How far will a brand stretch?

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by: Jennifer Rice

Friday's Wall Street Journal offers two examples of brands trying to stretch outside their traditional boundaries.

First, Wal-Mart plans to launch small-footprint stores in a response to Tesco's entrance into the US market. Two different concepts will be launched next year:

  • Urban convenience stores stocked with groceries geared to more affluent tastes
  • Stand-alone stores offering a variety of health services and products

Second, Samsonite is striving to play in the luxury-goods market by reinventing itself as a "sexy, high-end label." The brand has launched designer luggage and high-end men's shoes; sunglasses and stationary are in the works. They're looking to compete with the likes of Burberry and Coach.

So how far will a brand stretch? While there are no hard and fast rules, a basic guideline is to determine how closely aligned the extension is from current perceptions. Wal-Mart has built its brand on 'cheap.' The likelihood of successfully extending upwards towards "more affluent tastes" is dubious unless it disconnects the Wal-Mart name using a sub-brand. The Wal-Mart connection with healthcare has a much tighter association —  healthcare costs have spiraled out of control, and Wal-Mart is a very viable brand to bring affordable healthcare to lower-income segments. And by doing so, some (needed) positive brand equity can be generated  for the master brand.

Samsonite is another story. By their own admission, "people still think of that hard, plastic suitcase when they think of Samsonite." It's associated with durable, not with style. Last year they acquired Lambertson Truex, a high-end leather-goods maker; IMO, it would have been an easier and less expensive proposition to position Truex as the high-end brand and keep Samsonite as the durable mass brand. That would give the company two distinct brands to appeal to two very distinct target audiences, and it would keep the aperture for revenue opportunities much wider. Repositioning Samsonite can be done if they create a cool enough product, but it will be challenging and I'm not sure it's the smartest move for the company. Time will tell.

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