Brand extensions are always tempting, marketers, and in the case of luxury brands in the stimulus is particularly strong. While the path to success luxury brand can partially paved with extensions, there are more examples of brand extension disasters that litter the path. Brand extensions continue to be among the most researched and studied phenomena in marketing. When it comes to luxury brands, but the factors that lead to a successful enlargement have far less attention. In this art … Read more »

Brand extensions are always tempting, marketers, and in the case of luxury brands in the stimulus is particularly strong. While the path to success luxury brand can partially paved with extensions, there are more examples of brand extension disasters that litter the path. Brand extensions continue to be among the most researched and studied phenomena in marketing. When it comes to luxury brands, but the factors that lead to a successful enlargement have far less attention. In this article we consider the notion of perceived degree of premium brand as a function of its category, and what we as a neighborhood between the extent of its product categories. Based on our research, which found that a luxury brand is perceived premium degree a different impact on profitability depending on whether or not the brand is distributed over adjacent product categories, we show when luxury brand extensions work and when they fail. Perhaps most importantly, we here introduce the premium adjacency matrix as a tool for luxury brand managers in the formulation of strategies to consider expansion.
«Hide

from
Mergen Reddy,
Nic Terblanche,
Leyland Pitt,
Michael Parent
Source: Business Horizons
11 pages.
Release Date: 15, March 2009. Prod #: BH322-PDF-ENG
How Far Can Luxury Brands trip? Avoid the Pitfalls of Luxury Brand Extension HBR case solution