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Brand dilution is the weakening of a brand though its overuse. This frequently happens as a result of ill-judged brand extension. Price cutting that increases volumes but moves a brand down-market can be similarly damage a brand.
Brand dilution is an ever present risk for companies that rely on a strong brand for high margins. A company that owns a strong brand obviously wants to leverage it to sell as much as possible, but the very strategies used to purse this end often also bring the danger of brand dilution.
Investors need to look at strategies designed to exploit brands by extension (or through otherwise increasing the market served by a brand) in order to be warned of dangers of brand dilution.
A company in such a situation needs to uncover where its problems really lie, identify the root causes and then create a strategy to solve the issues in order to win back customer loyalty and regain market share.
‘The way we do things around here’
Who am I?
Human behaviour and people risk
What should the company do next?
A company’s culture won’t change overnight, but needs to start somewhere and in Tesco’s case, there is no time to wait.
I fully agree with & endorse Mr. Mohammed's excellent submission.
Thanx for the invitation
Thanks for the invitation.
I'll let the answer for seniors.
The risk of over-extension is brand dilution where the brand loses its brand associations with a market segment, product area, or quality, price or cachet
Brand dilution is the weakening of a brand though its overuse. This frequently happens as a result of ill-judged brand extension. Price cutting that increases volumes but moves a brand down-market can be similarly damage a brand.
Brand dilution is an ever present risk for companies that rely on a strong brand for high margins. A company that owns a strong brand obviously wants to leverage it to sell as much as possible, but the very strategies used to purse this end often also bring the danger of brand dilution.
Investors need to look at strategies designed to exploit brands by extension (or through otherwise increasing the market served by a brand) in order to be warned of dangers of brand dilution.
Restoring trust won’t be easy. Some product categories are more intimate than others. From a branding perspective, a car defines your identity publicly (you’re using it to signal to others who you are) and literally protects you and your body. If an envelope company cheated this way, you’d denounce their ethics. When Volkswagen does it, many of their ardent fans felt viscerally betrayed. Muller has a difficult – but not impossible – task ahead of him. Here are three things he needs to do this week to stop the spiral and get the company back on track.
Restore strategies are as follows:
1. Start by setting new rules. Articulate “new rules of brand” that set out in a clear manifesto form what you will do and won’t do going forward. If necessary, revisit the values and behaviors that have condoned how your brand has been managed in the past.
2. Look for quick wins. What are the immediate things that you can do to turn around how your brand is managed? If you’re making claims you can’t back up, for example, either alter the claims to make them realistic or seek further substantiation. Quick wins do two things. They establish momentum, and they signal that you are serious about the changing of the guard.
3. Change what you reward. Oftentimes, brands are managed in ways that directly mirror the priorities and attitudes that are prized internally. By shifting the emphasis to integrity for example (not just what happens, but how), you can motivate people to rethink the actions they will accept from themselves and from those around them.
4. Monitor/feed back results. Your team needs to see that these changes are worth pursuing. Establish clear metrics to monitor the moral health of your brand and loop everyone in on the results.
5. Take your commitments public. You don’t have to talk about why you’ve changed or what was wrong, but by going public with what you will accept from now on, you can make the culture accountable not just aware.
6. Hold your competitors accountable to new standards. If the ways you were working are widespread across your industry, get your own house in order and then call out your competitors. Make it clear why the ways that were cannot be the ways going forward. Take the moral high ground.
This level and scope of change is never easy – but far better if you undertake such change while you are in control and away from the public gaze. Otherwise there’s a very good chance you will find yourself trying to make these repairs under the unerring scrutiny of the media and with your trust status in serious review.
