luxury brand.pdf

Journal of Business Economics Research – October 2006 Volume 4, Number 10 57 Unique Brand Extension Challenges For Luxury Brands Nicole Stegemann, University of Western Sydney, Australia 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. INTRODUCTION his article will explore the impact of brand extensions on the brand equity of luxury brands. The first section is a concise presentation of existing brand equity constructs followed by a brief description of brand extensions. The second part addresses the history and development of the luxury market. The next section is devoted to the systematic review of research that has addressed individual brand equity elements for luxury brands such