What is Brand Stretching Strategy and how it is used in Luxury Brands?

What is Brand Stretching?

Until the beginning of the 1900s, luxury flourished in the world, segregated and structured by regulated professions, and this structure lasted until the “Belle Epoque,” when Hermes was a saddler and Vuitton was a luggage and trunk maker. However, following World War I, the major luxury houses started producing or rebranding items they had not previously been associated with. One of the leaders who first truly structured and executed the brand stretching strategy was Coco Chanel, who launched Chanel No. 5 perfume.

"Brand stretching can be defined as a strategy used by the luxury housed to expand their product/service portfolio beyond their core expertise, leveraging their brand name to reach a broader audience, increase revenue, and adapt to changing societal needs without becoming outdated."

Advantages of Brand Stretching

This strategy became extremely crucial when the luxury market began to democratise, as it gave more people access to the luxury products without the products themselves seeking to become more accessible, except by means of extension within their own original trade.
Additionally, as luxury houses evolved into "brands," they actively sought to leverage their fame.
Most significantly, brand stretching enabled luxury houses to expand rapidly, breaking free from the constraints of organic growth and avoiding being confined by the limitations of their traditional industries.
Stretching doesn't rely solely on wishful thinking but rather adheres to specific rules: each brand's know-how, a domain of expertise, establishes a legitimate zone for its expansion and restricts it to variations that appear to originate from the same expertise.

Risks of Brand Stretching

Even though brand stretching is one of the key methods of expansion for many major luxury houses, it also comes with its demerits, which the luxury houses should keep in check to avoid losing their credibility. 

The risk associated with brand stretching are:

1. The risk of lowering the brand’s creativity: This risk arises when a brand extends itself too far beyond its original identity, potentially diluting its unique creative essence. Consequently, this can lead to a perception that the brand is less innovative or authentic, ultimately harming its reputation in the luxury market.

2. There is a risk of losing control over the brand due to Licensees:  The chance of losing control of the brand is related to how the brand is organised internally. The licence needs to be manageable. Licensees are separate businesses whose main goal is not to build the brand or put money into its long-term growth.

3. Relocating the manufacturing center poses a significant risk to maintaining the quality standards: If the manufacturing center moves, it may be challenging to uphold the high standards of craftsmanship that luxury consumers expect. This shift could further contribute to a decline in brand perception and customer loyalty.

4. The risk associated with stretching of distribution: The brand may dilute its image by making its products more accessible, leading to a loss of exclusivity. As a result, the allure that originally attracted customers could diminish, potentially causing them to seek alternatives that align better with their expectations of luxury. 

5. The risk of fragmented advertising: The potential fragmentation of advertising efforts may dilute the brand's message and weaken its overall impact in the market. This inconsistency could confuse consumers and diminish their emotional connection to the brand, ultimately harming its brand image.

6. The risk of providing qualitative and consistent service: If the brand fails to deliver a consistently high-quality experience, customers may feel disappointed and less inclined to remain loyal. This can lead to negative perceptions and a decline in the brand's overall standing in the competitive landscape.

Key Parameters of Brand Stretching

Apart from their know-how and territory of competence, luxury houses classify their stretching based on three parameters, and they are as follows:

1. Price: In brand stretching, the products or categories being expanded are characterized by difference in their price points. This strategy helps brands to attract new clients through accessible price ranges. 

2. Distance from the original core product: For example, Yamaha sells both motorcycles and musical instruments like pianos. These two products don't have a clear link, but the mastery and precision used to make them can be seen as a metaphor for each other.

3. Maintenance of the Level of Luxury: Maintaining the Level of Luxury involves upholding the image and reputation of the primary brand while launching a new range of products or services. For example, Bottega Venetta

Models of Extension

To incorporate these parameters, luxury houses follow two models of extension: the vertical model, also known as the pyramid model, and the horizontal model, also known as the galaxy model. Luxury houses integrate these models into their business strategies to develop a sound and well- structured business model that  enables them to meet the challenges that are associated with reaching profitability.

Conclusion

In conclusion, brand stretching is essential for luxury brands seeking to adapt to changing market dynamics and consumer preferences. By leveraging models such as vertical and horizontal extension, these brands can effectively diversify their offerings while maintaining their prestigious image. The successful implementation of brand stretching not only helps in attracting a broader audience but also reinforces the brand's legacy and relevance in the competitive luxury landscape. As luxury houses continue to innovate and evolve, understanding and applying these extension strategies will be essential in sustaining growth and ensuring long-term success.

Subscribe to the blog now to delve deeper into genre of fashion, gain further insights into the luxury fashion world, and stay informed about the latest trends.

Feel free to leave a comment below sharing your thoughts on the significance of brand stretching in the luxury industry.

Reference:

The Luxury Strategy: Break the rules of marketing to build luxury brands by J.N. Kapferer and V. Bastien