PRESERVE THE LUXURY OR EXTEND THE BRAND

Harvard Business Review

Stakeholders

Gaspard de Sauveterre - The owner of Chateau de Vallois - Famous wine producing estate

Claire de Valhubert – Gaspard’s granddaughter

Francois de Sauveterre – Gaspard’s son

Jean Paul Oudineaux – Gaspard’s estate manager

Negotiants – Merchants who purchase the wine and aid in distribution

• Chateau de Vallois produces two types of wine

• Sells to distributors and importers and not directly to consumers to keep their wine rare and vintage

Claire wants to enter the affordable luxury market selling directly to consumers to open a new customer base - Extend the brand

Reasons for Extending the Brand

Claire noted that younger wine enthusiasts were being priced out of high end French wines

Claire wanted to capitalize on her vintage wine brand by targeting young consumers

Reasons for Preserving the Brand

Additional costs incurred on low-priced wine in marketing and distribution

New product might result in dilution of original brand

SHOULD CHÂTEAU DE VALLOIS BEGIN PRODUCING A MORE-AFFORDABLE

WINE?

Case Study - Horlicks

First invented to substitute milk as baby food

It’s almost a 137 year old brand

From nutritional drink it positioned itself as “pleasurable nourishment” by launching different exciting flavours

Brand Extension

Line extension

WHY HORLICKS WAS SUCCESSFUL IN EXTENDING THE BRAND WHILE PRESERVING IT’S IDENTITY ?

Their products were consistent with the image of the core brand offering same functional benefits

Identified with the key benefit and value proposition of their product and then executed their marketing campaigns – “Taller, Stronger, Sharper”

campaign, “Epang Opang Japang”, “Badlo Apne Bachpan ka Size”

Case Study - PONDS

Communicate message of ‘soft and caring’ beauty products through their marketing campaigns like ‘Googly Woogly Woosh’

WHY PONDS BRAND EXTENSION FROM BEAUTY PRODUCTS TO TOOTHPASTE WAS UNSUCCESSFUL ?

Consumers viewed pond’s as a soft and skin friendly beauty product

Toothpaste creates the image of a product that is used to fight germs and associate medicinal benefit with it

Functional benefit of both the brands didn’t remain the same. Beauty cream/face wash is for external use and it’s major attribute is fragrance. While major attribute of toothpaste is taste

So the brand extension was a failure due to clashing images of brands in the mindset of consumers.

Conclusion

• Brand Extension has strategic implication on brands sales curve. It may result in enormous growth or put the asset of firm at risk

• Brand Extension should be consistent with the image of the core brand which has been already established in the consumer mind

• Market Research is of paramount significance for firms going for brand extension

• Adequate marketing support and efficiency of distribution channel is of key importance in the extension strategy

Created by:Mohd Wasil

IIT Delhi

During Internship bySameer Mathur, IIM

Lucknow