Unique Brand Extension Challenges For Luxury Brands

Abstract

This article addresses the impact of brand extensions on the brand equity of luxury brands. A review of the developments in the luxury market has shown significant changes in demand and supply sides. The luxury market has been growing rapidly over the last 20 years, and luxury brands, formerly reserved for a small group of privileged individuals, are now available to more consumers. Meanwhile, luxury goods manufacturers have been applying new marketing strategies, and extending their brands without any insights as to the consequences for their brands. Despite these changes, little research has investigated the luxury market. Therefore, a systematic review has been undertaken regarding the nature of luxury brands and research measuring individual luxury brand equity elements such as attitudes and perceptions. Deviating results in the application of concepts for non-luxury brands to luxury brands have been found due to the abstract and emotional nature of luxury brands. These results support the development of distinct brand equity constructs for luxury brands. The main focus of this article is the impact of luxury brand extensions on the parent brand’s equity and the proposal of a framework to allow the impact to be measured.