Brand extensions are always tempting for marketers, and in the case of luxury brands appeal particularly strongly. While the road to success can be a luxury brand extensions partly paved, there are examples of brand extension disasters that litter the path. Brand extensions continue to be among the most researched and studied the phenomenon in marketing. When it comes to luxury brands, however, the factors that lead to a successful expansion received far less attention. In this paper we consider the notion of the degree of perceived premium brand, depending on the category, and what we call the degree of contiguity between product categories. Based on our study, which showed that the luxury brand is perceived premium degree has a different impact on the profitability, depending on whether or not the brand is distributed to related product categories, we demonstrate that enlargement luxury brand work, and when they fail. Perhaps most importantly, we are here to introduce premium adjacency matrix as a tool for managers of the luxury brand to consider in developing a strategy of expansion. "Hide
by Mergen Reddy, Nic Terblanche, Leyland Pitt and Michael Parent Source: Business Horizons 11 pages. Publication Date: March 15, 2009. Prod. #: BH322-PDF-ENG
Related Case Solutions & Analyses:
Wi-LAN
Cramer Electronics Inc.
Texas Instruments: Time Products Division
Use of Cases in Management Education
Note on Organization Design
Introduction to the Case Method
Enzone Petroleum Corp.
Rana Plaza: Workplace Safety in Bangladesh
The Eleganzia Group
Automotive Quality Reputation: Hard to Achieve, Hard to Lose, Still Harder to Win Back
