Brand Extensions

The assignment for Managing Luxury brands was inventing a brand extension and saying why it would work.
Before I post a summary on my finished project, I am going to give an overview on how Luxury brands can extend.

There are 2 possible ways of extending a brand.
The first way is extending following a verticall model, or the pyramid model

This model describes how brands can go upwards or downwards, concerning their brand stretching.
Important for a brand is that they realize that any movement on this pyramid will affect the image towards the 'original' brand.



A good example to apply towards this pyramid extension is Armani. Armani started as a Luxury Brand, with a Couture line (the Griffe) but during the years they have let themselves slip down the Pyramid, introducing Armani Jeans (Upper-Range) and Armani Exchange ( the Brand). This have had an crucial impact on the image of the brand. It went from an Italian Luxury Brand image, towards an High-street brand image. Eventually, his profit has dropped and there will be a possibility of Armani getting into trouble.

The other way of extending, is using a horizontal model. This model can be best explained, using the Ansoff Growth Model

This model focusses more on other products or markets, instead of downgrading or upgrading.

There are 4 different possibilities in Ansoff's matrix.







Market Penetration: Using existing models in existing markets. The goal of this growth strategy is being aggressive in the existing markets by trying to get more market share, trying to sell more and make more profit.

Market Development: Using existing products in new markets. The best example I can give you are nose strips. This was originally intended to stop snoring. Now, new markets did open: Sportsmen are using it as well. ( Just a simple example)

Product Development: Using new products in existing markets. This is what Apple did when launching their Ipad. They launched a new product, on the markets they already operate in.





Diversification: Launching new products on new, and mostly unknown markets. This is the most risky extension a company can do. At this moment, I do not have a good example of diversification.



What I will do with Tiffany, is a Product Development. More to come.

Later

Vic