30 Apr Brand Extension Can Be a Key to Growing and Evolving a Consumer Product Line or Service
Switzerland is the couture watch capital of the world. A visit to Geneva and its surrounding cantons exposes the traveler to the hundreds of exotic watch brands made in this famous horology center. Eponymous watch stores, displays, advertisements and billboards and jewelry stores are ubiquitous. Each brand prides itself on the customization, detail, amazing complications and old world craftsmanship that is present in each artisanal timepiece produced.
Frank Muller, Constantine Vacheron, Piaget, Chopard, and scores of other producers offer pieces that retail for thousands, to hundreds of thousands of dollars. Exclusivity of distribution is practiced with military-like diligence. Into this clubby world, in the late 20th century an outlier sprang forth. The amazing Swatch watch line was born.
Swatch is everything that Audemars Piguet and Breitling are not. Mass produced, simple mechanical movements, plastic bands, unlimited and gaudy color combinations and very low retail price points mark Swatch as a watch for everyone. No exclusivity here.
Swatch became an international hit almost immediately. Consumers loved the quirky, whimsical look of the time pieces. And then Swatch did something that seemed counter-intuitive: the Company teamed up with Mercedes Benz to create the Swatch automobile lineup.
Mercedes Benz and Swatch seem like strange business bed partners. And yet, this has become an international example of a successful Brand Extension that is ripe with benefits for both Companies.
Mercedes Benz has been able to keep production flourishing, develop small car manufacturing technologies that could never be perfected on their high end, exclusive luxury models, profit handsomely and still keep their Mercedes Benz Brand name and heritage pristine. The car they produce is known by consumers as a Swatch car, not a Mercedes Benz Swatch.
Swatch, having no capability to produce such complex machines as automobiles, gained the luster and panache of having a Mercedes Benz produced vehicle to sell. The Branding of the cars, the fun, hip color combinations of the interiors and exteriors of Swatch cars stand out in a sea of look alike, dull, even ugly mini-car offerings. It is fun to own and drive a Swatch, practical too as a miserly fuel sipper and an easy vehicle to maneuver in crowded cities.
The Swatch car has further extended the fame and Branding of the Swatch watch business. The very word Swatch creates instantaneous thoughts of bright, cool and fun products with great design cues. Swatch is by far the largest selling watch Brand in the world.
Rossignol is a famous producer of skis. Many Olympic champions, professional and serious skiers prefer Rossignol skis to any other Brand. This is one of the most famous sporting good brand names in the world.
Some years ago Rossignol, having conquered the ski slopes, decided to enter another arena. They began to produce Tennis rackets. Rossignol tennis rackets are now ubiquitous on the men’s and women’s international professional tennis tours. This is another obvious example of utilizing the concept of Brand Extensions to grow a mature firms business in another space.
Branding Extension can be hurtful to a business franchise. A famous example of this is demonstrated in the history of the venerable Pierre Cardin fashion business. Cardin was one of the earliest proponents of licensing his name. In the 1970’s, at its zenith, Pierre Cardin was generating over $400 million dollars annually in sales turnover of his couture men’s and ladies Clothing and Fragrance lines. Then the pursuit of licensing began.
Over a period of about 20 years, the fashion franchise that Pierre Cardin had arduously built began to crumble. The extension of his brand became an industry joke. The formerly famous Pierre Cardin logo began to appear on a slew of wholly unrelated, unfashionable, cheaply made products. Sport bags, running shoes, cheap Asian ties, mass market plastic tableware, bath towels and hundreds of other products began to flood discount stores with low end goods carrying the iconic PC logo. Department stores and luxury boutiques took notice and discontinued the Pierre Cardin lines they had carried proudly for years.
Mercedes Benz has enhanced their business by extending to partner with the Swatch. Pierre Cardin did not police his brand and his extension into rubber flip flop-type products meant death to his fashion house.
Brand Extension is a technique that has been practiced on products and for client Consumer Product brands for many years. It is a wonderful way to grow a mature business. But remember, the Brand Extension must make sense to your most important asset, your customers and clients. Do no harm!