Consumers create a social statement when utilizing luxury brands. Hence, luxury brands have to remain in front from the social trends to fulfill this consumer need. However, with mass-market brands progressively upgrading the look of them, proper response and method of marketing their goods, many brands have found it tough to stand above those.
As a result of the mass-market movement, many brands are diversifying into unrelated areas. The thought of brand extension and also at occasions irrelevant diversification (i.e. leaving one product category to a different one) is especially delicate problem for luxury brands. This really is mainly due to the strong brand origin and brand image associations consumer have using these brands.
Many luxury brands have diversified effectively however however, many have battled a great deal and for that reason this problem should be worked with many different caution. For instance, Prada’s change from footwear to handbags after which into ready-to-put on market labored each time. Gucci also is at exactly the same category. However, it required a long time for that first Bulgari watch to become success. In situation of smaller sized and boutique luxury brands, because of financial and marketing resource limitations, the problem of brand name extension looks very lucrative but could be a bottleneck very rapidly. For instance, in 2005, Mattel made the decision to produce Barbie dolls-themed clothes and accessories and involved designers for example Tarina Tarantino and Anna Sui to interpret Barbie’s wardrobe for grownups. Strangely enough, it had been recommended among the worst brand extensions of the season by BusinessWeek. Another illustration of this really is Audi in US market. Audi’s sudden acceleration issue and evokes thirty years ago still haunts the company.
My suggestion to brand managers of those brands will be highly careful of diversification. There are lots of other routes recommended by marketing experts which could be taken into consideration. For instance, Ansoff’s theoretical framework associated with product and market matrix might help brand managers in considering other ways that brands could be taken further.
Within the quadrant 1 in which a company desires to expand itself into its present local market, managers could concentrate on various ‘market penetration’ strategies (a) growing the regularity of usage (b) growing the amount used and (c) identifying new use of the merchandise. I am certain the choices a and b are very achievable in situation on most luxury brands that are used from time to time only by consumers as my studies have proven. This by itself can result in greater share of the market and more powerful customer loyalty.
The quadrant 2 which concentrates on developing new items for that current markets does not necessarily mean diversification but rather examines ‘product development’ strategies. Within this situation, luxury brands can concentrate on product enhancements (highlight them in communications carefully) and line extensions (after careful researching the market instead of an insiders only brainstorming).
The quadrant 3 concentrates on ‘market development’ strategies. Within this situation, brands should concentrate on (a) geographic expansion and (b) target new segments. For all these options, specific proper initiatives are needed. For example, for geographic expansion, cultural closeness and market understanding really are a must. Similarly, when targeting new segments, it might be desirable to recognize individuals peripheral groups which go ahead and take current brand consumers his or her aspirational leaders.