Extensions1

A leading luxury brand understands that it is an icon. It stands beyond its competitors and transcends categories by creating a clear space around itself that makes substitution an unacceptable compromise. For instance, if a Hermes Birkin Bag is not available, consumers will often feel it is better to delay the purchase or make a completely alternative purchase, than compromise on brand. While this shows the strength of the brand, it may prove to be an uncomfortable strength in 2009 if purchases prove to easy to postpone. Managing the architecture of a luxury brand requires discipline and precision. There is always the temptation to extend the brand, providing access to broader market segments to maximize revenues. But when luxury brands move in this direction, they run the risk of compromising their long-term value. Take the case of Mont Blanc. In an attempt to be a "lifestyle" brand, Mont Blanc entered into watches and jewelry - categories where it had less expertise, heritage,chanel unisex watches, or history of craftsmanship. The diversification was a stretch. Although Mont Blanc makes a good pen, one needs to consider more carefully if its craftsmanship means it could make a watch on par with the established leaders. Similarly, when Dolce & Gabbana, Versace, and Armani attempted to reach a broad market segment by creating less expensive sub-brands, they sacrificed their high-end brands' long-term value. With every other person on the street clad in D&G, Versace Jeans Couture, and Armani Exchange t-shirts, the brands risk no longer appealing to their affluent audience, and may lose appeal among the broader segment as well. No longer dictating the trends, they have to cater to the consumers' whims. If they lose the interest of the affluent consumer, these brands are on a continuous spiral, forced to target an increasingly down-market audience. However, some extensions into new market segments can enhance long-term brand value. Chanel and Louis Vuitton's move into watches are two examples that work because their products display the same quality and exclusivity as their brands. Chanel's creation of the J12 watch brand has been successful because it is entirely separate from the Chanel line, though just as distinct. Likewise, when Karl Lagerfeld, designer for the House of Chanel,replica chanel watches, paired with H&M on a clothing line targeting a fast market audience,chanel ladies watches, the product was so distinct and different from the premium Chanel brand that the bold move worked. Not only did the decision display the brand's characteristic confidence and certainty, but the designs also became iconic in their own right and created demand among a younger, untapped market. Another example is when luxury brands expand geographically. In contrast to catering to a broader audience, this expansion targets a new cultural elite. Louis Vuitton, in particular, has seen success in its expansion to Japan, where 44 percent of Japanese women own a Louis Vuitton bag. As the first luxury brand to consider Japan an important market, Louis Vuitton has ensured its success in the country and set a trend among other luxury brands. Still, such expansion comes with its own risks. The popularity of the Vuitton bag in Japan has sacrificed some of the brand's desirability. Its success risks becoming its own undoing. Ultimately, any move to expand needs careful management. Spread the brand too overtly, and the brand risks devaluing itself. Meanwhile, spread the brand too conservatively, and it goes unnoticed, delivering no incremental value.