Some of the most enduring brands have managed a delicate balancing act: evolving while maintaining their ethos. As they expand their product line, they do so without compromising their core identity.
Do this right and you have a successful brand extension that captures a wider market and boosts revenue. However, lose equilibrium and you risk brand dilution, which can weaken your brand identity and topple the perception and value of your business.
Here’s how to spot and combat brand dilution so you can keep your company’s essence and positive reputation intact.
What is brand dilution?
Brand dilution is the weakening of a company’s brand identity and value, often due to poorly conceived product expansions or marketing decisions. It results in consumer confusion about what the brand stands for or represents in the market.
A brand with a strong identity typically conjures a clear image or set of associations, but brand dilution disrupts and muddles this image, making the brand less distinct and memorable.
What causes brand dilution?
- Launching products outside the core offering
- Venturing beyond areas of expertise
- Failing to maintain consistent brand messaging
- Licensing to unaligned third parties
- Expanding into new markets
Many instances of dilution begin as opportunities for businesses to stretch their wings and provide customers with more value. However, these well-intentioned attempts at offering additional options can sometimes backfire.
Here’s why:
Launching products outside the core offering
Expanding your products beyond your consumers’ expectations can put your brand in the danger zone. If customers associate your brand with high-quality outdoor gear, for instance, you could confuse and alienate your core audience if you were to introduce a line of formal business attire.
Brand extensions are typically more successful when there’s a perceived fit between the parent brand and the new product category. Without this logical connection, customers may struggle to reconcile the new products with their existing brand perceptions, weakening their overall brand image and eroding trust.
Venturing beyond areas of expertise
When your brand stretches too far beyond its core competencies, you risk disappointing customers. You might run an athletic wear brand that became popular for its high-quality shorts and tops; now, you’re considering entering the running shoe market. On paper, this move might appear sensible—your customers might even be requesting it. However, athletic apparel and footwear are fundamentally different product categories with unique challenges.
Without any footwear industry knowledge, you may not successfully navigate the different manufacturing processes and logistics. For example, clothing is lightweight, foldable, and cheap to ship; shoes are bulky, stacked in boxes, and pricey to get to customers. You may also face quality issues and delays or fall short of expectations.
As a result, you may have sizable financial implications with higher investments straining your resources and profit margins. You might diminish consumer confidence and damage your brand’s reputation across product lines.
Failing to maintain consistent brand messaging
Brand dilution doesn’t always stem from product-related issues; it can also come down to marketing—particularly when it comes to rebrands. Take Tropicana’s 2009 packaging redesign, which removed the iconic orange-with-straw imagery. This drastic change led to a 20% sales drop in just two months; a lack of brand recognition meant customers no longer connected with the brand.
Missteps, like this, in brand presentation can erode brand equity and confuse your loyal customer base, watering down your brand and handing your competitors a win.
Licensing to unaligned third parties
To expand your business, you might turn to licensing, which allows third parties to use your brand name on products or services. While this can increase brand recognition and revenue, it can hurt your company if the licensee fails to maintain the quality standards or brand values your company has set. The blame often falls on the third party, but your business bears the consequences of negative brand associations.
Expanding into new markets
The challenges of market expansion—whether you’re trying to capture new audience segments or expanding geographically to capture new markets—can be deceptively complex. A US-based company expanding its products to the Latin American market might make a cultural faux pas that damages the brand abroad with lingering effects domestically. A luxury brand introducing a budget line for wallet-tight Gen Z consumers might inadvertently alienate its high-budget customer base.
In severe cases, your expansion attempts might fail to capture new markets and erase years of carefully cultivated brand prestige, potentially causing long-term damage to your reputation.
Tips to prevent brand dilution
- Conduct thorough market research before expanding
- Carefully vet and align with distribution partners
- Stay true to your core brand identity and messaging
- Listen and adapt to customer feedback
While a brand extension can carry risks, it can also lead to success when you execute it thoughtfully. GymShark expanded from fitness apparel to workout accessories like water bottles, lifting straps, and barbell pads. Glossier launched in 2014 with just four products but has since grown into a comprehensive beauty brand.
Here are some strategies to help you venture beyond your flagship products but avoid brand dilution:
Conduct thorough market research before expanding
Your gut might tell you expanding your candle business into home fragrances is the right move, but it’s best to back that hunch with market research. Get to know the space you’re entering, and understand the nuances between your current products and the new ones you’re considering. Here are some questions about logistics, customer budgets, and competitors:
- How does the production process differ for the new product line compared to current offerings?
- What price points are customers willing to pay for products in this new category?
- Who are the major players in this market, and what sets them apart?
- What distribution channels work best for this type of product?
You can also tap into your existing customer base. Their perspectives on your brand, products, and needs are invaluable. Add customer surveys to your email newsletter. If possible, get a few customers in a room for a focus group session. Consider asking them these questions:
- How do you currently use our products in your daily life?
- What related products do you use from other brands?
- What would make you choose our brand over others for this new product category?
- How much would you be willing to spend on this type of product from us?
Armed with this research, you can move forward with more confidence, knowing you have data to support your instincts.
Carefully vet and align with distribution partners
Teaming up with the right distribution partners can expand your business—but only if you choose wisely. Take In-N-Out Burger, for instance. With around 400 locations, the fast food chain remains a family business, famously turning down franchising offers to avoid a diminished brand perception.
Whether you’re running a food joint or looking for a partner to take your brick-and-mortar shop into ecommerce, who you partner with can make or break your expansion plans. Here are some key qualities to consider in a partner:
- Values alignment. They should understand your core values and brand standards and be just as passionate about them as you are.
- Service-oriented mindset. Partners need to commit to doing right by your customers and maintaining the same quality you established for your brand.
- Proven track record. Look for a solid history of successful partnerships and growth.
- Financial stability. Make sure they’ve got the resources to support your expansion without cutting corners.
Stay true to your core brand identity and messaging
Regardless of how you expand, your brand message should be the thread that ties everything together. For example, Rothy’s started out making comfortable and stylish shoes from recycled plastic water bottles. In 2020, it expanded into bags, applying the same eco-friendly ethos and design principles to this new category. Throughout its expansion, Rothy’s maintained its brand message of sustainability. Its shoes and bags still come from recycled materials, and the brand continues to emphasize style and comfort.
If your brand is popular because of bold, colorful designs in clothing and you’re expanding into home décor, that vibrant aesthetic should be evident in your new product line and associated brand assets. If your brand offers luxurious self-care and you’re branching out from skin care to hair care, you should continue to sell products that provide an indulgent, pampering experience.
Standardize brand messaging to keep customers aligned with your brand values so they’re more willing to try your new offerings.
Listen and adapt to customer feedback
Sometimes your expansion will miss the mark. Instead of pressing forward, listen to your customers. If you’re a cosmetics brand launching a new line of serums, pay attention to what customers are saying on beauty forums. If you’re a home goods brand expanding into kitchenware, monitor the product reviews on your ecommerce site closely. This feedback should inform the size and scale of your expansion strategy.
In the event a brand expansion is unsuccessful, a strategic product rollback may be necessary. Sure, it’s a setback, but it doesn’t have to be a disaster. Be upfront with customers, listen to their feedback, and use what you learn to make more fitting brand decisions moving forward.
A hypothetical example of brand dilution
Imagine a quick-service restaurant chain that offers coffee and delicious donuts. Much of the brand’s success stems from its simple menu offering that is available nearly on demand. However, in recent years the fast food restaurant decided to branch out and sell pizza. While also a food that comes together quickly, it’s unusual for a coffeehouse to sell pizza, and it leaves consumers confused by the unreasonable brand extension.
As a result, the chain receives negative reviews online as it struggles to adjust to the new offering, causing delays for customers who aren’t there for a pie. Consumers call out the inconsistent service and quality and question why they tried the new item when they could have just visited a place that specializes in pizza. This kind of reaction can harm a brand’s reputation and make it so a customer is hesitant to return for new or core products.
Brand dilution FAQ
What are the consequences of brand dilution?
Brand dilution can lead to customer confusion, decreased loyalty, and a drop in sales and market share.
How do you know if your brand has been diluted?
Signs of brand dilution include declining customer engagement, negative feedback on new offerings, and a noticeable shift in public perception of your brand identity. You can measure this through social media sentiment analysis, customer surveys, and changes in brand association studies.
How do you fix brand dilution?
To fix brand dilution, refocus on your core offerings and values while gradually phasing out inconsistent products or marketing messaging.
