Brand dilution is the weakening of a brand through its overuse. Brand dilution is usually a result of brand extension gone badly. If a brand expands into so many new territories that customers start getting confused, the parent brand, or the original brand, will be diluted. If the brand is extended so far as to render itself irrelevant in a certain category, that hurts the original brand.
Here’s an example. Let’s say a headache medicine in pill form was somehow able to exist in liquid form. So now the brand is in pill and liquid form. Great brand extension. Then it’s discovered that the headache pill also helps with muscle aches, so it’s branded as a muscle-ache relief medication as well as a headache relief medication. Well, then is the liquid form also a muscle-ache relief medication or just the pill form? And what if the liquid version doesn’t work as well as the pill version? Then the brand has been diluted – it’s been weakened because the brand extension didn’t work.
Another worry about brand dilution is that money that would have gone toward strengthening the original brand is now spread among three (or however many) brand products. Instead of the original brand growing its customer base, 2/3 of the brand’s marketing money is going toward marketing the other brand products – the extension products. So that means the original brand isn’t being cultivated and nurtured and instead might get tossed onto the backburner. This translates into a loss of sales for the original brand. Not good.
Of course, some brand extensions work well and the company ends up making more money. That’s great. Of course, for companies like Starbucks, that’s not the case.
In a memo written by Howard Schultz, chairman of Starbucks, on Valentine’s Day 2007, he warned the top executives of diluting the Starbucks brand. Even if you don’t drink coffee (as I don’t), I’m sure you can probably think of at least five Starbucks stores in your area. I know I can think of at least that many I pass when I commute to work. Anyway, Schultz told execs that expanding the company’s stores to 13,000 is “watering down” the brand.
Schultz wrote, “Some people even call our stores sterile, cookie cutter, no longer reflecting the passion our partners feel about coffee.” Yep, I’d agree with that Mr. Schultz. I’ve only been in a few Starbucks stores because they seem to be connected to my bank, which is odd in itself – sharing a lobby with a bank? – but they all look and smell the same to me. Some might say that’s good branding – people get the same experience from Starbucks they walk into.
But the whole point of Starbucks when it started was to feel like a warm neighborhood store, not a mass produced chain store. And now, Consumer Reports has reported that McDonald’s has better tasting coffee and Starbucks shares dropped 7.5 percent last year. Not a good brand extension indeed.
So, if you’re thinking about expanding your brand, great! Just make sure you don’t expand too much or too quickly. Don’t put your original brand in jeopardy just for some brand extensions that you don’t even know will work.
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