Brand Dilution: When Do New Brands Hurt Existing Brands?

Abstract

Potential for trademark dilution occurs when a new brand introduces itself with an identical or substantially similar mark to that of an existing brand. Currently, there is neither a clear standard for legal proof of dilution nor widely accepted measures for managerial use. Using a shared-brand-network model, the authors use three different but conceptually related measurement methodologies (response latency, aided recall, and simulated choice) across five experiments to examine “blurring” dilution effects. The results suggest that when junior brands operate in similar categories and position on similar attributes, there is no immediate threat of blurring dilution. However, if the junior brand chooses to position on dissimilar attributes in a similar category, dilution of attribute associations is likely. When the junior brand operates in dissimilar categories, there is a threat of blurring dilution for both category and attribute associations. The final two studies demonstrate that dilution of junior brands (i.e., operating in dissimilar categories positioned on dissimilar attributes) can suppress consideration and choice probabilities for the senior brand and that this effect may extend over a period of time.