Impact of Brand Extensions

Impact of flaw Extensions submission differentiate propagations argon a bit like having kids just because you derriere doesnt mean you should. But if the conditions are right, and everything is thoroughly prepared and though through and through, thus it dismiss be terrifically rewarding Rory Sutherland, Creative Director, Ogilvy One, as cited in (Miller Muir, 2004). Initially, tarnish annexes begun in the prodigality goods industry, when the french haute couture fashion houses started diversifying to jewelry, watches, cosmetics and accessories. In 1921, French opulence fashion house Chanel launched its first perfume, Chanel n5 and it frame until now one of the best-selling perfume in the world, enhancing the lavishness character of the carry.In the last few years, many luxury fashion houses take a shit launched clean ventures in order to expand their recognizability outside their usual r severally of activities i.e., clothing, cosmetics and accessories. This process initiated by evolving to new spaces such as hotels, bars, or consistaurants where throng can experience a special mood often in strict relationship with the philosophy of the brand. With the success of many luxury brands entering the hospitality industry such as Bulgari, Versace, this question paper seeks to psychoanalyze Guccis brand extension and advise the head of directors on the jolts of extending to the hospitality business. Founded in the 1920s, Gucci has become one of the worlds leading luxury fashion brands. With a celebrated reputation for design, whole step and Italian traditional expertise, the brand offers a immense range of products (clothing, handbags, shoes, timepieces, jewelry and skis). Gucci covers all aspects of product launching, from designing, through manufacturing, and distribution. (Kering, 2013)In the discipline of the arguments for and against, the researcher go out examine brands that conduct intended this variegation precedent to get an indication of the upholds of undertaking such a project. The key schema utilise to examine the outlets of progressing the Gucci collection into the hospitality industry is the denounce extension schema (Aaker Keller, 1990, pp. 27-41) that the researcher depart enhance by applying the compartmentalisation system (Smith Medin, 1981). Further much, previous examples of failure or success of brand diversification pull up stakes be discussed as in essential to avoid pitfalls and has an influence on the decision. Among these examples, the Golden Arch Hotel, case of McDonalds extends to the hospitality industry.In order to violate conduct the research, the major first step is to clearly define the research aims and objectives. The Aim is what the paper wants to achieve depending on the business question, season the Objectives tell apart how the aim is going to be achieved (Manchester Metropolitan University, 2008). The next section allow revolve around on both parts so as to cast the structure and serve as a guiding line for the rest of this essay.Aim ObjectivesAimThis research project aims to analyze whether a luxury brand such as the Gucci host, should extend their products and services into the hotel industry in order to follow the path previously experienced by the Armani group in Dubai.ObjectivesTo determine if the brand extension strategy successively mark offs the group if it is compatible with the vegetable marrow brand and company goals, as diversification can enable a business to access new revenue streams.What is patsy extension theory?The conceptual modelDoes it apply to the Gucci Group?What are the cost of such a process?What are the benefits and limitations?What are the competitors? (SWOT Analysis)To critically review if the Italian lifestyle and the prestige of Italian fashion industry constitute important elements of cultural heritage that can be productively employed in the fields of leisure and hospitality merchandise.Doe s the brand virtue apply to the Hospitality Industry?What variables influence consumers perceptions about the swallow upability of brand extensions?How similarity and consumer innovativeness may affect the brand?To analyze whether brand extension strategy is a proper tool to keep the brand up to date whilst the disposal adapt to market changes.Does extending to the hospitality industry peril making it lose its relevance and appeal?Is the brand strong overflowing to guarantee successful brand extension? (Case study of McDonalds adventure in the hotel industry)Will it improve overall brand image or impose on _or_ oppress brand identity?Literature reviewBrand Extension schemeThe original definition of a brand, as cited by Aaker, is a distinguishing advert and/or symbol (such as a logo, motto, package design or trademark) intended to identify the goods or services of one seller, and to differentiate those goods or services from those of the competition (Aaker Keller, 1990). A b rand extension is defined when a company uses an existing brand name to introduce a new product (Vukasovic, 2012), as well as, when an existing brand is combined with a new brand when introducing a new product (Keller, 2008). Consumer Behavior Seminar, regrouping a number of contributors, first introduced brand extension in 1987. They were trying to bring in how consumers extend prior associations about a companys brands to new products offered by the equal firm (Boush, et al., 1987). Nowadays, brand extensions might be one of the most researched and equaling areas of marketing (Elliott Percy, 2007).Brand extension is considered to be the most attractive marketing strategy indeed, it enables to reduce the launching cost of introducing new products by compensating with the consumers perception and cognizance of the mention brand (Lassar, Mittal, S scathea, 1995). Therefore, a successful brand extension will allow manufacturers to take advantage from this by gaining a higher v iew in the consumers mind and hold more shelf space for their brands. It has excessively been determined that the least quality variation in product diversification is likely to gain more consumers than when the product lines are distinguishable (Lassar, Mittal, Sharma, 1995). The carrying into action of this strategy will result in rase advertising costs for the extended brand as well as higher gross revenue because of the knowledge experience of the brand.Nonetheless, numerous researchers agreed that luxury brand extensions have been left behind. Even though the luxury brands were the first to initiate brand extensions by extending their haute couture brand to accessories, cosmetics, watches and jewelry, and though brand extensions are the essence of an organization model of the luxury haute couture brands (Uggla Lashgari, 2012), yet the main researchers that were conducted were either relating about a non luxury brand or a venture between a luxury and a non-luxury brand, whi ch has some(a) particular limitations (Stankeviciute Hoffmann, 2011).Previous findings on the impact of brand extensions on the luxury parent brand will be introduced, followed by a focus on the categorization theory and a self-created conceptual model.The Impact of Brand Extensions on the Luxury Parent BrandIt has been proven that luxury brands may be compromising their reputation while diversifying and targeting a wider market share. We record well-known luxury brand capital of South Dakota Cardin who fall into every consumers reach goods by using his notoriety in marketing a commercial quality of hundreds of products. This can be still by high quality non-personal needs when customers wish to buy products, not available to a broader public (Dubois Paternault, 1995).In order to strengthen the core luxury brand image of the parent brand, luxury brand extensions are often attempted, thus, the relationship between consumers and the luxury brand must be strengthened. In a study in 1995, Elyette Roux intended to measure the impact of luxury brand extensions on the parent brand image through brand prestige, brand combine and desirableness (Roux, Consumer Evaluation of Luxury Brand Extensions, 1995). In order to do so, Roux predicted that she could use conceptual fit, transferability, and perceived quality of original brand as variables.The results proved that brand confidence is and influenced by the conceptual fit approach. Thus, only luxury brand extensions that are in strict correlation to the build brand confidence and the parent luxury brands expertise will have a positive outcome on the parent brand. If extensions are uncertain, brand image dilution will demote due to brand confidence decrease.Brand prestige is mainly judge by brand quality and conceptual fit. On a lower extend, transferability contributes in a significant way to brand prestige. Only hold luxury brand extensions will enrich brand prestige, assuming the luxury brand possesses the abil ity to substitute its credentials and has quality reputation. Luxury brand extensions are facing many challenges to extend target markets (Dubois Paternault, 1995). The aim is to affix consumers need for this specific brand. Brand perceived quality and conceptual fit are the main predictors for desirability.The decrease of brand desirability will harm the luxury brand image.People devoting to buy luxury brands for pretention motives, will consume their demand off these brands. Globally, the results proved that brand prestige brand confidence and brand desirability are significantly linked with the nature of luxury brand extensions (Boush, et al., 1987).In 1996, Roux went a step further, expanding the study on the impact of brand extensions on a luxury fashion brands confidence, prestige and desirability balanced by the use of consumers knowledge level. The hypothesis was not supported, it elusive that more knowledgeable people would give the parent brand elements more extreme ev aluations. This hypothesis approves that consumers are attracted to buy luxury fashion brands because of their stirred benefit and image influence. Furthermore, the study states that brand prestige desirability and confidence, when used as purchase intention variables, have no relationship among each other. (Roux Boush, The Role of Familiarity and Expertise in Luxury Brand Extension, 1996).The Categorization surmiseCategorization enables a large variety of subordinate functions because classifying something as a category member grants people to bring their knowledge of the category to focus on the new entrant (Smith Medin, 1981). The step in which any cylindrical object is determined as a flash watery allows you to examine the Categorization theory. Therefore, people trend to predict its parts, trace its functions, and presume its behavior (Cheah Phau, 2008). one time people have categorized some new entity, for example, they may be using suitable knowledge for prediction and acceptation. For example, you can easily take aim that the cylindrical object set as a flashlight will have one battery at least, will have some kind of interrupter, and will basically produce a beam of light when the switch is pressed. People do not only categorize to accept new market entrants, they also use the new entities to modify and modify their concepts. In a nutshell, categorization supports learning (Medin Rips, 2005).The Conceptual ModelThis conceptual model was proposed by the researcher in order to better understand the impact of brand extensions on the parent brand equity of luxury brands. As brand extension affects the four outcomes, these interact in a certain way.Figure The impact of brand extension