How far can luxury brands travel: avoiding the pitfalls of luxury brand extension

Article Type: Abstracts From: Strategic Direction, Volume 26, Issue 1

Reddy M., Terblanche N., Pitt L., Parent M.Business Horizons (USA)March-April 2009Vol. 52 No. 2Start page: 187No. of pages: 11

Purpose – to explore the phenomena of brand extensions, and the notion of perceived premium degree of the brand as a function of its category Design/methodology/approach – reviews previous research into the brand extensions, how well they travel, brand profitability and market share. Describes a study of 150 luxury brands, using a decade’s worth of financial data and the views of 300 executives, aimed at establishing whether degree premium fully explains brand profitability. Considers the issue of brand adjacency as the extent to which a particular brand extension is consistent with the values embodied by the core brand, and the phenomenon of the mainstreaming of affluence, whereby consumers expect more than what they deserve. Develops a premium adjacency matrix whereby any luxury brand can be mapped onto one of four quadrants: aspiring starts; star brands; dying stars; and waning star. Expands on the implications of each of these positions for a luxury brand’s profit potential.Article type: Research paperISSN: 0007-6813Reference: 38AS332

Keywords: Brand extensions, Brands, Marketing strategy