The Impact of Brand Extension on the Parent Luxury Fashion Brand: The Cases of Giorgio Armani, Calvin Klein and Jimmy Choo

Abstract Brand extensions are an interesting brand strategy alternative, as they may attract new segments of customers that may have not considered the brand before because of different reasons. Therefore, the brand extensions are seen as a perfect way to boost the revenues of the company. However, though the brand extensions may work quite well for consumer (value) brands, they might have quite opposite effect on the luxury ones. While the brand extensions, especially the downward ones attract attention and make the brands more accessible and familiar among new segments of consumers, at the same time they may weaken the status of the luxury brand among its existing clientele and so dilute the luxury brand. And as the luxury brands emphasize their long-term value, once the image of the luxury brand is diluted, it has to take a very difficult and long way to gain its luxury status back in the eyes of consumers, and sadly not every brand manages to get back the respect it once had. Nevertheless, there is little research done on luxury brands and especially luxury brand extensions. What is more, previous research gave more attention to consumers’ evaluations of and attitudes to the extensions themselves than the parent brands. This study explores the evaluations of and attitudes to the parent luxury brands after different extensions are introduced. The study firstly introduces previous findings on value brand extensions and luxury brand extensions. Secondly, the cases of three chosen brands, representing a question mark, a failure and a current success practice of luxury brand extensions are analyzed in-depth: Giorgio Armani, Calvin Klein and Jimmy Choo. Armani is chosen as it is one of the most diversified brands in fashion. Despite the fashion brand varying from haute couture line Armani Privé to fast fashion brand Armani Exchange, Armani today offers everything that is needed for one’s luxury lifestyle from sweets and flowers to restaurants and hotels. The study analyses Armani’s brand extensions, and reactions to them. Armani represents a successful diversification of the luxury brand, but at the same time it questions the risk of over-extension and its consequences on the brand portfolio. Calvin Klein is chosen because it illustrates an example of the brand that once lost its luxury status mainly because of licensing and in the face of such experience the brand is now digging its way back to the luxury industry with its high-end sub-brand Calvin Klein Collection. Jimmy Choo is a world famous women’s shoes brand whose creations are appreciated by a large public including red carpet stars and First Ladies. After starting as a luxury shoes maker in 1996, the brand has expanded into handbags, sunglasses, accessories and even fragrance. But it was the luxury brand’s collaborations with non-luxury brands Hunters (iconic British company producing wellington boots) and H&M (Swedish fast fashion giant) that attracted our attention. Jimmy Choo represents a current success practice of the collaborations between the luxury and non-luxury brands and shows that such brand extensions, when carefully thought through, not only makes no damage to the luxury brand, but also enhances its image and desirability instead. The study analyses these two collaborations, which are viewed as downward brand extensions, and the impact of those collaborations on the Jimmy Choo brand. Each brand approach to brand extension is presented and discussed to underline reasons for success or failure. Desk research on the brands’ annual reports, reviews, articles and interviews from fashion, marketing, lifestyle, financial, and other magazines and newspapers, as well as visual material are used for the analysis of the chosen cases. An analysis of the cases of Giorgio Armani, Calvin Klein and Jimmy Choo leads us to four conclusions: 1) Luxury fashion brand’s collaboration with a non-luxury brand can have positive impact on the parent luxury brand if the extension keeps the luxury criteria, and the non-luxury collaborator has a good reputation; 2) Downward brand extension enhances the parent luxury brand if the extension keeps the luxury criteria and parent luxury brand’s quality, qualities and values; 3) Usually licensing, unless strictly controlled, dilutes the luxury brand; 4) Notwithstanding how diversified the luxury brand is, the luxury brand’s core business has to be constantly enhanced in order for the brand portfolio to be successful instead of diluted. This study is going to be the key and starting point for the further studies of the impact of brand extensions on the parent luxury brands.