8

BRAND EXTENSIONS IN THE LUXURY

INDUSTRY
Rasa Stankeviciute

8.1 INTRODUCTION

Brand extensions are an interesting brand strategy alternative, as

they may attract new segments of customers who, for various rea-
sons, may have not considered the luxury brand before. The luxury
brand extensions have gained such momentum that today a fan of
a luxury fashion house is able not only to dress herself from head
to toe in a beloved designer’s clothes, but also serve dinner in the
same designer’s porcelain dinnerware or simply dine in the restau-
rant under the same designer’s name (Ralph Lauren, for example).
The American luxury jewelry brand Tiffany & Co., long known for
fulfilling every woman’s dreams by offering high-end jewelry and
high-quality silver accessories in the iconic blue box, decided to try
gaining more business by extending the brand into watches, hand-
bags and briefcases. Some luxury fashion brands, like Gucci and
Stella McCartney, have joined many others, like Burberry and Ralph
Lauren, in targeting children (or their fashion-conscious mothers)
by offering children’s wear lines – a popular luxury fashion brand
extension.
As diversification of the luxury brands has reached such heights,
and the number of luxury lifestyle brands is increasing so rapidly,
it would make no sense to continue to talk about how impor-
tant it is to extend the luxury brands into adjacent categories in
order not to dilute them. Today, companies must find other ways

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J. Hoffmann et al. (eds.), Luxury Strategy in Action

© Palgrave Macmillan, a division of Macmillan Publishers Limited 2012
 RASA STANKEVICIUTE

to avoid brand extension mistakes and to ensure that brand exten-

sions will not dilute the brand with a well-established name for
luxury.

8.2 WHAT DOES BRAND EXTENSION STAND FOR?

Many authors have introduced their own definitions of brand

extensions (see Table 8. 1), even though at the end of the day,
everyone refers to the same result – introducing new products in
order for the company to grow. There is, however, always a slight
risk of confusion when talking about the brand extensions. Aaker1
describes brand extension as the use of a brand name established
in one product class to enter another product class (e. g. Armani
Casa furnishings), while describing line extensions as offering new
products within the same category (such as the Emporio Armani
fashion line). Kapferer2 warns that line extension should be differen-
tiated from the brand extension, as the latter is ‘a real diversification
toward different product categories and different clients’. However,
this definition can be questioned, as, for instance, if we look at the
Armani brand, it is quite obvious that with Armani Dolci, Armani
Flowers or even Armani Hotels, the parent luxury brand targets the
same fashion-conscious customers that it targets with its fashion
lines, though the product categories of these extensions are very
different from the apparel.
Meanwhile, Best3 classifies the ways of introducing new products
into horizontal brand extensions and vertical brand extensions. Thus

TABLE 8.1 Different definitions of brand extensions by author

Farquhar Aaker Kapferer Best
(1989) (1991) (2008) (2009)

New product launched in Line Line Line Vertical

the same category as the extension extension extension brand
parent brand (e.g. Emporio extension
Armani fashion line)
New product launched in Category Brand Brand Horizontal
other category than the extension extension extension brand
parent brand (e.g. Armani extension
Casa furnishings)

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