The Danger of Dilution

Are you protecting against dilution?

How do you like your coffee?

Your answer may depend on where you come from. If you’re Italian there is really only one answer. It’s a single espresso.

If you’re American, your answer is probably a big bucket of coffee – perhaps venti (720ml) or trenta (920ml). That’s a serious amount of coffee. Or a serious amount of coffee flavoured hot water if you ask the Italians.

For most Italians, coffee is espresso. And espresso is something that you don’t play around with. We were in a workshop in Milan a couple of months ago. In the corner of the room, there was a flask with espresso in it. There was a selection of tea bags. There was a flask of hot water for the tea. Someone (of course, not Italian) poured a coffee. Then added hot water to it.

A look of mild horror spread across the Italian faces. You are in Italy. You don’t add hot water to your coffee in Italy. How can you dilute a work of art?

If you look up ‘dilution’ in the dictionary, you will find 2 definitions. The first is the scientific one “the action of making a liquid more dilute”. The second is the more general one “the action of making something weaker in force, content, or value”. This is the definition we’re most interested in – we’re not that bothered about how you drink your coffee.

So, why are we interested in this definition of dilution? Well, we think that dilution often happens in our industry. For instance, when we work on category strategy projects we always do stakeholder conversations. We ask people a few simple questions. What are the big challenges facing the category? What are the big opportunities? What actions would you focus on? We usually get very clear responses.

Then you get into the project. You encounter lots of research reports. Each additional report should give you more insight, but often it provides less. You get into workshops and people say “what about X?” or “what about Y?” or “what about Z?” It should add more to the thinking, but often it provides less.

We find that the more you add, the more you tend to dilute. What started out as an espresso risks becoming a venti (perhaps trenta) bucket of coffee flavoured hot water.

So, what type of activities do you need to protect from dilution?

Protect against range dilution. The temptation is always to add to range. The more range there is, the more choice there is for shoppers, right? Or the more space a brand gets, right? But, each addition to the range can start diluting. This is what Tesco found a few years ago. More listings helped their numbers in the short term, but it made the shopping experience poorer for shoppers over the longer term. There is a key question for any category range or any brand range…are additional SKUs genuinely giving the shopper more choice or are they diluting the existing range?

We also see range dilution in NPD launches. Often brands launch 4 or 5 variants. You can almost guarantee that one, perhaps two, of the variants will deliver the bulk of the sales. Yet, each SKU will get equal shelf space and equal marketing support. Why not focus on the winning products – the shot of espresso not the hot water?

Protect against proposition dilution. There are a few ways propositions can get diluted. For instance, they can get diluted over time. Every 2 years or so, there is a brand refresh and out pops a new positioning and a new tagline. Then 2 years later there is another brand refresh. Each time there is a refresh there is usually a dilution of the core proposition.

Propositions can also be diluted as you broaden your shopper target. A lot of brands start with a clear target shopper. This sets clear direction for the brand. But, then they worry that they are being too targeted. Are they missing out on some shoppers? Are they alienating some shoppers?   So, they try to appeal to a broader group of shoppers. So much so, that your shopper target ends up becoming ‘everyone’.

Protect against design dilution. Think about pack design. Good shopper based design is all about clarity. A key element of clarity is consistency. This can mean consistency over time. For instance, show someone a Heinz Beans can from 50 years ago and they will immediately recognise it as Heinz Beans. Show the current can to someone 50 years ago and they would immediately recognise it as Heinz Beans (not technically possible we know, but you get the point!). Is this true for other brands? Some, yes. Many, no.

It means consistency across the range. Does each product clearly signal it is a part of the brand? Does each product clearly signal which variant it is? The Cadbury Dairy Milk family is a great example of this. Visual assets are some of the strongest things a brand has. It’s their espresso. Don’t add hot water to it.

When we add things we think we are strengthening. But, the reality is that we are often diluting.

Less is more. Just like a great espresso.

Feel free to forward.  Have a great weekend and speak to you next week.

© 2020 by Insight Traction