Putting your brand in jeopardy.

How easily can a company dilute its brand? For the opportunity to bring in some more cash, can a CEO decide that it’s worth the risk? Our colleague at Placemaking Group, John Nunes, thinks through the situation at Fender Guitars with their Squier line. (BTW, John is an accomplished professional guitarist so this is a subject close to his heart.)One of the many problems facing brands is the temptation to sell a less expensive version of a product to capture another market section. This can be risky and often leads to the weakening of a quality brand.

Fender sells low – end models of guitars with the same names as the higher – end models. They call their less expensive instruments the “Squier” line, but it still says Fender Stratocaster on the headstock of the guitar. What this means is that a Fender Stratocaster or Telecaster, two of the most used and revered guitars of the last forty years, are now diminished in reputation by the flood of low-end “copies” made by the very same manufacturer who makes the real instruments.

Is this good for the Fender brand? To me, no. They’re selling a piece of their brand reputation for $200 so they can dominate the low end of the market. But, they’re also flooding the market with cheap versions of their great guitars. You can buy a used Fender Squier guitar for $100; is this what Fender wants for its brand reputation?

Is it worth it to degrade the brand by selling cheap merchandise with the same name as the quality stuff? Probably not. It may be a good short term move to trade on the reputation of a good brand by selling cheap goods, but the long term effect will likely bring all of the brand’s products down in value and reputation.

What other brand name can you think of which has diminished itself by targeting the low end of the market?

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