I would associate the color purple with too much blood supply to the area. If the dog gets excited, then blood will rush to the region, and the area will turn pink, red, and finally purple if the blood keeps rushing in. Purple, however, is not a normal color for the area to be, so it is possible that the blood is rushing to the region, but has no way of going back out.
Another reason why your dog could have this problem is if there is internal bleeding (I would suspect this if the discoloration is not on the penis, but around it) which has resulted in blood collecting under the skin in the region, and thus the excess of blood has turned the area purple.
Regardless of which one of these two it is, you need to take your dog to the local vet to get a thorough test done and get proper treatment for this problem.
Another reason why your dog could have this problem is if there is internal bleeding (I would suspect this if the discoloration is not on the penis, but around it) which has resulted in blood collecting under the skin in the region, and thus the excess of blood has turned the area purple.
Regardless of which one of these two it is, you need to take your dog to the local vet to get a thorough test done and get proper treatment for this problem.