Do you know what's common in all?

Preserve the Luxury or Extend the Brand?

What is luxury?A material, object, service, etc, conducive to sumptuous living usually a delicacy, elegance, or refinement of living rather than a necessity.

Luxury vs premium

Exclusivity of service

Functionality vs hedonism

Uniqueness

Luxury vs fashion

Fashion changes, luxury timeless

Luxury merchandise more pricey

Differentiating Prestige Brands

Emotional Value

Level of Prestige

Functional Value

Volume Up Market Premium Luxury

Luxury Brand Associations

Authenticity

Premium Price

Exclusivity

Self-Image

Luxury Brand Pyramid

Brand Loyalty

Brand PerformancePremium Price

Brand ImageryHeritage

Customer FeelingsStatusSelf Image

Customer JudgmentsPerceived QualityAuthenticityExclusivity

Case Analysis

2 PRODUCT LINES

Grand Vin du Château de Vallois

Puinȇ

€1000 €100

150, 000 Bottles/Year

200, 000 Bottles/Year

Château de Vallois

Stakeholders Gaspard de Sauveterre

50%

Claire de Valhubert

25%

Franҫois de Sauveterre

25%

So what’s the problem?

LOOSING NEXT GENERATION

MARKET

YOUNG GENERATION IS

PRICED OUT

Claire’s Proposal

To enter “Affordable Luxury” Category!

A THIRD WINE

What is this third wine?

• Branded wine, not aged well

• € 20-25 a bottle

• Younger wine enthusiasts, priced out

• Direct Selling or through website

PRODUCT

DISTRIBUTION

TARGET SEGMENT

PRICE

SOURCING

• Import or Grow on separate land in Bordeaux

PRESERVE THE LUXURY OR EXTEND THE BRAND

How others did ?

Success

Failure

Success

Failure

Failure

Success

Success

ConclusionsLuxury fashion brand’s collaboration with a non-luxury brand creates

positive impact on the parent luxury brand if the extension keeps the luxury criteria, and the non-luxury collaborator has a good reputation

Downward brand extension enhances the parent luxury brand if the “luxury” criteria and its qualities and values are maintained

Usually licensing, unless strictly controlled, dilutes the luxury brand as we saw in case of Pierre Cardin

The luxury brands business has to be enhanced for the entire portfolio to be successful

Customer FeelingsStatusSelf Image

Customer JudgmentsPerceived QualityAuthenticityExclusivity

Recommendation 1/3

Brand Loyalty

Brand PerformancePremium Price

Brand ImageryHeritage

Customer FeelingsStatusSelf Image

Customer JudgmentsPerceived QualityAuthenticityExclusivity

Recommendation 2/3

If they were to extend, they should create

Recommendation 3/3

References http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=2542245&fileOId=2542248

http://www.lspr-education.com/uploads/lspr-publications/LSPR_LuxuryBrands.pdf

https://archive.ama.org/archive/ResourceLibrary/MarketingManagement/documents/Slippery%20Slope.pdf

https://hbr.org/2003/04/luxury-for-the-masses

http://www.forbes.com/2010/03/08/saturn-gm-innovation-leadership-managing-failure.html

http://www.wsj.com/articles/SB116836324469271556

Prof. Sameer MathurIndian Institute of Management, LucknowMarketing Professor: August 2013 – Present

McGill UniversityMarketing Professor: July 2009 – July 2013 

Carnegie Mellon UniversityPh.D. in Marketing : August 2003 – June 2009PGP359 PGP087 PGP333 PGP348 PGP313

Group 8Akshita SnehalTanviPriyank

aManjot