A1) Diversify or die: it's an adage that sounds a warning to businesses about the

dangers of staying in the same place for too long, a warning that many brands have
heeded by finding new products or services, new markets and new revenue
streams. It can be a risky strategy. Business owners must be able to focus on their
new venture without neglecting their core business, yet in trying to control
everything, they risk spreading themselves or their resources too thin and losing
everything. However, some brands have been remarkably successful in the
diversification stakes, spotting and exploiting new market opportunities for their
products, using their core skills to offer complementary businesses services or
simply taking their brands into uncharted territory.

This is a hard needle to thread apropos of fashion because it’s necessary for luxury
brands to align themselves to a specific universe or territory encourage immediate
consumer-recall. Armani, for example, brand hinges on the personality of the
founder, Giorgio Armani. Therefore it is important for the fashion influence to
remain in that arena for the customers. Any deviation from this expected ingredient
could spell disaster for the company. The blueprint of the designer should be
evident in the apparel and fashion accessories that carry his name. 

However, there’s another train of thought. Subsequently, once you’ve essentially

reached the upper stratospheres of your field, what more could you do with your
clout? Because luxury brands are well-established and have positive
associations and values, they’re able to move out of their original universe and
extend their reputation into other sectors. Major luxury goods companies like
Armani are evolving from mono-brand to multi-brand. Traditionally, brands have
one core segment, and additional one(s) for diversification.

Brand Extension (Market Levels): This entails straddling different segments of the
same product category. A company can segment it’s brands to respond to different
customer grades: from premium to absolute luxury. For example, throughout the
years Armani has developed many different lines under his main brand, targeting
different customers by adding different products with different prices and styles.

The most common criterion used to segment a market in such a manner is price.
This can be illustrated using a pyramid comparable to Maslow's hierarchy of needs.
The bottom-most tier in this pyramid, coinciding with physiological needs,
constitutes the mass market, this would be occupied with Armani Exchange, with
the middling tiers being occupied by such sub-brands as Armani Collezioni,
Emporio Armani, and top tiers by Privé, followed by Giorgio Armani, wherein
Giorgio Armani is targeted toward an older, more affluent client base that is
interested in more classic European tailoring; and Armani Prive is aimed at the
small subset of very wealthy clients who prefer couture to RTW. By creating
different lines to cater to each of these markets, Armani is better able to attract
more consumers from each segment, and thus clears a larger profit. New variations
to capture more of the market may also take the form of targeting specific
consumer groups such as children (as in Armani Junior-high-end fashion designs
for babies and teenagers), or athletes (as in EA7).

Brand Stretching (Market Sectors): Such a strategy aims to use the successful
brand image of a company for different products or services beyond its core
business or to venture into distant avenues. For example, Giorgio
Armani, stretched his business out from Ready-to-wear to also sell edibles like
chocolate, candy and biscuits, under Armani-branded Dolci, flowers under Fiori,
cosmetics under Armani Beauty. Further, through a partnership with Emaar
Properties, Dubai headquartered real estate company, Giorgio Armani runs seven
luxury hotels around the world, Armani Casa, launched in 2000, focuses on
designing and delivering luxury furnishing, interior design accessories and
furniture. While all of these sub-groups speak to an aspect of lifestyle, the clothes
remain at the centre of the Armani universe.

While the advantage of this is that the bottom products may bring in some
significant capital, it may cause the brand to shift focus onto its more profitable
units. Taking attention away from the original products can kill the brands allure.
Thus, even though brand diversification can be a very lucrative endeavour, it can
go horribly wrong if a brand doesn’t do their homework and ascertain if it’s the
right move for them.