry.
On the other hand, companies like Coca-Cola have succeeded in extending their brands within the soft drink market, avoiding brand damage. Drinks like Cherry Coke and Vanilla Coke have become mainstays in the industry because the extensions seemed sensible and familiar to customers.
A simple product type mismatch or failed brand extension can damage company reputations if customers don’t buy into creative product ideas. Consider bringing on a brand consultant to provide feedback on extending your branding.
Additional Reading: ‘Brand Assets: Tips for Small Businesses Growing a Brand’
Keep Quality Consistent Across All Products
One reason brand dilution is a threat to businesses is that it encourages companies to spread their resources thin. When strategically expanding a brand or offering new services, it’s essential to ensure quality is maintained across all product types. If something negative happens with the new product line, it will only reflect on the existing brand.
This is why experts encourage companies to refrain from extending their brand name to too many products. While diversification is beneficial and has the potential to appeal to new audiences, it will be a strain on your company to support too many different kinds of services.
For instance, Amazon is one of the most successful companies in the world. The company was wildly successful in the e-commerce and voice services spaces. However, when the company attempted to expand into the already competitive mobile phone market, Amazon experienced failure.
Another example of brand dilution is when Amazon introduced the Fire Phone following Amazon Fire Tablets, which performed well in the marketplace as a competitor to other tablets. However, customers cited that the Fire Phone didn’t offer the app support they expected from top-tier mobile companies.
This is sensible, given that established competitors like Apple and Android had been in the market for years, setting the standard for mobile experiences. The market was already too saturated and advanced to allow Amazon to make waves with a simple brand extension.
The Amazon Fire Phone failed to gain traction, and the company pivoted back to what it was known for with their classic, quality products. However, this instance of brand dilution cost the company time and money to bring the new product to market.
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Customer needs and preferences should be primary guiding factors in any business strategy. That doesn’t change within the realm of brand dilution.
Companies looking to expand their brand smartly must evaluate consumer perceptions of core brand characteristics and measure potential extensions against how similar they are to existing successful characteristics.
Keeping your company’s mission and values at the forefront of your work during brand extensions will help you avoid sending confusing messages to your customers with new products.
For instance, Coca-Cola has been through tons of brand extension efforts. Some have been more successful than others for the original brand. New Coke and Coca-Cola Life are two of the less successful extensions that resulted from brand dilution and differences of opinion between the core brand and its customers.
Source: Campaign Live
New Coke was an attempt to reinvigorate audiences following a main product formula change. Even though survey data shows that people preferred the new formula, customers simply did not want a new version of a product they already liked.
Similarly, the company created Coca-Cola Life in 2014 to appeal to people wanting a low-calorie, low-sugar alternative to the brand’s existing products. Coca-Cola may not have differentiated this product enough from more established options, such as Coke Zero or Diet Coke, to gain much traction.
By making the can green, the company distanced the product from the core brand, which may have deterred prospective customers from purchasing it in stores.
Customers should always come first, especially when companies are dreaming up new products. An idea might be interesting, but it may only dilute your brand if it doesn’t solve a problem for consumers, leading to a failed product.
Avoid Brand Dilution By Playing To Your Company Strengths
Companies should always consider the potential for brand dilution when expanding their brand into new markets. The adverse effects of brand dilution should encourage companies to focus on familiar markets, maintain consistent quality, and keep customer needs at the forefront of all business decisions.