Increasing standardisation, rising competition and decreasing efficacy of distribution have put various consumer-facing brands at risk of dilution, according to a report by Kotak Institutional Equities. In such a scenario, establishing brand longevity through differentiation has become key. Geetika Srivastava asks experts how brands can insulate themselves from the risk of equity erosion.
Balance business expansion with brand preservation
Rahul Gupta, founder & chief creative officer, By Design (formerly IBD)
In an ever-evolving business world, brand equity is a concept that underpins any company’s success. It represents the intangible value, perception, and trust associated with a brand. A recent report by Kotak Securities suggests that brand equity is increasingly being diluted. To understand this, one needs to understand the complexities surrounding brand equity, examining both its merits and risks.
For starters, it’s imperative to discuss why brand equity is essential. Brand equity encompasses a wide range of factors, like brand recognition, customer loyalty, and perceived quality. It is an asset that can provide a competitive advantage. Building brand equity requires consistent investment in marketing, product development, and customer experience.
The report says excessive focus on brand equity can inadvertently lead to brand dilution. When companies stretch their brand too thin by diversifying into unrelated markets or excessively extending their product lines, they risk diluting the original brand’s core values and diluting customer loyalty. This can erode the brand’s differentiation and weaken its overall position in the market.
While the concerns of brand dilution should not be disregarded, it is important to recognise that brand equity, when managed prudently, remains a powerful tool for growth. Striking the right balance between expansion and preservation is crucial. Companies must carefully evaluate opportunities to extend their brand, ensuring that new ventures align with their core values.
Moreover, to allay the risks of brand dilution, companies must maintain a focus on protecting their brand’s integrity through management strategies, including regular market research and monitoring customer feedback.
Rather than perceiving brand equity as a direct cause of brand dilution, it is more accurate to view it as a valuable asset that requires strategic management. It is important to acknowledge that brand equity, when cultivated wisely, remains an indispensable asset and only poses risks if not managed thoughtfully.
Marry cool, shiny tech with big ideas
Carlos Limseob Chung, MD, Cheil India
In today’s era of decreasing attention spans, accentuated by content overload, brands face a challenge in retaining a loyal consumer base. Democratisation of platforms and lowering of entry barriers have seen a mushrooming of upstart brands, looking to transform every category. Most brands within a category are vying for the same consumer’s share of attention & share of wallet, using the same platforms and influencers. This herd mentality is increasingly eroding brand value & impacting loyalty (for example, data suggests Gen Z is the least brand-loyal generation so far). And with many marketers focussed on short-term targets, it finally boils down to tactics like deals & discounts.
But it is possible to break out of this rut by going back to the original reason for branding — differentiation. The question for every marketer today is, “How can my brand stand out in this digital clutter and leave an impression?”
That’s why, how consumers experience the brand is key. Brand experience is the holistic, lasting impression a consumer has after any brand interaction. Features can be recreated, competition products can look & feel similar. But what sets the most admired brands apart, is how they bring their promise to life for the consumer to touch, feel and see in an innovative way.
And the way to do it is by marrying a powerful brand idea with technology that amazes, inspires or entertains the consumer. In today’s world, technology underpins every aspect of consumer behaviour. With new tech catching the consumers’ imagination every day, it becomes imperative to leverage these tools to excite them and create brand preference.
The next decade will belong to brands who manage to bring alive their promise through consumer experiences that marry “cool, shiny” tech with an idea that the consumer will sit up and take notice of.
Underestimate customer loyalty at your own peril
Aditi Mishra, CEO, Lodestar UM
In an increasingly competitive marketplace, brand dilution has become a pressing concern for businesses, and addressing this challenge requires a multi-faceted approach that combines differentiation, product superiority, and customer loyalty. While differentiation certainly holds immense significance, the enduring power of brand equity cannot be dismissed. Building robust brand equity nurtures consumer trust and loyalty, providing brands with a crucial competitive advantage. Establishing a stellar reputation, consistently delivering on promises, and cultivating strong relationships with customers are key elements that contribute to the development of brand equity.
Additionally, brands must consistently focus on creating and innovating exceptional experiences. Despite the challenges posed by apparent product parity, relative experiences with a product and all that surrounds it play a pivotal role in establishing brand superiority. Investing in research to enhance product quality can continue to differentiate a brand from its competitors. A superior product experience can capture the attention and loyalty of both casual consumers and avid enthusiasts.
Moreover, customer loyalty should not be underestimated. Dedicated brand loyalists can be powerful advocates, driving awareness and attracting new customers. Nurturing customer loyalty through personalised experiences, rewards programmes, and exceptional customer service can mitigate brand dilution risks.
In the pursuit to combat brand dilution, businesses should strengthen their brand narratives and communicate their unique value propositions effectively. Captivating storytelling allows brands to stand out, resonate emotionally with consumers, and differentiate themselves. Media agencies, with their expertise in mapping sharp audience cohorts and targeting them strategically, play a pivotal role in crafting a stronger consumer connect.
Moving forward, we are likely to see greater shifts with newer products and evolving usage patterns. Brands will need to evolve in this rapidly changing consumerscape with agility, leveraging a comprehensive approach that combines differentiation in terms of both product superiority and customer engagement to drive loyalty.