atmosphere and service level at Pierre Cardin’s restaurant in Paris, Maxims,
is the epitome of opulence, distinction and exceptionally high standards. This
description doesn’t exactly fit the brand’s products like the licensed perfumes
sold at several Parisian supermarkets.
Every luxury brand has the creative capability to turn out desirable
extended products and services but not every brand has the capacity to effec-
tively extend its product range. Before product extension can be successful
for a luxury brand, the brand should have achieved a clear and concrete posi-
tioning in the market and most importantly in the consumer’s mind. There
should also be an apparent consumer following through a loyal consumer
base. For example, consumers that are most likely to stay at the Palazzo
Versace hotel are those that have an affinity with the Versace brand and are
attracted to what the brand represents. In the same way, home furnishings
designed by Missoni are likely to be purchased by consumers that also buy
Missoni fashion or are attracted to the brand.
The implication of product and brand extension for luxury brands is that
this strategy creates opportunities for growth and also for a broader level of
brand experience and a deeper level of brand affiliation. The risk factor of
brand extension is also high and rests with the company’s capabilities and
resources. Product and brand extension provides a channel for growth but
should only be adopted if a possibility of competitive advantage is envisaged.Pricing
Pricing is an important aspect of the marketing and branding strategy as it is
one of the first indicators of a brand’s positioning to consumers. It is also the
most flexible of the Six Ps as it can be easily modified.
Luxury and prestige brands have traditionally adopted the premium pric-
ing strategy to emphasize the brand strength, high quality and exclusivity
associated with luxury goods, and also to differentiate them from the mass-
market fashion brands. The luxury target audience is less price-sensitive and
actually expects luxury goods to be premium-priced rather than economically
priced. Pricing forms a part of the branding process as consumers often judge
the position of a brand and the value of a product in terms of price.
To explain further, luxury brands are those brands whose ratio of func-
tionality to price is low while their ratio of intangible and situational utility to
price is high. This means that the price of luxury products is significantly
higher than the price of products with similar tangible features but the high
intangible characteristics and benefits of luxury goods justify the high price.
Pricing is the most elastic element of the marketing and branding mix as it
can be changed at will. However, the strategy behind pricing decisions for
luxury products requires meticulous evaluation and control. Pricing is also the
only direct revenue generator among the Six Ps. This gives it a delicate position140
luxury fashion branding