Luxury brand extensions and perceived luxury : insights from the Australian market

Luxury-brand managers must balance optimising brand value while simultaneously maintaining the exclusivity of the brand. Corporate interests increase the focus towards strategies that return greater profit for the business. For example, managers may consider brand extensions or greater channel exposure to increase revenues. However, these strategies may have an adverse impact on brand exclusivity. The damage to over-stretched brands like Pierre Cardin and Gucci has been attributed, in part, to the use of brand extensions and increased distribution. This article examines the impact of brand extensions on consumer perceptions of luxury. Careful consideration of the degree of fit of the extension with the luxury brand as well as the channel exposure offers mechanisms for brand managers to extract greater profit from the brand while maintaining luxury-brand perceptions.