Brands that have built high Brand Value have exciting opportunities for extension, creating new platforms for dramatic improvements in bottom-line profitability.
Brand extension functions and succeeds with low risk on the basis of leveraging client loyalty and identification, while maintaining an unswerving eye toward the brand’s target demographic and toward the brand’s differentiated position.
Brand extension, in simple terms, is expanding the offer in view of the needs of the existing targeted clients. Practically, it is not at all simple, but fraught with pitfalls unless sharp discipline is maintained relative to target and position.
The Hermes entire business model (since 1837) has been based on brand extension. Veuve Clicquot Ponsardin recently expanded into hospitality. They did this carefully, with a view toward target and position. Its team of strategists carefully collaborated with the design team to ensure that the position was reflected in every detail of the design implementation. Bvlgari is also expanding into hospitality.
Brand growth and brand extension must be viewed within the framework of risk of eroding or damaging the existing position (and thus the overall Brand Value). Any decision that extends or changes the position, target or offer details must be carefully considered so that the base business is not damaged and loyal customers are not alienated.