seven hotels and resorts within the next decade. Missoni also plans to build a
hotel chain across the world. Salvatore Ferragamo owns luxury Hotel
Lungarno in Florence and Bvlgari has hotels in Milan and Capri. Versace has
also added hotel services to its range with the Palazzo Versace in Australia
and a second hotel slated to open in Dubai in 2008 with six more hotels
planned in Asia, North America and Europe. Nicole Farhi’s offerings also
range from fashion goods to restaurants, furnishings and home accessories.
Pierre Cardin owns the highly successful Maxims hotel, restaurant, bar and
club in Paris, Monte Carlo, New York, Mexico, Shanghai and Peking. The list
of examples could go on for several pages.
Other luxury brands, from Gucci to Bottega Veneta, Ralph Lauren, Nino
Cerruti and Paul Smith have all extended their product ranges to include
home decoration, furnishings and more. Yet other product extensions include
Prada and Nicole Farhi’s debut fragrance launch in 2005 and Missoni’s 2006
fragrance range launch. Gucci and Louis Vuitton have also included writing
materials in their offerings and Tod’s plans to launch its first ready-to-wear
range in 2006. Also crystal brand Swarovski and jewellery brand Cartier have
added leather goods such as handbags to their product portfolios. In addition,
several luxury brands have included iPod covers in their product ranges as a
response to the new MP3 player market.
Product and brand extension has brought a new dimension to luxury
branding. New product and service categories that include a total lifestyle
concept make up the new business arena that luxury fashion is being stretched
into. Consumers now have the possibility to dress their homes with luxury
products from brands like Versace and Armani; to grab a drink at Just Cavalli
café in Milan; to have lunch or dinner at Nicole Farhi’s restaurant in London
or New York while shopping in the unique concept store; not to forget getting
down to some dancing at Armani’s nightclub in Milan. Product and brand
extension has provided an avenue for luxury brands to offer a complete 360°
lifestyle provision for consumers.
This diversification strategy of product and brand extension is an impor-
tant means to extend the luxury brand from ‘fashion’ to ‘lifestyle’ through
offering home furnishing and hospitality services to complement fashion and
accessories. While diversification breeds growth, it is imperative to infuse a
strategic approach in the diversification process of luxury goods. This means
that for product extension to be successful, there should be an equal blending
of solid managerial ability with artistic skill and an understanding of
customer needs. Although several luxury brands have achieved success
through this approach, the sector still lacks adequate streamlining and clear
positioning of the diverse products and services offerings.
The creative talents of the designers at luxury brands are a part of the core
make-up of the brands but must be complemented with business proficiency
especially in the management of product extensions such as hotels and restau-
rants, which require a completely different set of skills. For example, the
chapter 5 139the art of creating and managing luxury fashion brands