Nescafe Brand Extension PDF

The contribution of the experience economy to brand extension strategy
A brand extension project for Krastase
Caroline Fraser
Thesis mentor: Marie-Pierre Schickel
Master in Business Design Academic Year 2010-2011

Milan, October 18 2011
Acknowledgements
I would like to acknowledge and extend my gratitude to the professors and professionals who have shared
their experience, ideas and feedback with me in preparation of this thesis : my mentor, Marie-Pierre
Schickel, as well as Silvia Barbieri (Future Brands Milano), Massimo Fabbro (Crea International), Giovanni
Lanzone (Domus Academy), Alberto Pasquini (Crea International), Angelo Taverniti (Institut Krastase
Angelo Taverniti) and Andrea Tosi (Domus Academy).
Un merci tout spcial Sandrine Michard (Division Professionnelle, LOral International,) pour avoir cru
au projet ds le dpart et mavoir donn la chance de collaborer avec la direction internationale de
Krastase dans le cadre de ce projet. La prsente thse ne serait pas la mme aujourdhui sans la
contribution de Franoise Lehmann (Krastase, LOral International) et de Claire Huet (Krastase,
LOral International) et des discussions que nous avons eues en dbut de projet. Jaimerais galement
souligner lapport de Carl D. Morisset (Krastase, LOral Canada) et le remercier de mavoir
gnreusement donn de son temps et partag son expertise sur la marque.
Jaimerais exprimer toute ma gratitude et tout mon amour mes parents, Berthe et Michel, qui mont
toujours encourage poursuivre mes ambitions et supporte dans mes projets, ainsi qu ma sur
Vronique, qui, grce son expertise et son exprience, ma donn de judicieux conseils des moments
cruciaux lors de la rdaction.
Desidero ringraziare con tuttto il mio cuore Giuliana e mio grande amore Diego per avere preso cure di me
con tanto di premure, dal inizio alla fine.
Abstract
One of the challenges of brand management in todays over-cluttered world of information is to

generate strong and positive feelings towards a specific brandand therefore, build its equity. The
avenue of solution I propose to achieve this is to design experience-based brand extensions. The
literature review and case studies suggest that experience-based brand extensions can potentially
increase the original brand equity, and this, to a larger extent then product-based extensions. The
theoretical framework of this paper links the experience economy to brand extension strategy. My
approach first consisted in analyzing brand extension success factors coming from several studies
and papers published between 1979 and 2011. Noticing that there was a missing link in the
literature reviewed to properly evaluate the extension potential of the core brand prior to making
correlations with variables related to the extension category, I designed the The Brand Elasticity
Assessment Square with two aims. First, determine if a brand should be extended or not and in the
event it should, determine how it should be extended. This tool was applied to the three
experience-based brand extension cases that were studied in the context of this researchGiorgio
Armani, Aveda and Nescafand obtained plausible results. Brands can be classified in three
categories: low elasticity brands, medium elasticity brands and high elasticity brands, resulting in
strategic brand extension implications. Because experiences are more personal and intimate than
other economic offerings, they engage the consumer further on the emotional level, which means,
on the design level, experiences built on three principles : mystery, sensuality and intimacy. Linking
the brand extension and the experience economy learning, I concluded that high elastic brands
were very well suited to deliver powerful brand experiences, medium-high elasticity, suited, but to
a lesser extent than high elasticity brands and low elasticity brands do not have the full potential to
deliveryeta real emotionally engaging consumer experience. I then established a six-step
methodology that I called The Brand Extension Definition Process and applied it to Krastase in order
to define its extension range of possibilities. Two experience-based brand extension concepts,
KRABAR and KRA-SPA were developed and with a stronger recommendation towards
KRA-SPA.
Index
1.
Objectives
1.1. Methodology
2.
Theoretical framework : literature review and analysis

2.1. Brand management
2.2. Brand equity
2.3. Brand extension
2.3.1. Brand extension benefits and dangers
2.3.2. Brand extension models
2.3.3. Brand extension strategic directions
2.3.4. Literature review : brand extension planning success factors
2.3.5. Literature review : brand extension marketing success factors
2.3.6. The Brand Elasticity Assessment Square
2.3.7. Brand elasticity assessment implications
2.3.8. Recommendations for the four brand elasticity criteria
2.3.9. The Brand Extension Definition Process
2.4. Experience economy
2.4.1. The social factors behind the experience economy
2.4.2. Experience design
2.4.3. Beyond the experience economy
2.5. Linking the experience economy to brand extension strategy
2.5.1. Indicators of brand equity increase for experience-based brand extensions
3.
Case histories
3.1. Case 1 : Giorgio Armani S.p.A.
3.1.1. Giorgio Armani S.p.A. : Company and brand presentation
3.1.2. Giorgio Armanis business strategy
3.1.3. Giorgio Armanis brand extension model and strategy
3.1.4. Giorgio Armani Hotels and Lifestyle experience
3.1.5. Analysis of Giorgio Armani case history
3.1.6. Learning from Giorgio Armani case history
3.2. Case 2 : Nestls Nescaf and Nespresso
3.2.1. Nestls Nescaf and Nespresso : Company and brands presentation
3.2.2. Nestls business strategy
3.2.3. Nescafs brand extension model and strategy
3.2.4. The Nespresso experience
3.2.5. Analysis of Nestls Nescaf and Nespresso case history
3.2.6. Learning from Nestls Nescaf and Nespresso case history
3.3. Case 3 : Este Lauders Aveda
3.3.1. Este Lauders Aveda : Company and brands presentation
3.3.2. Este Lauders business strategy
3.3.3. Avedas brand extension model and strategy
3.3.4. Aveda Lifestyle Concept and Spa experience
3.3.5. Analysis of the Este Lauders Aveda case history
3.3.6. Learning from the Este Lauders Aveda case history
4.
Application of The Brand Extension Definition Process to Krastase

4.1. Krastases vision and objectives
4.1.1. LOrals Krastase : Company and brand presentation
4.1.2. LOrals business strategy
4.1.3. Krastases business strategy
4.1.4. Krastases brand extension strategy
4.1.5. Krastase Institute experience
4.1.6. Analysis of Krastases experience-based extension
4.1.7. Learning from Krastases extension history
4.1.8. Krastases long term brand vision
4.1.9. Krastases objectives

4.2. Krastases elasticity assessment
4.2.1. Krastases elasticity evaluation
4.2.2. Krastases elasticity implications
4.2.3. Krastase brand extension recommendations
4.3. Krastases brand essence assessment
4.3.1. Krastases history and original mission
4.3.2. Krastases brand image evolution
4.3.3. Krastases values and identity today
4.3.4. Krastases brand architecture
4.3.5. Krastases identity prism
4.3.6. Krastases Chinese portrait
4.3.7. Krastases brand essence equation
4.4. Krastases brand extension legitimacy
4.4.1. Krastases potential extension categories
4.4.2. Krastases extensions positioning dimensions
4.5. Related trends
4.5.1. Schizophrenic world
4.5.2. Body is first priority
4.5.3. The Medicalization of society
4.5.4. Asia, the new centre of the world
4.5.5. Med spa
4.5.6. Good bye Sex in the City, welcome to the Eat, Pray, Love era
4.5.7. Do it yourself
5.
Project conceptualization
5.1. Concept 1 : KraBar
5.1.1. KraBar description
5.1.2. KraBars inspirations
5.1.3. KraBars target market
5.1.4. KraBars usage scenarios
5.1.5. KraBars services
5.1.6. KraBar experience
5.1.7. KraBars physical environment
5.2. Concept 2 : Kra-Spa
5.2.1. Kra-Spa description
5.2.2. Kra-Spas inspirations
5.2.3. Kra-Spas target market
5.2.4. Kra-Spas usage scenarios
5.2.5. Kra-Spas services
5.2.6. Kra-Spa experience
5.2.7. Kra-Spas physical environment
6.
Concepts evaluation
6.1. Positioning assessment
6.2. Krastases elasticity versus fit strategy
6.3. Effects on Krastases elasticity
6.4. Experience assessment
6.5. Customers engagement assessment
6.6. Recommendation
7.
Critical aspects and future developments

7.1. Key brand extension and experience-based brand extensions guidelines
7.2. Limitations and future research
8.
Bibliography and references
1. Objectives
One of the challenges of brand management in todays over-cluttered world of information is to
generate strong and positive feelings towards a specific brandand therefore, build its equity.
However, a strong brand alone is not sufficient anymore to create determining connections with
the customer. To be strongly engaged towards a brand, the consumer needs to be emotionally
affected by it. A first avenue of solution leads us towards experience-based marketing. Because
experiences are more personal and intimate than other economic offerings, they engage more the
consumer on the emotional level. As matter of fact, since the end of the nineties, primary sectors
of the experience industrytourism, entertainment, music and cinemahave been continuously
increasing their market share over more traditional industries while product-based companies have
been adapting their marketing strategies and designing their points of sales to emotionally engage
consumers and allow them to physically experience their brand. B. Joseph Pine II and James H.
Gilmore have documented this evolution from commodity, to product, to service, to experience
and more recently to transformation economy in The Experience Economy.
In the context of this research, I suggest to consider experience, not only as an element of a
marketing strategy, but also as a proper economic offer, a form of brand extension for mature
brands. Brand extension has traditionally been regarded as a strategy to penetrate new markets at
lower costs, building on the strength of an existing brand. However, this research aims to look at it
from another angle. Instead of considering brand extension primary as a product launch strategy,
my research goal is to investigate the use of experience-based extension as a strategy to increase
the core brand equity.
The learning and methods developed will be applied to Krastase, the brand being at the centre of
the context of application. There is an opportunity for the brand Krastase, owned by the leading
cosmetics group LOral, to create new emotional experiences for the customers. The Krastase
products are currently distributed and experienced at Krastase salons and institutesboth third
party independent retailers. The Krastase salons have carefully been selected by Krastase for
their prestige and quality and must respect specific usage and merchandising guidelines. The
Krastase Institutes go a step further than the salons in the brand experience delivery, as they have
a Krastase-corner designed to enjoy a more complete Krastase experience. There could be an
opportunity for Krastase, building on the cases of brands extending into experience-based
industries to explore new points of contact for the consumers in order to create new emotional
experiences with the brand.
Guidelines will be developed in order to bring together the brand extension and experience
economy findings, with final objective of applying the outcomes to Krastase. My goal is to
propose two experience-based concepts and assess their validity through the tools developed.
1.1 Methodology
My approach will consist in developing a brand extension assessment method to first, determine if
a brand should be extended or not and in the event it should, determine how it should be
extended. The validity of this method will be assessed through the application of this tool to the
three experience-based brand extension cases that were studied in the context of this research
Giorgio Armani, Aveda and Nescaf. To further connect the brand elasticity assessment model to
the experience economy theory, I will review the literature, the design principles and the case
studies of the latter. I will then establish a six-step brand-extension methodology that I will apply
to Krastase in order to define its extension range of possibilities. Two experience-based brand
extension concepts will be developed and evaluated thanks to the tools that will have been
conceived in the theoretical framework. A recommendation will be made towards one concept.
2. Theoretical framework : literature review and analysis

The outcome sought in this research is to build a brand extension framework that enhances brand
equity. In this section, I will first study brand extension models, possible strategic directions and
success factors. Strong of this knowledge, I will analyse the results to propose a new model to
evaluate a brands extension potential and main strategic extension direction. Next, I will provide
recommendations for each of the criteria mentioned in the extension evaluation model. Finally, I
will propose a six-step methodology that initiates when brand managers start considering a brand
extension strategy and ends with the evaluation of brand extensions possibilities.
2.1 Brand management
Brand management patricians and theorists almost consensually consider the brand the most
important asset of the company.1 There exist many definitions for brand. Marketing expert
David A. Aaker defines it as follow A brand is a distinguishing name and/or symbol such as a
logo, trademark, or package design intended to identify the goods or services of either one seller or
a group of sellers, and to differentiate those goods or services from those of competitors.2
Historically, and up to twenty years ago, this definition was accurate. Brands purpose was
commodification, identification, and differentiation of the goods and services available in the
market. Brand managements rules were to lead the brand to bigger, brighter, better, stronger,
faster easier, newer, or cheaper than its competitors. Today, this narrow competitive world is not
sufficient anymore to guaranty a brands long life.3 According to Kevin Roberts, author of
Lovemarks and CEO Worldwide Saatchi & Saatchi, brands are out of juice.4 We live in a world of
brands; whatever we do, we encounter daily thousand of brands that make attempt to pass us their
signals and messages. This over-use of brands has created consumer-resistance. There is much
more consumer awareness, more consumers who understand how brands work and, more
importantly how brands are intended to work on them! says Robert.5 The avenue of solution
proposed by Robert is to dig into the emotional connection with the consumer, as human beings
are powered by emotion, not by reason, he argues.6 The reason behind this is simple. The
neurologist Donald Calne explains The essential difference between emotion and reason is that
emotion leads to action while reason leads to conclusions.7 Indeed, as further explained by
Maurice Lvy, Chairman of Publicis Group:
Consumers who make decisions based purely on facts represent a very small minority of
the worlds population. They are people without feelings, or perhaps people who put
their heart and emotions in the fridge when they are leaving home in the morning, and
Kevin Lane Keller, Conceptualizing, Measuring, and Managing Customer-Based Brand Equity, Journal of Marketing, 57
(January 1993), 1-2.
2 David A. Aaker, Managing Brand Equity : Capitalizing on the Value of a Brand Name, (New York : The Free Press, 1991), 7.
3 Kevin Roberts, Lovemarks : The Future Beyond Brands, (New York : PowerHouse Books, 2005), 32.
4 Ibid., 32.
5 Ibid., 35.
6 Ibid., 35.
7 Ibid., 42.
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only take them out again when they go back home in the evening. Although even for
these people, there is always some product or service they buy based on impulse or
emotion.8
Larry Light, the former Chief Marketing Officer for McDonalds who leaded its marketing
turnaround adds a perspective to this argument. He argues that even in todays over-crowded
brands world, consumers continue to desire and seek branded products and services. The
differences, he explains, is that the products and services, as well as life in general, have become
more complex, while the market, more fractionated. Time is the most precious commodity,
therefore brands continue to be important to the consumers as they facilitate and expedite
decision-making, he argues.9
For the reasons listed above, every year emerges a large number of marketing trends, for instance,
brand hijack (marketing without marketing), consumer tribes (capitalizing on a group of
people that share the same passion), guerrilla marketing (unconventional low budget
promotion), viral marketing (electronic word of mouth), buzz marketing (free publicity
through special stunts, for instance Redbull and Virgin), ambush marketing (capitalizing on an
existing even without sponsoring it), stealth marketing (existing in a market in a furtive secretive
or imperceptible manner) and ambient marketing (using elements of the environment in a
complex way to convey marketing messages).10
These tactics all aim to make the consumers fall in love with a brand and its products. We
therefore assist to a mega marketing phenomenon that seeks to transform Trustmarks into
Lovemarks, a term coined by Robert Keller. More specifically, this means moving from
information to relationship, recognized by consumers to loved by people, generic to
personal, symbolic to iconic, the promise of quality to the touch of sensuality, and so
on.11
In todays competitive market, brand managers can get caught up in their mission of sustaining
business growth and keeping their stakeholders happy on a short-term basis. The day-to-day
performance measures can lead to decisions that damage the brand or do not nurture it enough to
nourish its core associations. Since the brand nameand the world of connotations revolving
around itis the most precious assets of many companies, special care should be given to its
management.12
2.2 Brand equity
Brand equity is a set of brand assets and liabilities linked to a brand, its name and symbol, that
add to or subtract from the value provide by a product or service to a firm and/or to that firms
customers.13 Other theorists have elaborated this definition further to incorporate other concepts
into it. For instance, for Edward M. Tauber, brand equity is not only linked to the actual brands
intangible assets, but also to everything else it could become in the future : () the incremental
value of a business above the value of its physical assets due to the market position achieved by its
Ibid., 42.
Larry Light and Joan Kiddon, Six Rules for Brand Revitalization : Learn How Companies like McDonalds can Re-Energize their
Brands, (New Jersey : Wharton School Publishing, 2009), 31.
10 Bernard Cova, Consumer Tribes & Brand Communities : A Mediterrenean Approach to Branding Strategies, (Domus
Academy : Brand Management and Design Lecture, 2011).
11 Roberts, Lovemarks, 70.
12 Aaker, Managing Brand Equity, 14-15.
13 Ibid., 15.
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brand and the extension potential of the brand.14 For Kevin Lane Keller, brand equity is related
to the current results of marketing efforts () the marketing effects uniquely attributable to the
brand-for example, when certain outcomes result from the marketing of a product or service
because of its brand name that would not occur if the same product or service did not have that
name.15
The assets included into the concept of brand equity are regrouped into five categories :
1.
Brand loyalty
2.
Name awareness
3.
Perceived quality
4.
Brand associations
5.
Proprietary brand assets such as patents, trademarks and channel relationships.16
The concept of brand equity has arisen in the 1980s to measure and justify the marketing expenses
aiming to build strong brands.17 This necessity to measure the intangible strength of a brand has
led to the development of measurement tools such as Millward Browns The BrandZ Top 100 Most
Valuable Global Brands and Interbrands Best Global Brands. These companies have developed an
expertise in measuring quantitatively the intangible. For instance, Interbrand arrives to a brand
value result with the following equation:
The parts come together so that forecast financial performance projects economic profits
that are multiplied by the role of brand to reveal branded earnings. These branded
earnings, which are based on the brand strength, are discounted back to a present value
and totalled to arrive at a brand value.18
Generally speaking, there are three ways of assessing brand equity. The assessment method
described above can be classified amongst the financial measure category, which is used to give a
monetary value to a qualitative asset represented by the brand at large. The second way of
evaluating the brand equity is to measure its impact on metrics related to consumer behaviour, for
instance brand loyalty and willingness to pay for premium price. The third assessment is related to
consumer perception of the brand, e.g. image, brand attitudes and perceived quality.19
The five brand equity assets mentioned above (brand loyalty, name awareness, perceived quality,
brand associations and other proprietary brand assets) have the potential to add or subtract value
for consumers by enhancing their interpretation of information, confidence in the purchase
decision and use satisfaction. These brand assets also add value to the business by enhancing the
efficiency and effectiveness of marketing programs, brand loyalty, prices/margins, trade leverage,
competitive advantage and brand extensions. 20
Edward M. Tauber, Brand Leverage: Strategy for Growth in a Cost-Control World, Journal of Advertising Research, 28
(August/September 1988), 27.
15 Keller, Conceptualizing, Measuring, and Managing Customer-Based Brand Equity, 1.
16 Aaker, Managing Brand Equity, 16.
17 Kevin Lane Keller, Strategic Brand Management : Building, Measuring and Managing Brand Equity, (New Jersey : Prentice Hall,
1998), 42.
18 Best Global Brands 2011, Interbrand, 67, http://www.interbrand.com/en/best-global-brands/best-global-brands-2008/bestglobal-brands-2011.aspx.
19 Leif E. Hem and Nina M. Iversen, Transfer of Brand Equity in Brand Extension : The Importance of Brand Loyalty,
Advances in Consumer Research, 30, (2003), 72.
20 Aaker, Managing Brand Equity, 16-17.
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2.3 Brand extension

Brand extension is () the use of a brand name established in one product class to enter another
product class ().21 Edward M. Tauber coined this term in 1979, after he started noticing that
the most successful companies in the US had started using their well-known brand names to
penetrate new product categories.22
Tauber identifies seven possible leverage strategies, when seeking a brand extension :
1.
Same products in a different form : for instance, Barilla First Fast Frozen Ready Meals
2.
Distinctive taste/ingredient/component in the new item : isolating an ingredient of a product

and to make it the core differentiator of a new category, for instance, Lalique, famous for its
crystals, making it the key differentiator of its vases, tables and cufflinks
3.
Companion products : penetrating a new category through production of an item that goes
hand-in-hand with an existing product, for instance, Illy coffee cups and mugs
4.
Expertise : for instance Louis Vuittons luggage making original know-how gives it the
legitimacy to launch city guides
5.
Same customer franchise : visa travellers checks
6.
Benefit/attribute/feature owned : beauty brand Lancmes makeup foundations with skincare benefit
7.
Designer image or lifestyle : Armani launching cafs, nightclubs, hotels and restaurants23
According to Keller, brand extension has been the predominant strategy for eighty percent of new
product launches in the last decades.24 In fact, as discussed in the literature, brand extension can
make product launch less costly, since the extension builds on the existing consumers attitudes
about the parent brand. However, extending a brand name does not always lead to positive
results. We will review below what are the potential benefits and dangers.
2.3.1 Brand extension benefits and dangers
There are five potential effects of extending a brand name, good and bad. First the bad : the brand
name can have a neutral effect on the extension, the original brand name can be damaged and
finally, the new brand can fail. On the other end, effects can also be positive : the brand name can
aid the extension and even more positive, the extension can enhance the brand name.25
Brand extensions allow launching products at lower costs because the extension borrows the
qualities that are associated with the original brand.26 In fact, the use of an established brand
name can substantially reduce the introduction investment and increase the success probability.27
The introduction of a new name in some consumer markets can involve an investment of from
$50 million to well over $150 million.28
This is specifically true for luxury brands. They are characterised by a strong brand capital, an
essential quality to fully benefit from brand extension, but inversely, need enormous marketing
Aaker, Managing Brand Equity, 208.
Edward M. Tauber, Brand Franchise Extension : New Product Profits from Existing Brand Names, A.N.A. New
Product Marketing Workshop, (November 1979), 1.
23 Edward M. Tauber, Types of Brand Extension, Brand Extension Research : The Innovator of Brand Extension,
http://www.brandextension.org/types.html.
24 Hem and Iversen, Transfer of Brand Equity in Brand Extension : The Importance of Brand Loyalty, 72.
26 Leif E. Hem and Nina M. Iversen, Effects of Different Types of Perceived Similarity and Subjective Knowledge in
Evaluations of Brand Extensions, International Journal of Market Research, 51 (2009), 797.
28 Ibid., 208.
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expenditure at time of launch. Although they historically flourished in world marked by social
stratification, they later felt the need to increase their financial return and therefore their tangible
or intangible accessibility, which brand stretching made possible. The sought outcomes for luxury
brands are usually gaining mass market, profitability, or physical intimacy with clients. For
instance, a luxury brand stretches into perfume to gain mass-market awareness through media
efforts deployed for the launch. A luxury brand enters the accessories market to gain profitability.
And finally, a luxury brand goes into spas to increase physical and intimate contact with its
clients.29
In addition, according to market research data, a product launch that builds on the strength of an
existing brand name leads to higher consumer trial than the use of a new brand name for an equal
product because of the awareness levels and association equities of the brand name being
leveraged.30 According to Leif E. Hem, Leslie de Chernatony and Nina M. Iversens research
findings, an established brand name can also serve as risk reliever and signal of quality, especially
when the brand enters a product category that is perceived risky.31
In addition of facilitating product trials and lowering a product launch costs, brand extension
allows management to thinking broadly about their business domain and spot potential missed
opportunities.32
However, the other side of the coin is that the effects of a failure can expend to the original brand
and affect its image negatively.33 Moreover, even with successful extensions, there is always a risk
of diluting brand image, or losing control of image and quality.34 For instance, although Pierre
Cardins extensions have provided immediate financial benefits, they had a negative impact on its
brand name. The reason why its name value has decreased is because the firm extended the Pierre
Cardin brand into too many products and licensed it to firms from all over the world that did not
deliver the right product quality.35 In the fashion sector, the other problem that may arise when
product line extensions includes lifestyle accessories and diffusion clothing ranges, is the growth of
illegitimate markets that sell the brand at discount prices in unauthorized and unwanted locations,
thus, threatening its exclusivity. 36 Or, alternatively, when fashion houses decide to do step-down
extensions to increase brand profitability, they directly affect its perceived quality. According to
literature review, the risks of diluting the core brand image, cannibalizing sales and affecting
negatively the perception of the core-brand consumers are high.37 Furthermore, when a co-
J.N. Kapferer and V. Bastien, The Luxury Strategy : Break the Rules of Marketing to Build Luxury Brands, (London : Kogan
Page Limited, 2009),138-140.
30 Keller, Strategic Brand Management, 582.
31 Leif E. Hem, Leslie de Chernatony, Nina M. Iversen, Factors Influencing Successful Brand Extensions, Journal of
Marketing Management, 19 (September 2003), 789.
32 Tauber, Brand Extension Research, http://www.brandextension.org/business.html
33 Eva Martinez and Jos M. Pina, Influence of Corporate Image on Brand Extensions : A Model Applied to the Service
Sector, Journal of Marketing Communications, 11 (December 2005), 14.
34 Kapferer and Bastien, The Luxury Strategy, 142.
35 Brand extension, with jacuzzi. The Economist, 370, (February 2004), 61-62.
36 Christopher M. Moore, Brands Without Boundaries : The Internationalisation of the Designer Retailer's Brand.
European Journal of Marketing, 34 (2000), 933.
37 Fanny Magnoni and Elyette Roux,Stretching the brand down, does it affect the consumer-brand relationship?
Universit de Droit, dconomie et des Sciences dAix Marseille, Universit Paul Cezanne, 8,
http://www.cergam.org/fileadmin/files/cerog/wp/822.pdf
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branding strategy is employed, a wrong combination of brands, or a combination of brands of

different status level may damage the images of both brands.38
Despite the potential risks, there are extensions that can enhance the original brand. This is the
outcome sought in this research. The proposed methodology is to first study brand extension
models, possible strategic directions and success factors. Strong of this knowledge, I will propose a
model to evaluate a brands extension potential and main stretching direction. Next, I will provide
recommendations for each criteria mentioned in the extension evaluation model. Finally, I will
propose a six-step methodology that initiates when brand managers start considering a brand
extension strategy and ends with the evaluation of the brand extensions possibilities.
2.3.2 Brand extension models
Brand management expert Jean-Noel Kapferer defines two possible models for luxury brand
extensions (Figure 2.1) :
1.
Vertical extension or pyramid model : the brand moves downward or upwards to reach new
customers thanks to the exclusivity or the accessibility brought by the change in absolute
price.39 This strategy is employed by fashion luxury brands to enlarge their markets and make
themselves more accessible to a larger number of customers, for instance Armani Exchange
line is 50% cheaper than the Armani Jeans line. However, upward extensions are also seen,
for instance Ralph Lauren creating couture line made in Italy. 40
2.
Horizontal extension or galaxy model : the second model revolves around the brand essence,
at times around the creator who is still living. The galaxy creates a universe, a lifestyle that
adapts to different situations. The price strategy remains the same: the brand moves in
different areas of the consumers life without changing its relative price.41
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Figure 2.1 Brand extension models
C. Whan Park, Sung Youl Jun, and Allan D. Shocker, Composite Branding Alliances : An Investigation of Extension
and Feedback Effects, Journal of Marketing Research, 33, (November 1996) 464-465.
39 Kapferer and Bastien, The Luxury Strategy,140-141.
40 Edith Cheong and Ian Phau, Young Status Oriented Consumers Evaluation of Diffusion Brand Extensions : The
Effects of Brand Loyalty, Branding Track, (December 2003), 187.
41 Kapferer and Bastien, The Luxury Strategy, 140-143.
38
15
One of the major differences between these two strategies consists in the places where the
brand is experienced. A brand extending vertically may choose to display all its products in one
place, the shop or the boutique, to show brand coherence, while the brand extending horizontally
creates different universes in which the brand is experienced.42
2.3.3 Brand extension strategic directions
It was explained in the previous section about brand extension methodology that the brands core
identity should be first defined since the logic of brand extension is to create associations between
the inner brand essence and related concepts. There are two possible directions (Figure 2.2) :
1.
Associations based on the expertise, know-how, competence or functionality : they are based
on the transfer of a brands expertise to a new category where its skills and assets are relevant,
for instance Crest mouthwash, Lalique cufflinks, or Heineken wine, or they logically
complement the original brand product or service offering, to be used together in some
situations, for instance Heineken popcorn or Vuarnet skis.43 According to Kapferer, this
type of stretching can go beyond physical similarity, and exploit instead the brands imaginary
quality or service function.44
2.
Associations based on the brand image, cultural heritage or lifestyle quality such as the
Baccarat Hotel, Armani cafes or Marc Jacob bars. In the case of Baccarat Hotel, the stretching
is linked to the dream life. The essence of the brand, crystal refers to a royal lifestyle, to
receptions, to palaces. As a result, Baccarat connotes intimacy, rarity and purity.45 Similarly
Bulgari, which was originally a jewel artisan, used its precious quality to extend into hotels,
which are made of precious materials and into perfumery and cosmetics, which are made of
rare ingredients.46
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Figure 2.2. The two strategic brand extension directions

We will see in the next two sections, when it is preferable to borrow the expertise or the image
path. Although the literature makes some clear recommendations regarding when to apply each of
these two strategies, it contradicts itself whereas which strategy is the strongest one, when there is
no obvious direction to take. In consequence, these two paths will be considered in the context of
this research.
2.3.4 Literature review : brand extension success factors
The literature about the factors influencing brand extensions success is exhaustive. This section
presents a summary of the most important ones, according to the literature review. Success factors
Kapferer and Bastien, The Luxury Strategy, 143.
David A. Aaker and Kevin Lane Keller, Consumer Evaluations of Brand Extensions, Journal of Marketing, 54 (January
1990), 32.
45 Ibid., 145.
46 Our Vision, Bulgari Hotels and Resorts, http://www.bulgarihotels.com/en-us/footer/our-vision.
42
43
16
listed in this section have been repeated in several studies, in articles published between 1981 and
2011. In most cases, the research results were based on surveys given to a student population
sample. Fictive brand extension possibilities for well known existed brands were presented to the
respondents and they had to rate factors on a scale. Most of the selected articles were frequently
cited amongst the authors, showing their importance in the brand extension field. Although many
of the studies show results consistency, there were some contradictions amongst them, depending
on the population sample or the variables used. I selected the factors and determining variables
that were repeated in a majority of studies.
Ten factors determining the extension success were identified, including four exclusively related to
the marketing strategy. Factors having similar effects, but called differently in various studies have
been regrouped below into unique categories. I listed in the header possible different names for
these factors.
Perceptual fit/perceived similarity
Perceptual fit has historically been considered as the most important brand extension success
factor.47 Perceptual fit is the term employed in the literature to describe the perceived similarity,
or consistency between the extension and the original brand. This finding comes from a
fundamental study by David A. Aaker and Kevin Lane Keller that aimed to understand how
consumers make judgments on which they would base their perception towards brand extension.48
For the following twenty years, several subsequent brand extension researches replicated Aaker
and Kellers study and arrived to similar conclusions. As assessed by Leif E. Hem and Nina M.
Iversen, () almost all research demonstrated that the most successful brand extensions were
those that had the highest degree of perceived similarity between the original brand and the
extension.49
Aaker and Kellers study has demonstrated that when consumers perceive strong similarity
between the parent brand and the extension, they transfer the qualities they associate with the
original brand to the new category. This is why brand extensions characterized by high fit level are
more successful : they indirectly benefit from previous marketing efforts towards the original
brand. However, in the case where there is a large perceived gap between the original and the new
product, the perceived quality of the original will not have such a positive impact on the extension,
as the consumer will not naturally link parent and extension brands. 50
Aaker and Keller have contextualized the fit variable into three different dimensions that are the
basis of the consumers perceptions :
1. Transfer : () the perceived application of the skills and assets of a competent manufacturer
in the original product class for making the product extension ().51
2. Complement : () the perceived product classes complementarity ().52
3. Substitute: () the perceived product classes substitutability ().53
Edward M. Tauber, Brand Franchise Extension : New Product Benefits from Existing Brand Names, Business Horizons,
24 (March/April 1981), 340.
48 Aaker and Keller, Consumer Evaluations of Brand Extensions, 1.
49 Batra, Lenk and Wedel, Brand Extension Strategy Planning: Empirical Estimation of Brand-Category Personality Fit
and Atypicality, 336.
51 Ibid., 38.
52 Ibid., 38.
47
17
Transfer and complement are the most important dimensions but do not need to be present
simultaneously. In fact, as Aaker and Keller explain, a fit on either TRANSFER or
COMPLEMENT may be adequate; a good fit on both is not necessary.54
Later investigations demonstrated that perceived similarity is not a fixed factor. For instance, Hem
and Iversens study demonstrates that several variables such as consumer brand knowledge and
the type of fit variable dimension affect perceived similarity judgements. That means that when
considering brand extension, managers should focus on different aspects in different situations.55
In fact, there are two brand extensions strategic poles to achieve fit, depending on the nature of
the brand. There can be fit at the expertise level, i.e. based on the functional nature of the brand
and its know-how. Or fit can happen at the image level, i.e. based on the intangible brand concept
or on the brand lifestyle.
Below, I will review the variables having an impact on perceived similarity (fit) and will put
forward some recommendations to achieve it, according the literature analysis.
Associations / Perceived quality
We have learned from the fit variable research findings that the perceived similarity between the
parent brand and the extension had a positive effect on the consumer evaluation of the extension.
In addition, Aaker and Kellers research has demonstrated that this perceived similarity determines
the degree to which the perceived quality of the original is transferred to the extension, since
consumers use their knowledge of the original brand to make a judgement on the extension.56
The more salient, shared associations there are between the brand name and the new extension
category, concluded Rajeev Batra, Peter Lenk and Michel Wedel, the greater is the perception of
fit. The greater the perceived fit, the greater is the degree to which consumers will view the
perceptions and preference of the extending brand to carry over to its new product category.57
Moreover, the extending brand name must possess strong and unique associations that
differentiate it from its parent product category, and thus allow it to go beyond.58 As pointed
out by Tauber, the existing brand associations must be somewhat different and better than general
brand associations for the product category. Tauber calls this aspect competitive leverage, or
powerful unique and strongly linked associations. 59
The transfer of the consumers associations with the parent brand to the extension can affect
positively or negatively the extension, depending on the interaction between the original and
extended product and product categories.60 For instance, in the eighties, Clorox tried to extend its
brand into the detergent category. It failed because consumers perceived Clorox as a brand whose
Ibid., 38.
Ibid., 38.
55 Hem and Iversen, Effects of Different Types of Perceived Similarity and Subjective Knowledge in Evaluations of Brand
Extensions, 814.
56 Franziska,Vlckner and Henrik Sattler, Drivers of Brand Extension Success, Journal of Marketing, 70 (April 2010), 23.
57 Rajeev Batra, Peter Lenk and Michel Wedel, Brand Extension Strategy Planning : Empirical Estimation of BrandCategory Personality Fit and Atypicality, Journal of Marketing Research, 47 (April 2010), 336.
59 Ibid., 337.
53
54
18
expertise was to bleach and therefore transferred that association to a fictive Clorox
detergent.61
However, it is important to consider that consumers associations with brands go well beyond
their functional attributes and include non-functional, symbolic qualities, which are referred to as
brand image, and necessarily inferred the brands personality.62 According to Batra et al, the fit
between the personality of the original and the parent brand plays an important role in consumers
evaluations of the extension.63
Prestige vs. functionality / Abstractness vs. Concreteness
The nature of the parent brand has a significant influence on the perceived similarity. 64 Aaker and
Kellers research on the fit variable suggests that brands that are of more abstract nature are
more easily extendable than concrete brands, based on the fact that abstract attributes are more
easily extendable and can therefore suit more categories since they are broader or more inclusive.65
This observation was confirmed in subsequent researches. For instance, Batra et al concluded:
Therefore, brands that are marketed on the basis of inherently more abstract lifestyle associations (e.g.,
Ralph Lauren) have historically proved to be extendible into many other seemingly disparate product categories
(e.g., table linen, sunglasses, paint). For example, Heinekens strong association with the concrete beer
category might make it less extendible than another beer, such as Corona, which also has a broader lifestyle
association of a partygoer or beach relaxation. 66
Park et als conclusions are somewhat similar to what Batra et al and Hem et al found later, but
they have separated function-oriented and prestige oriented brands instead of basing their research
on the degree of abstractness versus concreteness. Their results also show that the degree of
abstractness of the parent brand played an important role in the way consumers perceive product
feature similarity, and since prestige brands are more abstract, they benefit from a higher level of
perceived concept consistency. Consequently, prestige brands can extend in more diversified
product class categories if they keep their status positioning. According to this study, functional
brand extensions should remain closer to the original product category to be successful.67
Alokparna Basu Monga and Deborah Roedder John have investigated this topic using two brands
of watches, one positioned on the basis of prestige, Rolex, and the other one, positioned on
functional attributes, Timex. Their study showed that prestige brands have abstract brand
concepts that are more elastic than the others and consequently can successfully expand into a
variety of product categories. On the other hand, functional brands are more successful if they
extend into categories that allow the expression of the functional nature of the brand.68
Batra, Lenk and Wedel, Brand Extension Strategy Planning: Empirical Estimation of Brand-Category Personality Fit
62 Jennifer L. Aaker, Dimensions of a Brand Personality, Journal of Marketing Research, 43 (August 1997), 347.
64 Hem and Iversen, Effects of Different Types of Perceived Similarity and Subjective Knowledge in Evaluations of Brand
Extensions, 813.
65 Aaker and Keller, Consumer Evaluations of Brand Extensions,38 and Batra, Lenk and Wedel, Brand Extension
Strategy Planning: Empirical Estimation of Brand-Category Personality Fit and Atypicality, 336.
67 C. Whan Park, Sandra Milberg and Robert Lawson, Evaluation of Brand Extension : The Role of Product Similarity and
Brand Concept Consistency, Journal of Consumer Research, 18, (September 1991), 185.
68 Alokparna Basu Monga and Deborah Roedder John, What Makes Brands Elastic? The Influence of Brand Concept and
Styles of Thinking on Brand Extension Evaluation, Journal of Marketing, 74, (May 2010), 80.
61
19
According to Broniarczyk and Albas study, brands that are elastic, e.g. abstract or prestige brands,
should choose extensions that allow a fit at the level of the imagery, as it has proven to be a
greater determinant of brand extension success than the perceived similarity between parent and
extension product categories.69
Brand awareness
According to Kevin Keller, the original brand must be well known before considering its
extension into new product categories.70 In fact, a brand generally looks at capitalizing on the
value of its name because it has a high equity, therefore high awareness. We can induct that it is
more logical for a brand with low awareness to build its brand name and achieve some sort of
maturity prior to being stretched.
Parent-brand experience/brand-consumer relationship
Brand-consumer relationship is one of the five most relevant brand extension success factors
according to Franziska Vlckner and Henrik Sattlers research on the drivers of extension success.
It is determined by the quality and the quantity of direct experiences the consumer had with the
brand or by consumer loyalty.71 According to Vlckner, direct experience might also cause
greater parent-brand knowledge, stronger brand associations, and stronger autobiographical
memories, all of which might result in higher levels of parent-brand conviction.72 The same
research argues that brand managers should be build customer based brand equity prior stretching
an existing brand, in order to achieve financial success.73
In another study that aimed specifically at understanding better the role of the consumer-brand
relationship in the extension success, Park and Kim transferred knowledge on interpersonal
relationship psychology to consumer-brand relationship based on evidences showed in Fourniers
research (1990 and 1992).74 Questioning why some dissimilar extensions were successful, while the
fit variable had been acknowledged in all studies, Park and Kims research findings suggest that
a strong relationship between the consumer and the brand could make dissimilar extensions
successful. If we use interpersonal relationship psychology theory to explain this phenomenon, we
can deduct that consumers engaged in satisfying relationship with a brand would show more
indulgence towards negative behaviour and would tend to evaluate it more positively than in the
opposite case, similarly to what is generally observed in an interpersonal relationships, when one
of the two parties behave in non appropriate ways.75
Higher quality extensions
Higher quality extensions refer directly to one of the two-brand extension models studied above,
the pyramid model. A number of studies have evaluated the impact of the two alternatives that
this model offers, e.g. the verticality of higher-quality extensions (consequently, more prestigious
and higher-priced), versus lower-quality extensions (therefore, more accessible and lower-priced).
Timothy B. Heath, Devon DelVecchio, and Michael S. McCarthys research findings showed that
70 Keller, Strategic Brand Management, 600-601.
71 Franziska Vlckner and Henrik Sattler, H., Drivers of Brand Extension Success, Journal of Marketing, 70 (2006), 22.
72 Ibid., 22.
73 Ibid., 30.
74 Jon-Wong Park and Kyeong-Heiu Kim, Role of Consumer Relationships with a Brand in Brand Extensions : Some
Exploratory Findings, Advances in Consumer Research, 28 (2001), 180.
75 Ibid., 180.
69
20
() a robust asymmetry emerges in which higher quality extensions improve brand evaluation far
more than lower-quality extensions damage it.76
According to the same article, a brand gains more positive feedback when it is stretched upward
than downward because its ascension in quality signals to consumers its ability to use its expertise
to produce high-quality products and services.77 This was Bulgaris strategy when the brand
extended into hotels. The Economist reports To fit the firm's luxurious image, Bulgari says that
its hotels must be as upmarket as it is possible to be.78
Negative reactions of current customers towards step-down extension can be understood by
linking the consumer-brand relationship theory to brand extension. It has been demonstrated that
step-down extension may negatively affect brand trust, emotional attachment to the brand and
brand loyalty. Fanny Magnoni et al give the following explanation :
The theory of the generalization of effects might explain these first results : beliefs and
brand affective evaluation (brand image, trust, and emotional attachment) are first
modified and it can then influence intentions and behaviours (involvement). Moreover,
the perceptual relationship between the step-down extension and the brand (typicality of
the extension within the brand, similarity, and the degree of perceived consistency
between extension attributes and core brand associations) appears to be a significant
explanatory variable.79
It is also interesting to note that prestige and mass brands are influenced in different ways by the
verticality of the extension. For instance, whereas prestige brands may be affected negatively by
step-down extensions, the influence may be positive on non-prestige brands.80
For the pyramid model, whatever is the stretching direction, the naming strategy is key to
differentiate the new brand from the original and thus allow the consumer to make its own
assessment of price/quality report.
Number/success of previous brand extensions
A factor having a minor influence than the previous ones is the number and success of previous
brand extensions. Research has shown that a brands elasticity increases with the number of
previous successful brand extensions because it increases the consumers associations with the
original brand concept. In addition it increases trust due to the fact that the brand has showed
quality consistency in different product categories.81
2.3.5 Literature review : brand extension marketing success factors
Literature has shown that the appropriate marketing strategy can help consumers making links
between the original brand concept and the extension, i.e. help them seeing better the similarity
between them, which, as mentioned before is considered the most important brand extension
factor. Marketing and communications can also help counterbalance some negative variables or
factors. For instance, when the consumer-brand relationship is low or the salient attributes of a
brand do not appear obvious to the consumers, a good communication strategy can ensure the
consumer understands the logic behind the extension, or the inherent quality of the brand that
allows it to extend in a given category.
Timothy B. Heath, Devon DelVecchio and Michael McCarthy, The Asymmetric Effects of Extending Brands to Lower
and Higher Quality, Journal of Marketing, 75 (July 2011), 17.
77 Ibid., 5.
78 Brand extension, with jacuzzi. The Economist, 61-62.
79 Magnoni and Roux, Stretching the brand down, does it affect the consumer-brand relationship? 17-18.
80 Ibid., 17-18.
81 Vlckner and Sattler, Drivers of Brand Extension Success, 23.
76
21
I listed below the marketing tools that can be played to enhance the brand extension perception.
Marketing and communication support
Appropriate communication efforts can have positive impact on the evaluation of the extension.
It could potentially add some credibility to the original firm for making the extension and play a
role to avoid the transfer of negative connotations or attribute associated with the original brand.82
In addition, since perceived fit between the original and the extension is the most important
success factor, variables able to decrease the perceived distance between these two, can play a
positive role in the consumers evaluations of the extension. For instance, research has shown that
repeated exposure to an extension may increase perceived fit as it helps consumers identify shared
attributes between the original and the extension. Thus, the advertising strategy can be specifically
developed to enhance a specific feature of the original brand, or to give consumers the appropriate
level of knowledge about the brand in order to help them understanding the logic of less obvious
extensions.83
Retailer acceptance
In cases where a product extension is distributed by a third party, retailer acceptance means the
retailers willingness to give the new product the appropriate space in store or contribute to its
promotional efforts. There are several ways to influence a retailers acceptance of the product. For
instance, a retailer is more inclined to accept a product that is backed-up by the appropriate
advertising support, as it builds awareness and demand. In addition, the manufacturer and the
distributor can partner together on the marketing strategy and direct the consumers to specific
stores in the consumers communications about the product extension.84
Cobranding
Since the early beginnings of brand extension, brand managers have strategically used co-branding
to penetrate the territory outside of their domain of expertise, and that is for obvious reasons.
First, the cost-reduction implication of the shared manufacturing and marketing expertise is
considerable, and secondly, previous literature suggests that the combination of two brand names
can lead to more consumer confidence than one brand alone. It is supposed that consumers
interpret the partnership as being favourable to both companies, and thus, trustable.85
C. Whan Park, Sung Youl Jun and Allan D. Shocker evaluated the effectiveness of a co-branding
brand extension strategy. Their research has demonstrated that, on a pure brand image point of
view, a brand may be better off seeking a brand partner than adventuring itself alone in the brand
extension process, especially if the brand partner can complement what is missing to the first
brand.86
Naming strategy
When stretching brands upwards or downwards, the appropriate brand naming strategy may help
achieved desired positioning and perception.87 Naming strategies include :
1.
Subbrand : adding a new name adjacent to an existing name, for instance, Armani Exchange88
Aaker and Keller, Consumer Evaluations of Brand Extensions, 38-39.

Hem and Iversen, Transfer of Brand Equity in Brand Extension : The Importance of Brand Loyalty, 814.
85 Park, Jun and Shocker, Composite Branding Alliances : An Investigation of Extension and Feedback Effects, 453.
86 Ibid., 453.
87 Ibid., 453.
82
83
22
2.
Nested brand : a new brand name introduced by existing name, for instance Courtyard by
Marriot89
3.
Co-brand : two existing brand names juxtaposed together, for instance Slim Fast by Godiva.
In this case, the position of the header (the brand preceding the preposition by) and the
modifier (the brand following the preposition by) result in different perceptions. 90
4.
Country of origin : the name of the brand is juxtaposed to the country where the brand is
made. It may help to create proximity (when it is made in the same location) or distance
(when the location differs) between the original and the extension. If the extension carries the
same country of origin, particularly in the case of prestige brands, it may help to transfer the
quality associated to the original product.91
5.
And finally I used Sister Brand to design a new brand name inspired by the original, for
instance Nespresso that recalls Nescaf, because of the exactitude of the first three letters of
both names.
2.3.6 The Brand Elasticity Assessment Square

Most of the brand extension literature includes studies that evaluate the impact or correlation of
one or two brand extension success factors at the time. There was one article amongst the
literature review for this paper that filled the missing gapmaking a general assessment of all
success factors into a single study. In fact, the work of Vlckner and Sattler is particularly
interesting because it evaluated altogether the relative importance of 10 factors coming from 45
studies done over 15 years. They have regrouped their findings into two categories, essential
factors and less important factors.92
Similarly, I evaluated factors coming from several studies over a period of 20 years. However, I
propose to use the data differently in order to allow brand managers to first evaluate the extension
potential of their brand, then to make informed brand extension choices based on the success
factors in relation with the extension category, and finally, to strategically plan their
implementation.
Thus, there is perhaps fundamental question to ask in first hand : What is the extension potential
of a given brand? I suggest to first assess the brands elasticity without making any correlations
with variables related to the extension category.
Based on the literature review, four criteria intrinsically associated with the parent brand should be
taken into consideration to judge the extension potential of a brand. These four criteria, in order
of importance, are:
1.
High awareness. High awareness refers to how well known is the brand. Awareness is key
since the rationale of brand extension is transferring the awareness, the knowledge and the
beliefs associated to an existing brand to a new brand. There are two dimensions to consider,
especially if brand managers seek to extend the brand into a new product category when
evaluating the awareness : general awareness and awareness within its product category.
Recommendations on the latter will be given in the next section.
Park, Jun and Shocker, Composite Branding Alliances : An Investigation of Extension and Feedback Effects, 453.
Ibid., 453.
90 Park, Jun and Shocker, Composite Branding Alliances : An Investigation of Extension and Feedback Effects, 454.
91 Ibid., 454.
88
89
23
2.
High abstractness. Abstractness refers to how broad is the brand, or its prestige versus its
functionality. Abstract or prestige brands are more elastic since they can extend in more
diversified product class categories, based on the fact that are more inclusive and can
therefore accommodate intangible concepts and associations.93
3.
Strong associations. Associations refer to how salient, unique and positive are the qualities
and attributes associated to the brand.94 Again here, associations can be made at the level of
the brand and of the product category. It is important to consider both, as both influence the
consumers perception. The brand associations should ideally be different than the general
brand associations for the product category.95
4.
Strong consumer-brand relationship. Consumer-brand relationship refers to brand loyalty or

the quantity and quality of direct experiences with the brand. Brand knowledge increases with
the number of direct experiences with the brand. It is through brand knowledge that the
consumer naturally makes conceptual associations with the brand, which are necessary to
create links between the original brand and the extension. Strong consumer-brand
relationship therefore results in stronger brand associations.96
I designed The Brand Elasticity Assessment Square to help brand managers assessing the extension
potential of their brand and making strategic brand extension decisions accordingly (Figure 2.3).
The Brand Elasticity Assessment Square has been designed to facilitate the ranking of the four
brand elasticity criteriaawareness, abstractness, associations and consumer-brand relationship
and thus make it easier to assess a brands elasticity.
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Figure 2.3 The four criteria of brand elasticity in order of importance

In sum, the brands that present high awareness, high abstractness, strong associations and strong
consumer-brand relationship are definitely elastic or brands with high extension potential.
Figure 2.4 illustrates the example of Armani, a brand with high elasticity potential. Armani has very
Park, Milberg and Lawson, Evaluation of Brand Extension : The Role of Product Similarity and Brand Concept
Consistency, 185.
95 Ibid., 337.
93
24
high awareness; consumers within and outside its target market know it and its brand alone is
evaluated at $5.1 billion (in terms of brand contribution valuation data) by Millward Brown.97
It is characterised by very high level of abstractness or prestige. In fact, Armani is one of the
worlds top ten prestige brands, according to The Luxury Institutes Luxury Customer Experience
Index.98 Armanis brand associations are extremely strong; when thinking of Armani, one
immediately thinks of timeless fashion, elegance, style and Italian design. Moreover, it has high
level of consumer-brand relationship, thanks to its flagship stores across the world, its cafs,
nightclubs and hotels.
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Figure 2.4 Example of a brand with high elasticity (Armani)

The ranking in importance of each of the elasticity criteria has an impact of a brands elasticity. For
instance a brand that is characterised by high levels of awareness and abstractness but medium
levels associations and consumer-brand relationship is more elastic than a brand that has medium
awareness and abstractness and high associations and consumer-brand relationship. Aveda is an
example of a brand with medium high-elasticity (Figure 2.5). Its awareness is high into its product
category, but not quite as much outside of its domain of expertise, for instance, consumers who
are not frequent users of its products do not necessarily recall the brand. Thanks to its broad
brand statement, the art and science of pure flower and plant essences, its level of abstractness is
higher than most of hair-care brands, although it is not the most prestigious in its product
category.99 Avedas associations are strong; it was one of the first hair care brand to position itself
on the basis of natural ingredients and preservation of the environment, therefore, its associations
differentiate the brand from its competitors and are broader than the brand itself. Finally, its retail
strategy (Aveda boutiques) and its hair and spa salon and spas allow the consumer to experience
the brand qualitatively and on several different occasions. Aveda still lacks the high levels of
awareness and abstractness to be a truly high elastic brand, but it is interesting to note that its
elasticity has increased along with its extension history, e.g. if we had done the elasticity exercise
one or two decades ago, it would certainly has been weaker in all criteria categories.
Millward Brown 2008 in Kapferer and Bastien, The Luxury Strategy, 120-121.
Luxe Look : Fashion Brands with Best Customer Experience, Footwear News, 64, (April 2008), 22.
99 Aveda, http://www.aveda.com/index.tmpl
97
98
25
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Figure 2.5 Example of a brand with medium-high elasticity (Aveda)

Nescaf is an interesting example since its high awareness contrasts with its low abstractness, the
two key brand elasticity criteria (Figure 2.6). In 2008, Nescaf was ranked 28th in Interbrands Top
100 Brands and evaluated at $13,055 million.100 Consequently, its high awareness is quasi
undisputable. However, it ranks very low in abstractness. First of all, Nescaf is a mass brand,
therefore positioned on the functional end of the expertise-image spectrum introduced earlier.
Moreover, its brand concept is very narrow; even its brand name refers to the world of coffee.
Although quite narrow, its brand associations are at a medium-high level. Nescaf is world famous
for its instant coffee and appreciated by consumers for its quality. Its consumer-brand relationship
is medium. On one hand it has high consumer-brand quality but few occasions for the consumer
to experience the brand qualitatively outside of home.
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Figure 2.6 Example of a brand with low-medium elasticity (Nescaf)
100
The 100 Top Brands, Bloomberg Business Week, http://images.businessweek.com/ss/08/09/0918_best_brands/29.htm
26
2.3.7 Brand elasticity assessment implications

The first purpose of The Brand Elasticity Assessment Square is to determine if a brand should be
extended or not. If a brand scores low on all criteria, especially awareness, it is probably better to
re-consider the extension in the brand strategic plan, or to leave the extension for later, when the
brand has at least minimum awareness.
The second purpose of The Brand Elasticity Assessment Square is to determine how it should be
extended. Later in this section, I will make recommendations for each of the four criteria but prior
to doing this, I would like to explain the main implications for low, medium and high elasticity
levels.
Implications for brands with high elasticity levels
The main implication for highly elastic brands is that they have more freedom in their extension
strategy. They can either expend in product categories close or away from their core expertise.101
As a result, the brands that are highly elastic are able to successfully launch extensions into more
remote product categories, based on a fit at the image level. 102 If we reflect on the Armani
example, we realize that brand has successfully extended its core expertise (haute couture fashion)
into various product and services categories (ready-to-wear, diffusion, swimwear accessories, home
furnishing, cafs, restaurants, nightclubs and hotels). Ralph Lauren, Virgin, Armani, and Bulgari
are other examples of elastic brands. Ralph Lauren sells in a broad range of products and service
categories such as fashion, fashion accessories, home furnishing, pet accessories and restaurants.
Similarly ,Virgin is present in very diversified industries such as transports, mobile services, music
labelling, retailing and broadcasting, travels and beverages. Bulgari, whose core expertise is
jewellery craftship has lent its brand name to fragrances, cosmetics, spas, sweets and hotels.103
Looking globally at these four brands, we note that their elasticity has increased with the number
of past successful brand extensions.
Implications for brands with medium elasticity levels
Brands with medium elasticity levels can also be extended but in a narrower range of product
categories. They should be first extended from their functional attributes and then, from their
brand image, as with time, their elasticity will increase with the number of previous extensions.
Although their extension strategy should be more alike that of low elasticity brands, i.e. at the
expertise level, medium elasticity brands can find a good middle ground between expertise and
image, especially after a few extensions. Aveda represents a good example of a brand with medium
elasticity that initiated its brand extension strategy from its core expertisehair care productsto
product categories within its field of expertise-beauty (cosmetics and make-up). Then, it expanded
again in adding services to its offer, moving slowly from services related to its core (hair care and
hair style) to broader services (facials, body treatments, massages, spa and food and beverages).
Monga and John, What Makes Brands Elastic? The Influence of Brand Concept and Styles of Thinking on Brand
Extension Evaluation, 90.
102 Ibid, 90.
103 Monga and John, What Makes Brands Elastic? The Influence of Brand Concept and Styles of Thinking on Brand
101
27
Implications for brands with low elasticity levels

According to the literature, it does not mean that brands with low or average degree of elasticity
should not consider a brand extension strategy.104 Studies have shown that these brands can
achieve successful brand extensions under specific conditions that we will review in the success
factors below. For instance, a brand such as Timex that is positioned more on the functional side
than the prestige, could be extended successfully if stretched from its core expertise.105 The case of
Nescaf that we studied above confirms the literature review. Nescaf has low elasticity because it
is weak on the abstractness levels. In fact, Nescaf has a narrow brand concept because it strongly
refers to the world of coffee. Indeed, the extension strategy for Nescaf was to extract its
strongest association (coffee with added convenience without compromise on the taste) and
played with the positioning dimensions to create a new product and service offering.
In consequence, the lower is the brand elasticity, the narrower is its range of extension
possibilities ; the higher is the brand elasticity, the broader larger is its range of possibility. As
illustrated in Figure 2.6, low elasticity brands should be stretched from their expertise, medium
elasticity brands, primarily from their expertise but progressively from image as well, while high
elasticity brands can be stretched from point in the entire spectrum, either from the expertise or
their image, or alternatively from both directions together.
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Figure 2.6 Brand elasticity implications on brand extension strategic direction

2.3.8 Recommendations for the four brand elasticity criteria
For each of the four brand elasticity criteriaawareness, abstractness, associations and consumerbrand relationshipI will make recommendations, based on the brand extension literature. I have
matched the success factors reviewed in the brand extension literature with each of the four brand
elasticity criteria. To recapitulate, when considering a brand extension strategy, I first recommend
looking at the original brand and evaluating whether or not, a brand extension is a strategic move.
Secondly, I suggest assessing the elasticity of the brand, based on the four elasticity criteria to
judge which strategic brand extension direction should be pursued. The recommendations below
are helpful to help reinforcing or palliating each of the high/low features a brand may have, when
making the strategic plan.
and Atypicality, 336-337.
105 Monga amd John, What Makes Brands Elastic? The Influence of Brand Concept and Styles of Thinking on Brand
104
28
Awareness
Awareness is the most important criteria to consider a brand extension strategy. Then, it is
important to assess whether the brand has high general awareness, or high awareness only within
its product category. The brand extensions strategy can be adapted accordingly. More specifically,
it means that if the brand extension is targeted at consumers that have low awareness or attitudes
towards the brand, the benefits of the extension will be somewhat lost, or worst, the links between
the original and the new brand misunderstood. If the brand has low awareness, it would be wise to
reconsider or delay the extension until the brand has reached minimum awareness. That taken
into consideration, while building a brand, it can be useful to keep the extension plan in mind and
ensure to communicate attributes that will facilitate the extension acceptation.
Abstractness
Amongst the four criteria, abstractness is the one having the most impact on the extension
strategic direction, e.g. expertise or image. According to some studies, the fit at the level of the
imagery is one of the main factors influencing the extension success.106 If the brand has high
abstractness it is definitely worth considering a brand extension strategy based on image. In that
event, one should use the abstract quality of the brand to exploit an extension category that
promotes the brand personality, concept and imagery. In addition, research has shown that the
extension has more chances of success if the prestige status of the brand is maintained intact or
scaled up.107 In case of low abstractness, the brand should be stretched from its functional
attributes or from its expertise.108 In this case, it is key to determine what are the strong, salient
and unique qualities that can add value to the extension category.
109
Moreover, brand managers
should also evaluate the counter effect of those qualities and ensure that there is a positive
relationship between these parent brand attributes and the extension categories. Lastly, the brand
should remain closer to its product category.
Associations
Evaluating the strength, salience and uniqueness of the brand associations helps extracting the
strongest qualities that can represent a competitive advantage in the new category, or a signal that
the brand has the expertise to make the new product or deliver the new service. When the
associations are strong, it is easier to for the consumers to make associations between the parent
brand and the new brand concept and transfer qualities from one to another. In that case,
managers should first define which ones represent the core of the brand and then determine in
which product category they could be highlighted. When associations are weak, it is important to
support the new product launch with marketing in order to help consumers making the links
between the original and the new brands.
Consumer-brand relationship
Consumer-brand relationship is another indicatorin lesser importance than abstractnessthat
helps determining how far the brand can be stretched. When the consumer-brand relationship is
109 Park, Milberg and Lawson, Evaluation of Brand Extension : The Role of Product Similarity and Brand Concept
Consistency, 185.
106
29
strong, the levels of attitudes and knowledge towards the brand are higher, usually resulting in a
better understanding of the brand concept. Consequently, the consumer perceives a greater
similarity between the parent brand and the extension, which is, as mentioned earlier, the most
important brand extension success factor (fit). A brand that is has a strong relationship with its
consumers, can get away with less similar extensions, because of the relationship effect. It can
therefore be stretched in more distant product categories if targeted to existing consumers.
Inversely, a brand that has low consumer loyalty or that has few occasions to be experienced by
consumers should extend in closer categories and invest in marketing.
CRITERIA
DEGREE
RECOMMENDATIONS
AWARENESS
HIGH
Consider a brand extension strategy

Adapt brand extension strategy to degree of awareness (high
only within its product category or high within and outside its
product category?)
LOW
Reconsider or delay brand extension strategy until the brand

has reached minimum awareness
ABSTRACTNESS
HIGH
Consider a brand extension strategy based on image and in

that event, favours extension categories that promote the
brand personality, concept and imagery110
Maintain prestige status intact or scale up111
LOW
Stretch from the brand functionality or expertise

Remain close to product category112
Determine what are the strong, salient qualities that will add
value to the extension category113
Ensure there is a positive relationship between the original
brand and the extension
ASSOCIATIONS
STRONG
Determine what are the strongest and more salient qualities

that are inherent to the brand
Determine in which product/service categories, those
qualities represent a competitive advantage
WEAK
Build a marketing strategy to communicate the qualities you

want to highlight
RELATIONSHIP
STRONG
If the extension is targeted to existing consumers, can stretch

the brand in less similar categories
WEAK
Expand in closer categories

Invest in marketing
Figure 2.7 Extension recommendations for the four elasticity criteria

Batra, Lenk and Wedel, Brand Extension Strategy Planning : Empirical Estimation of Brand-Category Personality Fit
112 Park, Milberg and Lawson, Evaluation of Brand Extension : The Role of Product Similarity and Brand Concept
Consistency, 185.
110
30
2.3.9 The Brand Extension Definition Process

Based on the literature review and on my personal methodology when searching a way to define
Krastases brand extension legitimacy, I have established a six-step methodology that I called The
Brand Extension Definition Process. This process initiates when brand managers start considering a
brand extension strategy and ends with the evaluation of the possible brand extensions. Therefore,
it excludes the implementation and marketing strategy. Figure 2.8 gives an overview of the
suggested methodology.
Assess
current
situation and
determine
long term
brand
vision and
objectives
Evaluate
brand
elasticity
and fit
strategy
Dig into
brand history
and culture
and assess
brand
essence
Define brand
extension
legitimacy
and
positioning
possibilities
Research
trends related
to the brands
extension
legitimacy
and
positioning
possibilities
Make
concept
associations
and evaluate
brand
extensions
options
Figure 2.8 The Brand Extension Definition Process

Step 1 : Determine the long term brand vision and objectives
Prior to considering a brand extension, the very first step should be determining the long term
brand vision and objectives. According to Tauber, it is fundamental that brand managers put
themselves at the task of defining the business of their company. This important step will help
them creating their limits and boundaries and defining the long-term vision of the business.
Tauber references Theodore Levitt who provided in the early sixties research techniques to help
companies defining their core businesses. Describing Levitts work, Tauber says He challenged
management to think broadly about what was or could be their domain, pointing out that the
failure of the railroads was due to not recognizing they were in the transportation business. The
result was missed opportunities and stiffer competition from other transportation carriers.114
Equally important is the necessity to set brand short, medium and long term objectives and ensure
first that brand extension strategy is the appropriate way to get there. Secondly, the brand
objectives will help determining which type of extension could potentially benefit the brand or
hurt it.
Step 2 : Evaluate brand elasticity and fit strategy
The second step should be evaluating the brand elasticity thanks to The Brand Elasticity
Assessment Square. The objective here is to first assess if the brand is a good brand extension
candidate and second judge which strategic extension directionstretch from brand expertise or
from brand imagesuits the brand better. Following the brand elasticity assessment, I recommend
going over the extension recommendations table to palliate the weaknesses or reinforce the
strengths of the parent brand in order to increase the extension success variables.
Tauber, E. Brand Franchise Extension : New Product Benefits from Existing Brand Names, Business Horizons, 24
(March/April 1981), 38.
114
31
Step 3 : Dig into brand history and culture and assess the brand essence
You have to understand the past to know the present. This quote from the American
astronomer Dr. Carl Sagan is also applicable to brand management. The quest to find the brand
essence must imperatively include historical research to understand the brand foundations, its
original mission and its evolution. A brand can only be built through coherence. To achieve this
you must know who you are and stick to it, says brand management guru Jean-Noel Kapeferer.115
This is especially true when evaluating a strategy that will impact the consumers brand perception,
such as brand extension. As mentioned earlier, the number one brand extension success factor is
the perceived similarity between the parent brand and the extension concepts, because the
consumer needs to recognize the brand and see the coherence between what he knows of the
brand and the novelties it brings to market under its name. This coherence is only possible once
the brand identity has been defined.
Identity expresses the tangible and intangible specificities of the brand, those that make
the brand what it is without which it would be something other. Identity is not
something that can be bolted on: it is nurtured from the brands roots, its heritage,
everything that gives it its unique authority and legitimacy in a specific territory of values
and benefits. It translates its DNA, the genes of the brand. It also integrates its knowhow and semiotic invariables: by which tangible, palpable elements is it recognized, both
in the products and in the shops in the staging or the advertising and communications.116
Kapferer has created a tool called the identity prism that is useful to codify a brand identity. This
tool assesses six essential facets: brand physique, brand personality, relationship mode, culture
(DNA and values), customer self-concept, customer reflected image and relationship mode.117 In a
later section of this paper, this tool will be applied to assess Krastases brand identity and brand
essence.
One of the six assets of Kapferers brand identity prism is the brands personality, which Jennifer
L. Aaker defines as (..) the set of human characteristics associated with a brand. 118 Aaker has
developed a measurement instrument to assess brands personalities, which allowed her to come to
five factors, after studied 114 personality traits : sincerity, excitement, competence, sophisticated
and ruggedness.119 These five factors can be used as a base to express the nature of the brand
personality in the brand essence assessment process. It has also been suggested by Batra et al, in
their literature review, that product categories and subcategories also possess a personality, which
has an impact on the brands perceived personality. 120 It is thus important to consider both when
assessing the brand personality.
Some researchers such as Tauber propose a consumer research method to reveal the key facets of
a brand personality.121 According to Kapferer, this process is useless The truth of a brand is
within itself.122 He argues that the brand identity is manifested over time in the products or key
Kapferer and Bastien, The Luxury Strategy, 122-123.

Ibid., 122-123.
117 Ibid., 122-123.
118 Jennifer L. Aaker, Dimensions of a Brand Personality, 347.
119 Batra, Lenk and Wedel, Brand Extension Strategy Planning : Empirical Estimation of Brand-Category Personality Fit
120 Ibid., 338.
121 Edward M. Tauber, Brand Franchise Extension : New Product Benefits from Existing Brand Names, Business
Horizons, 24, (March/April 1981), 340.
122 Kapferer and Bastien, The Luxury Strategy, 142-148.
115
116
32
milestones at the basis of the brand success.123 I suggest to refer to Kapferers approach and to
look within the brand to extract its essence instead of the opposite.
Another method that can be helpful in the course of this strategic portrait is the Chinese portrait
technique that consists in illustrating a brand with concepts outside its categories. For instance,
common examples are questions such as If the brand were a colour what would it be? If the
brand were an animal, which one would it be?
Step 4 : Define brand extension legitimacy
Once the brand essence has been clarified, the next step is to define the brands extension
legitimacy circles, which refer to the concepts related (closely or remotely) to the brand essence.
Here, as explained in an earlier section, the concepts can either be extracted from the brands
expertise (or functionality) or from the brands image (or lifestyle). Then, axes featuring opposite
poles, for instance, self-service versus service or custom-made versus mass-produced, can be used
to positioned the concepts and generate new ideas.
Step 5 : Research related trends
Once we know the limits of the brand playground, we can start researching related trends. Since
the trends will not necessarily refer to the immediate product category, it is better to start
researching them once we know what can become the brands new product categories.
Step 6 : Make concept associations and evaluate brand extension options
Finally, the last step of the extension definition process consists in matching the trends to the
potential new product categories while ensuring the brands essence and identity remain coherent.
The extension recommendations for the four brand elasticity criteria can be used as a checklist to
assess the concepts validity.
2.4 Experience Economy
Nowadays, a majority of households in developed countries have reached a certain level of wealth
and comfort, which, as a consequence, has shifted these consumers wants from basic and
functional products to more meaningful and emotionally engaging market offer, following the
logic of Abraham Maslows Hierarchy of Needs theory. B. Joseph Pine II and James H. Gilmore
have documented the evolution from commodity, to product, to service, to experience and more
recently to transformation economy, in their book The Experience Economy.124 Their main argument
is that experiences can add value to the companies. According to them, recognizing experiences
as a distinct economic offering provides the key to future economic growth ().125 In similar
ways to what happened in the economic history, i.e. the previous shifts to the Industrial Economy
two hundred years ago, and to the Service Economy thirty years ago, Pine and Gilmore predicts
the next one to be a shift into the Experience Economy. In their opinion, there is new economic
value potential in the latter, on which businesses should capitalize.126
Experiences are the fourth economic offering, after commodities, goods, and services. The more
we move towards experiences, the more the competitive differentiation and the customization
Kapferer and Bastien, The Luxury Strategy, 148

Pine II, B. Joseph and Gilmore, James H., The Experience Economy : World is a theather and every business is a stage, (Boston :
Harvard Business School Press, 1999), 166.
125 Ibid., ix-x.
126 Pine II and Gilmore, The Experience Economy, x-xii.
123
124
33
increase, and consequently the higher is the value (and price).127 A simple example is the price
asked for a cup of coffee. The actual price of the commoditycoffee bean when it is not fairtraded) is one or two cents a cup. The goodpackaged coffee grinds sold at supermarketscosts 5
to 25 cents a cup to the consumer. The servicea cup of coffee served at the local coffee barwill
be sold for $1.50 up to $2.00. But then came Starbucks, which managed to create an experience
while delivering the same basic commodity, and successfully starting charging an average of $5.00
per coffee cup.128 Starbucks created an enjoyable atmosphere, including places to sit and relax. It
also inspired itself from the European coffee culture, keeping the Italian coffee names and
planning carefully its stores intangibles such as the soft lighting, the sounds of the espresso
machines brewing coffee or steaming the milk, the voices of the bar attendant pronouncing the
Italian coffee names. Starbucks capitalized on the experience economy to create more value for a
similar product and therefore, to charge more for it.
Designer fashion brands are picking up on this trend by opening more freestanding stores,
considered an important too for continued growth. Calvin Klein, Michael Kors and Armani have
been following this trend. Giorgio Armani has made a big splash at retail, renovating existing
stores and shops-in-shops in the U.S and opening a 47,000-square-foot unit on Fifth Avenuean
Armani universe showcasing all its fashion lines as well as Armani Casa.129
2.4.1 The social factors behind The Experience Economy
Since The Experience Economy is first an economic concept, let us have a look at the social
factors motivating this change.
Self-definition through experiences
A group of psychologists led by Elizabeth Dunn and Michael Norton have conducted a research
on happiness that reveals that the way people spend their money is more important than how
much they earn. Their study indicates that happiness levels off after $75,000. The reason why?
Nowadays, people define themselves more through the experiences they live than through the
goods they accumulate. The postmodern consumer (post-consumer) is emerging to be less
concerned about the material values and more interested in the experiential values of activities.130
What the consumer is looking for in his experiences are cues for his identity construction and
pillars, on which to base his existence. Life is to be produced and created, in effect, constructed
through the multiple experiences in which the consumer immerses."131 However, experiences exist
only as mental representations and the more life-changing is the experience, the longer it takes the
mind to adapt to these changes. This process allows memories formation, which, with time, will
grow and will be revisited and reinterpreted by the mind. Consequently, positive experiences
directly contribute to peoples happiness.132 Negative consumer experiences destroy a persons
identity, while positive ones help him or her to define who he or she is.133
Ibid., 22.
Ibid., 22.
129 Marc Karimzadeh, Store Splash: Building Four Walls for Image, WWD: Womens Wear Daily, (October 2007), p.8.
130 Firat and Dholakia (2006) in Cova, Consumer Tribes & Brand Communities : A Mediterrenean Approach to Branding
Strategies.
131 Firat and Dholakia (1998) in Cova, Consumer Tribes & Brand Communities : A Mediterrenean Approach to Branding
Strategies.
132 Luka Lucic, Money Can Buy Happiness! You Just Need to Know How to Spend It, A Small World Newsletter
(January 2011).
133 Cova,Consumer Tribes & Brand Communities : A Mediterrenean Approach to Branding Strategies.
127
128
34
One of the key differences between the prior economic offeringscommodities, goods and
services and experiences resides in the degree of personal engagement. Experiences are more
personal and intimate and consequently engage the consumer on multi-levels: mind, body and
emotions.134 Lovemarks author, Kevin Robert agrees The Lovemarks of this new century will be
the brands and businesses that create genuine emotional connections with the communities and
networks they live in. This means getting up close and personal.135 In fact, in the experience
economy, satisfaction and emotions go hand in hand. It is argued that there is ample evidence
that emotional reactions associated with the consumption experience are fundamental for the
determination of satisfaction.136
How do we generate emotions? Roberts answer to generate emotions resides in three elements
mystery (great stories based on the past, the present and the future), sensuality (the five senses)
and intimacytwo of which require an experience.137
2.4.2 Experience design
Experience design is tremendously important in the experience economy since this it what
consumers will evaluate as being worth or not the asking price. Indeed, experience design has
become a business art as much as product or graphic design and like them, present its own design
challenges. These challenges can be addressed thanks to a map positioning the experiences across
two main dimensions : customer participation and environment relationship. Customer
participation can be positioned between two extremes : passive participation and active
participation. Examples of passive participation are attending a concert, a sporting event or a
theatre play. Active participation include activities which require the customers to be fully involved
for the experience to be appropriately delivered such as skiing, taking a dance lesson, completing a
Master Degree. The second dimension of experience relates to the type connection between the
consumers and the event or performance. One possibility is the immersion. For instance,
descending the Grand Canyon or taking a rollercoaster ride. The other possibility is absorption,
for example reading a text book or attending a university class. When we connect these two axes
together, we obtain four main experience categories. The first is entertainment, falls into the
absorption and passive participation dimensions, for instance watching television, or going to the
cinema. The second, educational event, is positioned across the absorption and active dimensions.
The third, escapist, is the most involving category as it implies an experience characterised by both
active participation and immersion. Universal studio provides such experiences at its theme parks.
Lastly, the fourth, esthetic, correspond to immersing experiences but that require little participation,
such as going to a nightclub or visiting a concept store.138 It is also possible to position the
experience more centrally across these dimensions. Generally, we find that the richest experiences
- such as going to Disney World or gambling in a Las Vegas casino - encompass aspects of all four
realms, forming a "sweet spot" around the area where the spectra meet.139 In the experience
B. Joseph Pine II, and James H. Gilmore, The Experience Economy : World is a Theater and Every Business is a
Stage, Museum News, Vol. 78 Issue 2, (March/April 1999), 102.
136 Bigne et al (2005) in Alexandra Coglan and Philip Peace, Tracking Affecting Components of Satisfaction, Tourism and
Hospitality Research, 10, (Januray 2010), 44.
138 Pine II and Gilmore, The Experience Economy: World is a theather and every business is a stage, 102.
139 Ibid., 102.
134
35
design process, the managers should reflect on how the experience will define their business and
vice-versa, i.e. what can be the brand contribution to a consumer experience. Just as goods and
services result from an iterative process of research, design, and development, experiences derive
from an iterative process of exploration, scripting, and staging-capabilities that aspiring experience
merchants will need to master.140
Pine II and Gilmore came up with five experience-design principles :
1.
Theme the experience. It must convey a unified story.
2.
Harmonize impressions with positive cues. Since the experience is intangible, what remains
are the impressionsthe takeaways of the experience.
3.
Eliminate negative cues
4.
Mix in memorabilia. Memorabilia contribute to the minds memories construction and thus
potential revisit of the experiences.
5.
Engage all five senses. The more senses an experience engages, the more effective and
memorable it can be.141
In an earlier section, the importance of designing emotionally engaging consumer experiences has
been demonstrated. According to Roberts, this can be achieved through mystery, sensuality and
intimacy. Let us look closely at each of these elements.
Mystery
Mystery stands for inspiring stories that combine the past, the present and the future. How can we
design the customer experience to make it story worthy? Roberts gives the following example :
Imagine youre in your Lexus driving to the hospital with your pregnant wife. You know
you are not going to make it and just then your local Lexus dealership comes into view.
That is exactly what happened to Mark and his wife. They pulled in and with the help of
the Lexus people delivered the baby. But the support didnt stop there. They loaned him
another car, cleaned up his, and generally played proud relatives.142
Another example, playing with the past, present and future this time, is Guinness Storehouse
visitor centre that connects the Guinness brand with Irish national history and transformed its
Storehouse visitor centre in major tourist attraction, making St James Gate Brewery the Home,
Heart and Soul of Guinness Beer.143
Sensuality
The senses are the fast tract to human emotions, says Roberts.144 He explains that when he went
to Beirut for the very first time, the city itself was a real senses awakening. The mixture of light,
textures, chaos and colours provided a very specific well-defined experience. The senses are
important information transmitters that interpret and prioritize. Creating emotional connections
using the language of senses require more than the simple addition of music, fragrance or textures.
All senses must work together to create a single impression.145
140
141
142
143
144
145
Ibid., 102.
Ibid., 102-104.
Roberts, 89.
Roberts, 92.
Roberts, Lovemarks, 105.
Ibid., 105-106.
36
Intimacy
What can turn an experience that is given to thousands and thousands of people into a
meaningful one for you? Intimacy, answers Roberts.146 Intimacy relates to the consumer-brand
relationship created in the course of the experience. Like every relationship, it implies a two-way
process, which means listening and more importantly understanding what matters deeply to
consumers.147 In addition, according to Caroline Tynan and Sally McKechnie, it is important to
manage the marketing experience through its whole lifespan including the pre and post
experience stages. To achieve this requires an in-depth knowledge of consumers, their
consumption values and willingness/ability to participate in the co-creation process.148
Furthermore, Pine and Gilmores latest work connects authenticity to The Experience Economy.
Indeed, authenticity is a trend that is raising in importance in experience design. But why? And
why now? Pine and Gilmore provide the following explanation : () in a world increasingly filled
with deliberately and sensationally staged experiences, consumers will choose whether to buy or
not based on how real they perceive an offering to be.149 They predict that the management of
the customer perception of authenticity will become the main source of competitive advantage.
This new business imperative is closely related to the social factors motivating the experience
economy reviewed above. Since the consumers use experiences to define who they are, the
coherence of their choice with their self-image is a factor they consider while making consumer
experience choices. Pine and Gilmore go further What they buy must reflect who they are and
who they aspire to be, with lightning quick judgments of real or fake hanging in the balance.150
When designing an experience, there are five dimensions that can be considered to create an
authentic experience : natural authenticity (something untouched by human hands that exists in its
natural state), original authenticity (it relates to the legitimacy of producing something, for
instance, being the first in a category or to offer a service), exceptional authenticity (done
exceptionally well by someone demonstrating human care), referential authenticity (connecting
with rituals or drawing inspiration from human history), and last, influential authenticity (exerting
an influence on other people, calling human beings to a higher goal).151
2.4.3 Beyond The Experience Economy
Coherently with the social and psychological factors justifying this new economic framework that
is the experience economy, Pine and Gilmore believe that there is a need to be affected by
experiences. The experiences we have affect who we are, what we can accomplish and where we
are going, and we will increasingly ask companies to stage experiences that change us, they
explain.152 They go further Human beings have always sought out new and exciting experiences
to learn and grow, develop and improve, mend and reform. But as the world progresses further
into the Experience Economy, much that was previously obtained through non-economic activity
Ibid., 128.
Ibid., 129-133.
148 Caroline Tynan and Sally McKechnie, Experience marketing : a review and reassessment, Journal of Marketing
Management, 25, (July 2009), 511.
149 Joseph Pine II and James H. Gilmore, In Search of Authenticity, Market Leader, 48 (Spring 2010), 52.
150 Pine II and Gilmore, In Search of Authenticity, 53.
151 Ibid., 53-54.
152 Pine II and Gilmore, The Experience Economy : World is a Theater and Every Business is a Stage, 163.
146
147
37
will increasingly be found in the domain of commerce.153 Thus, experiences would not be the last
economic offering, according to them. What comes after is transformation-experiences that
helps changing the individual and directly affect their identity. The person who subscribes to a
fitness centre is an example of someone seeking a transformation : he or she is interested in
increasing his or her physical health. Similarly, Master students want to open their mind, increase
their analytical skills to affect positively their professional and financial future. Pine and Gilmore
note that it is through the repetition of an experience that transformation can be achieved. By
staging a series of experiences, companies are better able to achieve a lasting effect on the buyer
than through an isolated event. It is the revisiting of a recurring theme, experienced through
distinct and yet unified events that transforms.154
The particularity of transformations is that the customer becomes the product. For this reason,
understanding the clients physical, emotional, intellectual aspirations is key to delivering a
satisfying transforming experience, since the client will look at the change within himself and
compare to what he wants to become to evaluate the transforming service that has been
provided.155 Once the Experience Economy has run its course, the Transformation Economy
will take over. Then the basis of success will be in understanding the aspirations of individual
consumers and businesses and guiding them to fully realize those aspirations.156
Transformation design must include the three following phases :
1.
Diagnosing Aspirations : understanding what the consumer truly wants to become.
2.
Staging Transforming Experiences : what is needed to achieve experiencesand more. The

four categories, especially the sweet spot where they all meet can be helpful to position the
offer.
3.
Following Through : probably the most difficult phase to achieve, although an essential one
to achieve the desired results. As mentioned above, repetition is one of the key elements
differentiating transformations from experiences.157
2.5 Linking the experience economy to brand extension strategy

In this part, I will establish links between the experience economy and brand extension. The logic
of brand extension is to create associations between the inner brand essence and related concepts
in order to enter a new product category, thanks to the strength of the original brand. We have
seen that depending on the brands elasticity degree, this stretch can be initiated from two strategic
directions : image or expertise. Brands with high elasticity can be stretched from anywhere in the
full spectrum : their broader concept allows them to fit better product categories that are close or
remote to their original offering. Brands with low elasticity can be stretched from their expertise.
Their extensions are more likely to be successful if they are perceived closer to the brands
functionality. Lastly, brands with medium elasticity should primarily be stretched from their
expertise as well, but in further extensions, can find a happy middle ground between expertise and
image. We have also seen that there are five possible outcomes on the original and extended
brands, from which three that are negativethe brand extension is a failure, the original brand has
153
154
155
156
157
Ibid., 163.
Ibid., 165.
Ibid., 173.
Ibid., 173
Ibid., 178-179.
38
no effect on the extension, the extension damages the originaland two that are positivethe
extension is a success and the extension has a positive effect on the original. One of this researchs
objectives is to create a framework thanks to the contribution of experience economy to design
brand extension that can potentially increase brand equity; therefore having a positive effect on the
original brand.
The experience economy and the transformation economy are the fourth and fifth economic
offerings after the commodities, the goods and the services. The experience economy is based on
two competitive business dimensions : making the offering more relevant to the need of
customers (customizing it) as well as differentiating it from the competition. The experience
economy has arisen at a time where consumers use experiences as bases of their self-identity. In
fact, economic value has climbed along with the increasing need for personalized consumer
offerings that help them define who they are. It is said that a persons life is basically the sum of its
experience. Pine and Gilmore predicted the transformation economy to be the next economic
paradigm succeeding to the experience economy. The transformation economy is based on
experiences that have the potential to affectsee changethe individual. They respond to a deep
human need to learn and grow, develop and improve, mend and reform.158 These experiences or
transformations can be positioned across two axesparticipation (from passive to active) and the
relationship with the environment (from absorption to immersion). These two axes create four
dimensions or categories in which the experiences can be positioned : entertainment, educational,
escapist (immerging participatory experiences) and esthetist (immerging non-participatory
experiences). Although the escapist one is probably the more engaging, the authors recommend to
position to try to centralize the experience at a sweet spot across the two axes.
Linking the experience economy to brand extension means targeting the two ultimate economic
offeringsexperiences and transformationswhen planning a brand extension. Thus, it means
creating an offer that will affect or ideally change the individual. Can all brands have the potential
of creating experiences and transformations? The answer resides in the establishment of a
correlation between the experience economy and the brand extension theories. To make this
assessment I will use the learning from The Brand Extension Elasticity Assessment Square and the
experience design principles. What does characterise high elastic brands? These brands are
imperatively well known, within and outside their field of activities. Their brand concept is broad,
abstract and inclusive while the associations generated with the brand are first of all positive and
secondly strong and unique enough to differentiate them from their competitors. Lastly, there is a
reciprocal relationship between their consumers and them; therefore there exists a minimum level
of intimacy and reciprocal knowledge. Now, what is a meaningful experience? We have seen that
the main differentiator between experience economy and the previous economic offerings resides
in the degree of personal engagement. Experiences are more personal and intimate and
consequently engage the consumer on multi-levels : mind, body and emotions.159 But the key word
amongst these three is emotions. Emotional reactions are fundamental to generate the brain
158
159
Pine II and Gilmore, The Experience Economy: World is a Theater and Every Business is a Stage, 163.
Pine II and Gilmore, The Experience Economy: World is a Theater and Every Business is a Stage, 163.
39
connections that will make the experience long-lasting and positively remembered.160 To generate
emotions, we have said that we have to design an experience that responds to the mystery,
sensuality and intimacy criteria described above.161 What is required in a brand to deliver mystery?
The brand needs to be able to transform its roots and cultural history into an inspiring story that
can be communicated in the physical world. Generally speaking, can high elasticity brands perform
this task? The answer is yes, their associations, awareness and abstractness almost guaranty that
these brands will have the ability to tell stories. Sensuality? The brand must be able to express itself
using the five senses. To achieve it, it needs strong associations. Do high elasticity brands have
them? Check mark. Intimacy? Intimacy refers to the consumer-brand relationship that is usually
strong amongst high elastic brands. Another check mark. In conclusion, high elastic brands are
very well suited to deliver powerful brand experiences.
Do low elasticity brands have the potential to deliver emotionally engaging experiences? What
characterise the low elasticity brands, except for the fact that they might not have the require levels
of awareness? They are narrow; they brand concept is functional. Their associations do not
differentiate them from the competition and do reference strong concepts outside their
functionality. They have low or average consumer-brand experience. Do low elasticity brands have
the potential to deliver mystery, sensuality and intimacy? Mystery, yes. Every brand has a story even
when it is not well known. Sensuality? Adding fragrance, music, textures, yes. But really connecting
them with the brand, no. To achieve it the brands need strong connotations. Intimacy? If the
consumer-brand relationship is weak, probably not. Therefore, low elasticity brands do not have
the full potential of deliveringyet a real emotionally engaging consumer experience. However,
since elasticity increases with the number of successful extension, it means that low-elasticity
brand could initiate playing with the experience concept, working on their services delivery until
they are ready to pass to the next change.
At last, can brands with medium elasticity emotionally engage the consumer through an
experience? Brands with medium elasticity find themselves between the low and high elasticity
brands. They usually have good awareness levels within their sector of activities but lesser general
awareness. Their abstractness is usually medium, their brand concept is larger than the product
itself but still closely relate to the category. Their brand associations are positive, but not topping
the extremes in terms of salience, strength and uniqueness. Finally, their consumer-brand
relationship can vary from low to high, as this is the least important of the four elasticity criteria.
Do medium elasticity brands have what is needed to generate emotional reactions through
experiences under their brand name? Yes, especially if they are medium-high elasticity brands,
meaning that they have fairly strong brand associations and consumer brand-relationship, but to a
lesser extent than high elasticity brands.
Now, what about transformations? Let us for us look back at what characterise the fifth economic
offering. In this economy, the businesses guide the consumers to help them to fully realize their
aspirations; therefore the customer become the product. To deliver these experiences, the
businesses must understand what the consumer truly wants to become and in addition to having
160
161
Coglan and Peace, Tracking Affecting Components of Satisfaction. Tourism and Hospitality Research, 42-58.
Roberts, Lovemarks, 76.
40
the power to help them achieve their full potential, they must gain their trust. Generally speaking,
real transformations are profound. Not only they are aesthetic, superficial or physical; they also
touch abstract levels such as the intellect, the self-image, the well-being and even the soul.
Transformations must at least achieve everything the experiences achieved, and go a step further.
Finally, they must deliver an experience that the consumer is willing to repeat frequently.
What levels of elasticity does it require for a brand to be suited to deliver experiences that have a
transforming purpose? (Here, let us put aside the businesses which of these have already made
transformation their core). Since they must at least be able to deliver a complete experience, we
can eliminate right away the low-elasticity brands. Medium elasticity brands have the potential to
deliver experiences, but based on the above analysis, this is probably their limit. High elasticity
brands can successfully create emotionally engaging experiences, and because of the strength of
their brand and their abstractness, they can play a more personal role in their clients life and be
suited to offer transformations. Figure 2.9 illustrates the experience-based extension potential of a
,%*-.!"#&"-('/-!(&%*&"+0!&/!*12'"3"!4'&
!"#$"%&'("!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!')*+"
brand according to its elasticity.
2'+2!"5*(&'1'&0
)".'6)!"5*(&'1'&0
5/7!"5*(&'1'&0
+//.(!!!!!!!!!!!!!!!!!("%3'1"(!!!!!!!!!!!!!!!!"#$"%'"-1"(!!!!!!!!!!!!!!!!&%*-(4/%)*&'/-(
&2"!$%/+%"(('/-!/4!"1/-/)'1!3*56"
Figure 2.9 Experience-based extension potential by elasticity

2.5.1 Indicators of brand equity increase for experience-based brand extensions
Kevin Keller argues that an extension can help the core brand image by improving the brand
associations at all levels : in strength, in favourability, and in salience.162 In addition, according to
Daniel C. Smith and C. Whan Parks research findings, brand extensions provide the opportunity
to come into contact into a brand in different contexts and as a consequence, naturally provide
natural brand exposure, which effects are similar to advertising. 163 We can deduct that the
exposure is even higher and more impactful in situations of experience-based brand extensions
since they are more emotionally engaging. There is therefore rational arguments back up the
Keller, Strategic Brand Management, 42.
Daniel C. Smith and C. Whan Park, The Effects of Brand Extensions on Market Share and Advertising Efficiency,
Journal of Marketing Research, 24 (August 1992), 296-313.
162
163
41
hypothesis that experience-based brand extensions can potentially increase the original brand
equity.
In addition, Smith and Parks research has shown that the one of the differences between what
they call search goodsproducts that can be evaluated accurately through visual inspectionand
experience goods products that need to be experienced to be judged on their qualityresides in
the way the products are evaluated. When a new product is an experience good, consumers have
neither actual experience with it nor concrete attributes on which to judge its quality (e.g., cough
and cold remedies, packaged foods). Consequently, consumers tend to rely heavily on cues such as
known brand names as bases for inferring quality.164 One the opposite with search goods, a
simple look at the product can tell a lot about its quality, therefore the impact of the brand name is
reduced in the product assessment process. These observations suggest that the effects of brand
extensions on product trial and hence market share are greater for experience goods than for
search goods.165 Here we can deduct that brand extensions can enhance more extensions that fit
with the experience economic model that the prior ones. It is also interesting to note, as discussed
in Park and Smiths literature review that the content of advertising for experience goods focuses
more on image than facts about product attributes and performance. These findings suggest that
the pre-established identity of brand extensions should prove particularly valuable for experience
goods.166 Smith and Parks research results show that the effect of brand extensions on market
share diminishes when the extension is a search good.167 Therefore, the impact of the original
brand has more positive effects when the extension targets experience goods.
We had explained in an earlier section that brand equity () can be defined in terms of the
differences in the discounted cash flows generated by using an established brand and those
generated by using a new brand ().168 Park and Smiths () findings suggest that the brand
extension new brand differential in the revenue component of cash flows widens as brand strength
increases and when extension products comprise primarily experience attributes (). 169 On the
basis of their findings, it is reasonable to believe that experience-based brand extensions can
increase brand equity.
3. Case histories
Three case histories of brands that have practiced experience-based extensions have been studied :
Giorgio Armani, Nescaf and Aveda. These brands have been selected for the appropriateness of
the consumer-experience they created and for they represent three different levels of brandelasticity as seen earlier. Giorgio Armani is a high-elasticity brand, Nescaf, low-medium and
Aveda, medium-high. The objective of the case histories is to get new insights from these brands
in order to apply them to Krastase, and to verify the validity of the theoretical framework.
3.1 Case 1 : Giorgio Armani S.p.A.
One of todays greatest fashion names, Giorgio Armani, is also one of the most diversified fashion
brands. As reported by The Economist :
164
165
166
167
168
169
Smith and Park, The Effects of Brand Extensions on Market Share and Advertising Efficiency, 300.
Ibid., 300.
Ibid., 300.
Ibid., 307.
Ibid., 307.
Ibid., 307.
42
As well as haute couture and every-day clothes, Mr Armani and his eponymous
firm create scent, cosmetics, spectacles, watches and accessories. Dedicated
followers of Mr Armani's minimalist aesthetics can buy furniture at Casa
Armani, chocolate, other sweets, jam and even marmalade at Armani dolce and
flowers at Armani fiore. There are Armani cafes and restaurants in Paris, New
York, London and other cities. An Armani night-club recently opened in Milan.
Now the great Giorgio is branching out further still. On February 22nd his firm
announced a $1 billion hotel venture with Dubai's Emaar Properties, the Middle
East's largest property developer. Mr Armani will be in charge of the design for
ten new luxury hotels and four resorts, to be built in the next six-to-eight
years.170
The particularity of Giorgio Armani S.p.A. is that it has been able to extend its reach enough to
become a very profitable company but without compromising or scarifying its luxury positioning.
In 2008, Armani was ranked in 9th position of The Luxury Institutes Luxury Customer Experience
Index. It scored 8.55/10 in a survey including 1,613 wealthy consumers that had to rate the brand
for its store environment, personnel and its ability to satisfy consumer demands.171 Armani's
consistent quality across its entire product portfolio was one of the feature appreciated by
surveyed consumers.172
3.1.1 Giorgio Armani S.p.A. : Company and brands presentation
Giorgio Armani and Sergio Galeotti founded the fashion company Giorgio Armani S.p.A. in 1975.
Today, Armani is distributed in over 46 countries173 and its turnover is estimated to be of $1.6
billion 174 Originally a company specialized in men and women fashion design, the Giorgio Armani
empire now comprisesin addition to its fashion lines Giorgio Armani, Armani Collezioni,
Emporio Armani, Armani Jeans and Armani Junior, Giorgio Armani Swimwear and Giorgio
Armani UnderwearGiorgio Armani Accessories (bags and sunglasses), Giorgio Armani
Cosmetics (fragrances, make-up and skincare), Armani Casa (interior design service, gift,
decoration, table accessories, textile and lightings), Armani Resorts and Hotels (private residences
and hotels) and Armani Lifestyle (cafs, restaurants, lounges, nightclubs).175
Interbrand evaluates Armanis brand value at $3,794 million, which positions it at the 93rd
position of the Best Global Brands 2011 ranking.
3.1.2 Giorgio Armanis business strategy
Armanis strategy has been to develop a diversified business portfolio in which were progressively
added more accessible fashion lines as well as new product categories, while maintaining its luxury
status. Through its home collection, cafs, restaurants, lounges, hotels and residences, Armani
created a lifestyle around its brand concept. Moreover, it expanded worldwide through direct retail
network distribution, while keeping direct control on all design, manufacturing, and retail aspects.
The Armani portfolio is characterised by three dimensions : its market coverage of customer
segments, the mutual exclusivity of these segments and the dynamism of the portfolio.176
While diversifying its portfolio in industries remote from its core expertise, Armani ensured the
company kept control on the value chain. We can observe this looking at its time line. Almost
Brand extension, with jacuzzi, The Economist, 61-62.
Luxe Look : Fashion Brands with Best Customer Experience, Footwear News, 22
172 Ibid., 22.
173 Paquita Paquin, Histoire dArmani, Pure Trend,
http://www.puretrend.com/marque/armani_b4294893190/histoire_i1/1.
174 Giorgio Armani, in Wikipedia, http://en.wikipedia.org/wiki/Giorgio_Armani.
175 Giorgio Armani, http://www.armani.com.
176 Stefania Saviolo, Brand and Identity Management in Fashion Companies, SDA Bocconi, 13.
170
171
43
every time, Armani entered a new industry, it bought shares of the company having the necessary
skills. For instance, it acquired shares in Antinea (Emporio Armani womens wear) and Simint
(Armani Jeans) before launching these two lines.177
Key Milestones
1975 : Foundation of Giorgio Armani S.p.A. and introduction of Giorgio Armanis men and
women fashion collections178
1979 : Licence Agreement with GFT (Gruppo Finanziario Tessile)179
1979 : Introduction of Giorgio Armani Collezioni
1980 : Introduction of Emporio Armani and Armani Junior
1982 : Introduction of Armani Jeans, Giorgio Armani Sposa and Giorgio Armani Underwear
1983 : Introduction of Giorgio Armani Swimwear
1983 : Introduction of Giorgio Armani Accessories
1983 : Agreement with LOral
1984 : Introduction of Armani Fragrances
1988 : Acquisition of shares (0.5 %) of Luxottica Group S.p.A (Licensee for eyewear)
1987 : Extension into eyewear
1990 : License Agreement with Fossil Inc.
1990 : Introduction of Giorgio Armani Accessories
1991 : Introduction of Armani Exchange
1997 : Introduction of Armani watches
1999 : Introduction of Giorgio Armani Make-up
2000 : Acquisition of GFTs (Gruppo Finanziario Tessile) manufacturing facilities
2000 : Joint Venture with Zegna Group
2000 : Opening of the first Armani Casa store and the first Armani multi brand store in Milan
200 1: Acquisition of shares (53,02%) of manufacturer Simint (licensee of Armani jeans)
2001 : Acquisition of shares of Intai (51%) (licensee of Armani Ties and Armani Underwear and
Swimwear)
2001 : Acquisition of 1000% of Antina (licensee of womans wear for Emporio Armani)
2002 : Acquisition of manufacturer Deanna S.pA (knitwear producer) and I Guardi (shoe
maker)180
2004 : New license agreement with Safilo S.p.A. (Luxottica agreement ends)
2004 : License Agreement with Wolford (hosiery and body wear)
2004 : Agreement with EMAAR Group to establish luxury hotels and resorts worldwide
2005 : License with Safilo extended until 2012
Despite its worldwide expansion, Armani managed its brand image carefully. For instance, it
carefully selects the best locations to open it stores and balances visibility with the risk of excessive
exposure.181
177
178
179
180
181
Saviolo, Brand and Identity Management in Fashion Companies, 14

Ibid., 14.
Armani Designer Clothing Information, http://www.ave-it.net/armani_designer_clothing_info.htm.
Ibid.
Saviolo, Brand and Identity Management in Fashion Companies, 20.
44
3.1.3 Giorgio Armanis extension model and strategy

In his first years of business (1975-1983), Armani first extended its brand downward (Giorgio
Armani Collezioni, Emporio Armani, Giorgio Armani Jeans) as well as laterally (Giorgio Armani
Sposa, Giorgio Armani Underwear and Giorgio Armani Swimwear). Thus, it opted for a mixed
extension model, using both the pyramid and the galaxy that we have seen earlier (Figure 2.1). In
terms of brand extension strategy, his first expansions were all declined from his core expertise :
fashion.
Armani Exchange was launched to compete with US retailers such as The Gap and Banana
Republic. 182 In terms of price point, the Armani Exchange line is positioned just above these two
retailers. But in terms of image and style, Armani Exchange benefits from the aura and
competence of the Armani brand.
In the subsequent years (1983-1999), Armani was extended into fragrances, cosmetics, eyewear
and leather goods (bags and shoes). These extensions were all horizontal (the galaxy model) : same
relative price and same level of luxury. It is interesting to note that in terms of brand extension
strategy, the stretch moved from the expertise end of the spectrum to somewhere in between
expertise and image.
The particularity of Giorgio Armani Cosmetics is that the products work in synergy with fashion
division of the company, thanks to the make-up/fashion collections of the season. In addition, its
fashion expertise is added to the product technology. As reported by Cosmetics Business, Johan
Lundin, international marketing director, Giorgio Armani, described the designers unique
philosophy which is about from textiles to cosmetics. For example, Armani invented Micro-Fil,
a technology that mills ingredients finely to get different sensorial and visual effects, layering the
product on like a dress.183
Finally, in its more-recent year (2000-2011), Armani expanded into home furnishing, cafs,
restaurants, lounges nightclubs, hotels and private residences. Most of these extensions followed
the galaxy model, except for Armanis lifestyle world (cafs, lounges, restaurants and nightclubs)
that followed his fashion vertical model making distinctions between the upper class restaurants
and clubArmani Nobu, Armani Priv, Armani Lounge and the more accessible placesEmporio
Armani Caff.
For its restaurant business, Armani has used a co-branding strategy with worlds top restaurant
Nobu. For the hotels wearing its name, though Armani has also sought external expertise, but in
that case, the partner remains invisible to most.184 For everything that is related to real estate,
construction and hotel management, Armani partnered with Dubai's Emaar Properties, the Middle
East's largest property developer, while it kept the responsibility of all as aspects of content,
design and style, including architecture, interiors, furnishings and amenities using specially
designed items from the collections.185
Ibid., 15.
In-Cosmetics Marketing Trends A time for recovery, Cosmetics Business, (June 2010),
http://www.cosmeticsbusiness.com/technical/article_page/incosmetics_marketing_trends__A_time_for_recovery/55120.
184 Giorgio Armani S.p.A. and Emaar Properties PJSC to Launch a Worldwide Collection of Armani Luxury Hotels and
Resorts, Armani Hotels and Resorts, (February 2004), http://www.armani.com/pressRelease/pressAdvSearch?language=.
185 Ibid.
182
183
45
In the later years, after a number of successful extensions, Armani became a true lifestyle brand,
stretching on pure image point of view, at the opposite end of the spectrum
3.1.4 Giorgio Armani Hotels and Lifestyle experience
For Giorgio Armani, a collection of hotels and resorts is the ultimate way of bringing to life his
philosophy of style and design, since fashion is more than over omnipresent in the way we live.186
Known for being a perfectionist, Armani has left nothing to coincidence when designing his hotels
and lifestyle restaurants and cafs. A comparison with the fashion designers fashion retail
experience is useful to understand his philosophy:
Considering retail Armani is, as usual, a "maniac" of details: every detail is fundamental,
even the lights into the shop. A wrong combination in a shop window between a cloth
and an accessory makes him suffer, so he personally checks that sellers don't distort the
equilibrium between the different items. Such a busy man uses to spend a lot of time
talking to the shop assistants in Milan to transfer them the entire brand concept.187
The Armani Hotel experience is embodied by the brands key values : beauty, elegance, grace,
superior service, immaculate design and luxury. Giorgio Armanis philosophy is to offer a very
personal and intimate experience, the same like if he was hosting his friends or family. 188 To
successfully deliver such a level of service, guests are assigned a personal Lifestyle Manager during
their entire stay. Interestingly, the philosophy behind this concept is based on the concept that
travel is much an emotional journey as a physical one. 189
In addition to reflecting Armanis philosophy, the hotels, restaurants and cafs under his name
embody the characteristics of the place. For instance, in a city such as Dubai, known for its
extremes, the hotel is located in the worlds tallest building, and features eight specialty restaurants
and a lounge. 190
The Emporio Armani Caff in Hong Kong, where the colour red symbolizes good fortune and
joy,191 features a spiralling red fibreglass ribbon that creates a flow from the entrance to the design
area, characterised by a minimalistic design playing with light and space. It is interesting to note
that while all the Armani Emporio Caf at the Armani/Chater House in the centre of Hong Kong
was designed by Milan based architects couple Massimiliano and Doriana Fuksas. The lights that
illuminate the Caffs wall varies in colour and intensity so the place can adapt to different times of
the day. "The caf is not a static space, says Doriania Fuksas. "It's changing all the time with
lights." 192 The place has also been designed to make people feel comfortable while putting them at
the centre of the space, as if they were its actors.193
Mystery, Sensuality, Intimacy
As explained earlier, emotions are what powered well-designed experiences. In fact, this agrees
with Giorgio Armanis vision that travel is as much an emotional journey as an emotional one.194
We have seen in the experience design section that three criteria were essential to emotionally
engage consumers in the context of an experience : mystery, sensuality and intimacy. Mystery is about
Giorgio Armani e Mohamed Ali Abbar Sign 'ARMANI HOTELS AND RESORTS' Agreement, Armani Hotels and
Resorts, (May 2005), http://www.armani.com/pressRelease/pressAdvSearch?language=.
187 Saviolo, Brand and Identity Management in Fashion Companies, 20-21.
188 Armani Hotels and Resorts, Giorgio Armani, http://www.armani.com/it/armani-hotels.
189 Live the brand, breath the brand, Business Traveller, (July/August 2010), p. 18.
190 Live the brand, breath the brand Business Traveller, 18.
191 Color in Chinese Culture, in Wikipedia, http://en.wikipedia.org/wiki/Color_in_Chinese_culture.
192 Erin McCarthy, Dining in high style, Display & Design Ideas; 15 (October 2003).
193 McCarthy, Dining in high style, Display & Design Ideas.
194 Live the brand, breath the brand, Business Traveller, 18.
186
46
incorporating story telling in the consumer experience. Armani does it in creating a sort of stage
for the consumers, using the Armani world as a setting. Sensuality is about using the five senses to
communicate what the brand is. As mentioned earlier, Giorgio Armani leaves no detail to
coincidence. The smells in his hotels have carefully been thought of, the design communicates the
brand values and even the light is used in a thoughtful way. Finally, intimacy is created through
Giorgio Armanis service philosophy that the clients should be treated like if they were friends and
family. His lifestyle manager concept is a nice way to officialise this intimate relationship with the
clients.
3.1.5 Analysis of Giorgio Armani case history
Business effects
With a turnover of $1.6 billion, Armani is one of the most successful fashion houses in the world,
and it is noticeable that it has successfully expanded its business beyond its core expertise. The six
pillar brands of the companyGiorgio Armani, Armani Collezioni, Emporio Armani, Armani
Jeans, Armani Junior and Armani Casahave their own personality, positioning, distribution and
retail strategy.195 Armanis business success is partly due to the equilibrium between its large
coverage of customer segments and his ability to maintain his luxurious status as fashion brand. In
addition, the six brands have been positioned so they do not cannibalize one another. Lastly, the
fact that Giorgio Armani capitalized on market opportunities outside of its core businessfor
instance Armani Casapropelled him to new eights. Furthermore, Giorgio Armani has always kept
strong control over his business despite his growth. More specifically, the company acquired
shares of the manufacturing facilities that it required to deliver his product and services and kept
the entire ownership of his company. Lastly, the Armani business evolved gradually over the years,
leaving Giorgio Armani the time to absorb every change and carefully plan the next one.196
Pyramid model effects
As mentioned in the literature review, there are image risks associated with step-down extensions
(pyramid model), especially for luxury brands. For instance, in the eighties, Gucci and Pierre
Cardin undermined their brand trying to extend it into to many directions without restricting
enough its access. 197 On a business point of view, the pyramid model usually brings a fast increase
in profits since the report gross margin is more important (usually 75% for bags and perfume for
instance). It also increases the brands awareness. In 2006, Armani was already known by 74
percent of adults, making it the third most recognized brand in the world. 198 However, the flip
side of the coin is potential brand image damage since the luxury dream is based on a fragile
equilibrium. Kapferer explains Democratization reduces the distance and luxury is meant to
create distance.199 It is believed that the fashion brands that will last through time are those that
will continue to restrict their availability, like Chanel.200
Giorgio Armani Annual Report 2008,

http://www.giorgioarmani.com/pressRelease/pressDownload?prid=129&year=2008&language=EN&section=FI.
196 Christopher M. Moore, Stephen M. Wigley,The Anatomy of an International Fashion Retailer The Giorgio Armani
Group British Academy of Management (BAM), (September 2004), 3.
197 Christopher M. Moore, Brands without boundaries : The Internationalisation of the Designer Retailer's Brand.
European Journal of Marketing, 34 (2000), 933.
198 Valerie Seckler, Luxe Study: Rating the Brands by Status, WWD : Women's Wear Daily, 191 (June 2006) p. 25.
200 Ibid., 142.
195
47
Armanis case is an exception for the reasons listed in the above section. One of the strategies that
Armani has used to counter this effect was the appeal to a sub-brand strategy for all its step-down
extensions (see section 2.3.5 for sub-brand strategy explanation). As suggested by Fanny Magnoni,
() a step-down extension with a distinct nominal identity separated from the brand identity
could provide better protection of the brand more than an extension only using the existing brand
name.201
Galaxy model and experience-based extensions effect
We have seen in the section about brand extension benefits and dangers that one of risks
associated with brand extensions is to dilute the core brand. However, despite his expansion in
many different business, Giorgio Armani has been able to control his brand image tightly and to
avoid the potential negative effects.
Christopher M. Moores research findings on the internationalization of the designer retail brand
suggest that because of the lifestyle nature of these extensions, they may never undermine the
original brand.202
The Economist has raised doubts about the appropriateness for fashion brands to move into the
hotel business. Does it make sense for designers of luxury goods to go into a tricky service
business? Hotels are not even a good hedge against the fickleness of the fashion world. Travel and
luxury follow the same economic cycle, it argues. 203
According to Antoine Colonna from financial management and advisory firm Merill Lynch,
designers hotels can provide good publicity to the brand, in sum, being a form of (expensive)
advertising campaign, even in the event the hotel is not profitable.204
Colonnas reasoning is not far away from the logic behind the flagship store. For instance, in 1996,
when Giorgio Armani relocated from the smaller Madison Avenue store to a larger Madison
Avenue flagship, the costs are estimated to be over 8 million.205 This was a huge amount,
especially given the fact that flagship stores are rarely profitable. Indeed, one of the International
Marketing Director interviewed by Moore, explained that the flagship stores had a
communications marketing function, so and the losses attributable to them were absorbed in the
latter budget :
() charged these against the company communications budget, on the basis that the
function of the flagship store is to create awareness and interest, which is ultimately the
role of advertising anyway.206
Therefore designer hotel can serve, as the flagship store, for communication marketing purposes
and reinforce the core brand. According to chairman of Interbrand, this strategy can work. A
strong product, strong images and a strong experience, such as staying at a fashion designer's
hotel, can combine to make a super-strong brand, says Ms Clifton to The Economist. Indeed, the
value of the Armani brand has increased by 10%, putting it at the 93rd rank of Interbrands Best
Global Brands 2011 ranking. The report partly attributes this equity growth to Armanis brand
extension management:
201
202
203
204
205
206
Magnoni and Roux, Stretching the brand down, does it affect the consumer-brand relationship? 17-18.
Moore, Brands without boundaries, 933.
Brand extension, with jacuzzi. The Economist, 61-62.
Ibid., 61-62.
Moore, Brands without boundaries, 935.
Ibid., 933.
48
Armani is driving its position as a timeless, high quality and stylish, Italian luxury brand
through well-planned brand extensions. It also continues to grow its hotel and resort
franchise, following its Dubai location with a new opening in Milan in November.
Armani also continues to build its web presence. A highly interactive new website for its
eyeglass-frame line launched in October, which connected seamlessly through all its
various social media channels. Additionally, this year Giorgio Armani launched the
much-praised Eyes to Kill make-up line, which includes versatile eye shadows that can
be wet or dry, and mascara that uses an innovative breakthrough wax complex. 207
3.1.6 Learning from Giorgio Armani case history
The brand extension history of Giorgio Armani is an exemplary one. It has been done
thoughtfully, step by step, first from the core expertise of the brand, and only then, moving slowly
to the other side of the spectrum with extensions stretched from its image. Armani managed to
extend its brand vertically, while literature had demonstrated that step-down extensions can
potentially damage a luxury brand. Giorgio Armani used a sub-brand strategy to separate its stepdown extensions and succeeded to create a synergy between its entire portfolio, finding the right
balance between differentiation and coherence. The Giorgio Armani case also demonstrates that a
high elasticity brand has the potential to deliver a true engaging experience based on the fact that it
can generate emotions through a mysterious, sensuous and intimate experience. It also shows the
importance of adapting the brand to the environment. Giorgio Armanis brand equity increased
this year by 10% partly due to his hotels and resorts initiative; therefore experience-based
extensions can reinforce the strength core brand. On the other end, vertical extensions can
increase the companys revenues and the brands awareness.
3.2 Case 2 : Nestls Nescaf and Nespresso
The second case will look at is Nestls coffee brand Nescaf scaling up in quality, expertise and
experience thanks to Nespresso. There are two particularities inherent to this case. The first, as
seen before, Nescaf is low-medium elasticity brand. It is therefore interesting to study how Nestl
successfully extended the Nescaf offer. Secondly, Nespresso does not come Nestls desire to
extend the Nescaf brand. The Nespressos brand originated from Nestls need to commercialize
a technological innovation. After two unsuccessful tries, Nestl achieved its goal not only by
creating a new brand for its product but also by creating a brand new coffee experience for the
prestige market.208
3.2.1
Nestl
Nestls Nescaf and Nespresso : Company and brands presentation
With CHF 109,7 million of sales and CHF 34,2 million of net profit, Nestl is the worlds leading
company in the nutrition, health and wellness sector.209 Founded in 1866 by Henri Nestl, the
Swiss company now employ around 280,000 people all around the world. It mission is to
provide consumers with the best tasting, most nutritious choices in a wide range of food and
beverage categories and eating occasions, from morning to night.210 Nestl offers products in the
following categories : baby foods, bottled water, cereals, chocolate and confectionery, coffee,
culinary, chilled & frozen food, dairy, drinks, food service, healthcare nutrition, ice cream, petcare,
Best Global Brands 2011, Interbrand, (2011), 41, http://www.interbrand.com/en/best-global-brands/best-global-brands2008/best-global-brands-2011.aspx.
208 Silvia Barbieri, "Strategic planning for emerging brands," Future Brands Milano, (Domus Academy : Open Design Lecture,
2011).
209 Nestl Annual Report 2010, Nestl, http://www.nestle.com/Investors/Reports/Pages/Reports.aspx
210 About Us, Nestl, http://www.nestle.com/AboutUs/Pages/AboutUs.aspx
207
49
sports nutrition, weight management. 211 In the context of this case history, we will look more in
details into its coffee offering.
Nescaf
Nescaf is one of the worlds most popular coffee brands. According to the companys website,
Nestl is the worlds most trusted and enjoyed coffee for it is rich in natural goodness flavour
and convenience.212 The first launched in Brazil in the mid thirties, and then in Switzerland in
1938. Until today, the brand evolved through product innovation allowing consumers to enjoy
different flavours and formats. The main Nescaf sub-brands are Nescaf Classic, Nescaf Decaff,
Nescaf Gold, Nescaf Cappuccino, Nescaf 3 in 1, Nescaf Dolce Gusto (a pod and machine
system for home-coffee making). 213
Nespresso
The Nespresso brand has been positioned as a separate brand from Nescaf with its own identity
and website. It is positioned as the high quality coffee, sophisticated taste, and continuous
innovation and is available in over 200 boutiques across more than 50 countries. 214 The
Nespresso offer includes 16 Grand Cru coffees available in sealed capsules, Nespresso coffee
machines and special B-to-B offers for offices, restaurants and hotels.
3.2.2 Nestls business strategy
Nestls key driver of profitable growth is the organic development of its product categories and
geographic positions.215 According to Nestls 2010 annual report the financial strength of the
company allows it to carefully evaluate the long-term strategic benefits of an opportunity prior
engaging itself in it :
The strength of our balance sheet means that we do not have to make either/or decisions
when we are investing in our own business, acquiring another company or driving our
performance, but that we can judge each opportunity on its own merits.216
Nestls competitive advantages are the strength of its product and brand portfolio, its innovation
capability, its geographic presence, and company culture. Its growth is attributable to the following
key drivers: Nutrition, Health and Wellness, Emerging markets and Popularly Positioned Products,
Out-of home consumption and Premiumisation. Nespresso is an offer that took advantages of
these two last business drivers. Out-of-home consumption is growing faster than in-home, while
leisure time is increasing with the incomes raises, which accelerated growth in premium food and
drinks, each a moment of affordable luxury, a moment of pleasure, according to the companys
annual report.217 Nespressos positioning strategy and market success reflects these two divers. The
business model of Nestl has the objective of increasing the company growth on a yearly basis,
based on high organic growth, and continuous improvement of the EBIT margin.218
3.2.3 Nescafs brand extension model and strategy
The scale-up from Nescaf to Nespresso, says Head of Brand Strategy Future Brands Milano
Silvia Barbieri during our interview, did not initiate from a will to penetrate the upper coffee
211
212
213
214
215
216
217
218
Ibid.
Ibid.
Ibid.
Ibid.
Nestl Annual Report 2010, 4.
Ibid., 4.
Ibid., 12.
Ibid., 5.
50
market, but from a pure technological innovation that did not have the projected market
results.219 In the seventies, Nestl developed a high quality espresso coffee system that had
convenience and hygiene advantages when compared to the traditional espresso machines. Despite
the excellence and newness of this espresso coffee machine, Nestl experimented some problems
in the commercialization of this technology. In fact, Nestl first tried to market its new coffee
machine to business, but the latter did not manage to deliver the appropriate quantity of coffee to
meet commercial requirements. Therefore, in the eighties, Nestl switched its target market from
B to B to B to C and tried to sell its Espresso machine by post and direct marketing. Once again,
the distribution strategy failed.220
Nestl had a new marketing weapon, an innovative technology to produce espresso coffee, but it
had not found the proper way yet to brand and market it. It was therefore the case of an accidental
extension, coming straight from the brands expertise.
Successfully marketing this new technology was the challenge Nestl asked Future Brands to
respond in the early nineties.221
To position the new concept, Future Brand first analyzed the trends in luxury and food segments.
In the nineties, with the global economic downturn, luxury became more subtle (understated) and
part of the everyday life, contrasting with the flashy eighties. It was also the beginning of the
slow food movement. People started re-discovering and appreciating the genuine quality of food
and rejected the over industrialized food products.222 Therefore, adds Barbieri, there was an
opportunity to change the coffee market, to differentiate the new product through an
experience.223
Because the new coffee capsules and machines were expensive to produced, Nestl needed to sell
them at a premium price for them to be profitable. Future Brands recommendation was to launch
this new concept as a trustworthy premium coffee brand.224 There was also a huge opportunity in
the luxury coffee market since no one owned this segment. Potential competitors were either
positioned as coffee experts, for instance Illy or Lavazza or coffee bar experts such as
Starbucks or Costa. 225
Future Brand recommended positioning Nespresso (name of the new concept) as the icon of the
best coffee worldwide, in creating something competitors would not be able to match : a unique
brand experience. Therefore, the Nespresso revolution was not about coffee but about coffee
experience. Playing with Nespressos Ultimate Coffee Experience brand premise, Future Brand
created Nespressos identity around the world of fine luxury maison.226
The extension from Nescaf to Nespresso, adds Barbieri, was not meant to be known as an
product extension by the consumers. For this reason, she says, Nespressos brand management
219
220
221
222
223
224
225
226
Caroline Fraser, Interview with Silvia Barbieri, Future Brands Milano, (September 2011).
Barbieri, "Strategic planning for emerging brands," Future Brands Milano.
Ibid.
Ibid.
Fraser, Interview with Silvia Barbieri.
Ibid.
Ibid.
51
was physically separated from the rest of the company.227 The Nescaf to Nespresso extension is
therefore model of a vertical extension but not a pure one.
As a result, Future Brands methodology was the same than when building a brand from scratch.
They examined the brand codes of Louis Vuitton and got inspiration from them to build the
Nespressos brand. First, they worked on a visual identity to express luxury codes (logo, typefaces,
signs) and the uniqueness of the Nespresso symbol.228
Then, they constructed a unique iconic visual identity working with New York based cosmetics
photographers Les 2A instead of working with traditional food photographer. Special packaging
was developed to present the products in a premium manner : a Grand Crus luxury box and
shopping bags and accessories.229
3.2.4 Nespresso Experience
At the heart of the Nespresso brand, is the Nespresso experienceits brand identity has been
conceived around the idea of a luxury coffee maison, literally meaning a house in French
language. Indeed, Nespressos competitive differentiator is its unique brand experience.
Competitors can mimic the coffee machine technology, but more difficultly the experience, since it
would not be considered authentic (see the authenticity paragraph in the experience design
section).230
In fact, the Nespresso boutiques, explains Barbieri, were a simple communications marketing
tool. However, their success was so important, even more than the products, that they were added
to Nespressos business model.231
Mystery
The story that lives the consumer at the Nespresso boutiques is the one of the modern
connoisseur. The products, the machines and the place have been designed smartly so the
consumer can play the expert and tastes different coffee flavours.
Sensuality
Nespresso would not be what it is today without the Nespresso Boutiques designed by architect
Francis Krempp. The objective of the boutiques is to reinforce the premium/luxury positioning of
the brand and to enrich consumers experience.232 There are visual and tactile icons, such as the
coffee capsules wall, the capsules tactile feeling, the ambient light, the ambient music and the
fresh coffee scent.
Intimacy
The personalised consumer service at the heart of the Nespresso offer, something the consumer
can experience at the boutique, on the website and through the customer relationship centre.
Nespressos goal is to create perfect experiences and moments of pleasure. The consumer-brand
relationship management though, is mostly done through the Nespresso Club, which consumers
can join through the Nespresso website. The brand welcomes coffee lovers and invites them into
an exclusive relationship, claims the Nespressos Corporate Backgrounder. The Nespresso Club,
227
228
229
230
231
232

Ibid.
Ibid.
52
with over 10 million members, has grown organically into a global community of some of the
most discerning coffee connoisseurs, and it has played a part in evolving the global coffee
culture.233 As a result, although the brands deliver high customer services, it has not reached an
intimate level yet in its experience delivery at the boutiques.
3.2.5 Analysis of Nestls Nescaf and Nespresso case history
Business effects
Nespresso, with sales of CHF 3,2 billion in 2010, has become the leader in super-premium
portioned coffee. The business success story is not over. For one more time, Nespresso enjoyed
double digits growth in 2010 and which is projected to continue to do so next year.234 In 2010, it
opened its 215th boutique, the 36th of that year including New York, Munich and Sydney.
The overall companys health also looks good, based on the 2010 annual report. Nestls stock
market valuation climbed over other consumer goods companies, making it one of Europes top
companies.235
Pyramid model and experience-based brand extension effects
Because of the name and brand differentiation between Nespresso and Nescaf, there was quasi
no reciprocal effects on one over the other. However, the experience-based model, which was
originally only created for communications marketing purposes became a real commercial success
and now accounts for 35% of the sales. The number of global retail boutique network went up
from 191 to 215 from 2009 to 2010.236
Moreover, we can say that Nespresso has shaped the global coffee culture. It has revolutionized
the coffee bar concept, combining pleasure, simplicity and aesthetics.237
Brand equity effects
Nespresso quickly gained a global brand status : it was included in the Top 100 most Powerful
Brands in 2008 and was chosen as number one European Trusted Coffee Brand in 2010 by
Readers Digest in a survey including 16 market.238
Since the corporate strategy was to totally separate Nespresso from Nescaf, the positive effects of
the Nespresso brand did not affect Nescaf. In fact, Interbrands Best Global Brands 2010 reports
that Nescaf is down by 5%, compared to last year. Its brand value is evaluated at $12,115 million.
In fact, Nescafs brand equity decrease is partly attributable to its miss to respond to refined
consumers needs (which did Nespresso instead) : Nescaf has engaged in a large-scale plan to
follow through on commitments to the improve its coffee farming and production by 2015.
However, the brand faces challenges due to a shift toward more sophisticated consumption
habits.239
On the other hand, the corporate entity Nestl is up by 1% on the Interbrand ranking, which is
translated in a brand value now evaluated at $6,613 million. It is interesting to note that one of the
key factors attributable to Nestls positive growth, according to Interbrand, is the Nespresso
coffee offering : Although buoyed by the success of its innovative Nespresso coffee offering, the
233
234
235
236
237
238
239
Corporate Backgrounder, Nespresso, http://www.nespresso.com/mediacenter/index.

Nestl Annual Report 2010, 24.
Ibid., 34
Corporate Backgrounder, Nespresso.
Ibid.
Ibid.
Best Global Brands 2011, Interbrand, 25.
53
product portfolio remains fragmented, revealing an opportunity to better leverage the Nestl
masterbrand and align its products for ongoing success.240 The other key interesting fact in
Interbrands justification of Nestl current position (which is below its brand Nescaf), is the lack
of alignment between the Nestl masterbrand and products. The Nespresso effect on the Nestl
brand is then only felt at pure business point of view (investors, stakeholders) but does not
generate more consumer enthusiasm towards the umbrella brand.
3.2.6 Learning from Nestls Nescaf and Nespresso case history
The corporate strategy to keep Nestl, Nescaf and Nespresso remote had two main effects. On
one hand, it allowed the company to give birth to a totally new brand, based on its core expertise,
and achieve a luxury positioning without risking to decrease its status because of negative
associations with its mass consumer brands. On the other hand, the effect of the Nespresso brand
on the umbrella brand Nestl and on the sister brand Nescaf were unimportant, contrary to
Armani who built its masterbrand while creating coherence through its brand portfolio. Although
originally destined to be a pure marketing communication strategy, the experience-based
Nespresso Caffs/Boutiques success transformed them into a true customer-relationship channel
in the Nespresso business model, accounting for 35% of the Nespresso business. Finally a lowmedium elasticity brand may not be quite there yet in terms of bringing intimacy in its customerrelationship management.
3.3 Case 3 : Este Lauders Aveda
The third case we will study is the one of Aveda, which is interesting for its proximity to Krastase
in terms of industry and of brand elasticity. Originally a hair care brand, Aveda has organically
expanded into the hair care segment (both in terms of products and experiences), and has then
progressively added other personal care, beauty, cosmetics and wellness offers, creating special
environments to experience each of its products.
3.3.1
Aveda
Este Lauders Aveda : Company and brand presentation
Hair stylist Horst Rechelbachers vision when he founded Aveda in 1978 was to provide hair care
products that exclusively contained botanical-based cosmeticsnot toxins.241 Today, Aveda also
produces styling, skin care, body care, spa, aroma, make-up, lifestyle products and hair colour. In
1997, the brand was acquired by The Este Lauder Companies Inc. and since then, continued
growing powered by one of the worlds beauty leader. Today, Aveda is sold in over 30 countries
over the world and continues fulfilling its environmental and community responsibility mission.242
Avedas products are distributed through Aveda Environmental Lifestyle Stores, Aveda Concept
Salons, Aveda Institutes, Aveda Experience Centres, Aveda Spas and Spa Retreats, and at more
than 7,000 selected hair salons.243
The Este Lauder Compagnies Inc.
Este Lauder was founded in 1946 in New York by Joseph and Este Lauder as a skin-care
company. Today, the company is one of the worlds beauty leader, with a record of net sales of
Ibid., 32.
Aveda Case Study : Adapting to the Changing Developments in Ethical Consumerism, Datamonitor, (July 2008), p.3.
242 The Este Lauder Companies Inc. Annual Report 2011, 77,
http://investors.elcompanies.com/phoenix.zhtml?c=109458&p=irol-reports.
243 Creating a Healthy Business, Global Cosmetic Industry, 161, (August 1997), 16.
240
241
54
$8.8 billion and record of net earnings of $743 million in 2011.244 The brands of The Este Lauder
Companies Inc. include : Este Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins,
M.A.C, Bobbi Brown, La Mer, Aveda, Jo Malone, Bumble and bumble, Darphin, Flirt!, GoodSkin
Labs, Ojon and Smashbox, while its licenses comprise Tommy Hilfiger, Kiton, Donna Karan,
Michael Kors, Sean John, Missoni, Daisy Fuentes, Tom Ford and Coachs cosmetics and/or
fragrances.245.
Today, the company is still controlled by the Lauder family, which hold around 88% of the shares.
In addition to direct and internet sales, the distribution of Este Lauders brands includes most of
the existing cosmetics distribution channels, such as department stores, specialty retailers, perfume
perfumeries, prestige hair salons and spas as wells as freestanding company-owned stores and
spas.246
3.3.2 Este Lauders business strategy
Este Lauders growth strategy is to continuously expand it portfolio of brands. The acquisition of
Aveda is an example of that kind.247 Este Lauder, a company that has known some controversy in
the past, has continued to propel Avedas growth while respecting its culture and identity, a key
success element. Avedas loyal consumer-base is partly due to its ethical positioning, which was
there at its very beginnings, making it authentic. 248
3.3.3 Avedas brand extension model and strategy
Founded by a hair stylist, Avedas original expertise and main product category today is still hair
care. Right from its beginnings, in 1978, Aveda created a relationship with the Indian traditional
medicine Ayurveda thanks to two world authorities in this discipline, Drs. Vinod and Kusum
Upadhyay.249 In these early years, they also helped Aveda to develop its practice of aromatherapy
and matching the properties of essential oils and their effects to the Aveda products.250 In 1984,
Aveda extended proceeded to its first extension outside of hair care and introduced skincare.
Three years later, it continued with the brand extension galaxy model and introduced makeup.251
In terms of brand extension strategy, Avedas stretched simultaneously from its image
(responsible, natural beauty company) and its expertise (beauty and essential oils), placing it in the
middle of expertise and image in the spectrum.
In 1989, Aveda expended its distribution channel thanks to the launch of its first freestanding
store.252 Although, its main purpose was commercial, the Aveda freestanding store can almost be
considered as an experience-based extension since it truly represents a unique consumer
experience. We will review the store experience in the next section. With the support of Vinod and
Kusum Upadhyay, Aveda became renowned for its aromatherapy expertise and trademarked the
names Aromaology (distilling blended flower and plant extracts to use them for therapeutic and
psychological purposes) and Pure-Fume (aromas derived from pure flower and plant essences).253
244
245
246
247
248
249
250
251
252
253
The Este Lauder Companies Inc. Annual Report, 7.

Ibid., 122.
Company Spotlight : Este Lauder, Datamonitor, (December 2009), 133.
The Este Lauder Companies Inc. Annual Report (2011), 3.
Aveda Case Study, Datamonitor, 1.
Discover : Heritage, Aveda, http://www.aveda.com/discover/heritage.tmpl.
Creating a Healthy Business, Global Cosmetics Industry, 16.
About Aveda : History, Aveda, http://www.aveda.com/aboutaveda/history.tmpl .
Ibid.
Creating a Healthy Business, Global Cosmetic Industry, 161, (August 1997), 16.
55
In addition to benefit their product, this expertise allowed them to created pioneered functional
aromas such as the Chakra Balancing Blends. Thanks to the authority gained and developed in the
field, in 1990, Aveda extended into an Ayurvedic Spa.254 In 1995, Aveda pursued its experiencebased extension and opened one of its first Aveda Environmental Lifestyle Esthetique, a concept
mixing hair salon, spa and store, in New York's SoHo neighbourhood. The space includes an
Aveda hair salon, a day spa, a pure-fumery, and appearance ateliers full-service styling
stations.255
In 2003, Aveda entered the Japanese market with the launch of an Aveda Lifestyle Salon and Spa
in Tokyo, a experience-based extension that also serves for communications purposes. In Japan,
and in some cities of the world, the lifestyle even includes a healthy caf. "Western Japan has a
different culture, business and customer base," says Este Lauder president Dominique Nils
Conseil. For expanding our business into the western part of Japan, we need a flagship shop with
enough space that can demonstrate the whole concept of Aveda," he explains to Womens Wear
Daily.256 With the Aveda Lifestyle Salon and Spa, Aveda slowly moves to the image end of the
spectrum. Healthy food is an extension purely based on Avedas natural and respectful image. The
food and beverage section is operated by a Japanese company, Chitose Pharmacy, known for its
health-conscious food and drinks.257
Aveda expended further its spa concept, continuing launching its own retreats and spas and
partnering with hotels such as The Palm Hotel and Spa in South Beach Miami and The Shulas
Hotel and Golf Club at Miami Lakes. Still in Florida, Aveda has partnered with the Amrit Resort
and Residences to open in the coming year a residential resort that includes the Aveda Lifestyle
and Spa.258
3.3.4 Aveda Lifestyle and Spa Concept Experience
The first thing that hits you is the virgin scent of rosemary. Then a woman approaches with a
steaming cup of peppermint tea, and tribal chants descend around you. Yucca plants are sprinkled
throughout the room, and a Tibetan-looking arch lies a few steps ahead. You can feel your
shoulders relax, your mind pause.259 This experience, described by Danielle Sacks of Fast Company
is a normal scenario for every consumer entering a Aveda Lifestyle Concept Store.
Aveda experience-based spaces are closely linked to the Avedas mission and values. For instance,
its environmental engagement and its community involvement that are communicated coherently
through the Aveda spaces. Another example is Avedas perception of beautybeauty as an art
meant to make clients look and feel beautifulis translated in an experience through the Aveda
body, mind and spirit rituals offered in at Aveda Lifestyle Concept and Spa.260
Mystery
According to Douglas Atkin, author of The Culting of Brands, ideologically based brands such as
Aveda for the strongest bonds with customersif they can live up to their contracts.261 Avedas
254
255
256
257
258
259
260
261
About Aveda : History, Aveda.

Aveda Opens Esthetique in New York SoHo, American Salon, 118, (February 1995), 1.
Koji Hirano, Aveda Opening 2nd Japan Flagship, WWD : Women's Wear Daily, 192 (November 2006).
Hirano, Aveda Opening 2nd Japan Flagship.
Rebecca Ryder Neipris,Permanent Vacation, Gift and Decorative Accessories, 107 (August 2006), 39.
Danielle Sacks, It's easy being green, Fast Company, 85 (August 2004).
Dominique Conseil. Aveda Turns 30, American Salon, 131, (September 2008), 96.
Sacks, It's easy being green.
56
strong ideology is continuously brought back to the surface through daily stories involving
employees and clients. For instance, when Aveda's corporate campus became overrun with geese,
it opted for a natural solution : a geese-herding dog named Dirk.262
From its very beginnings, Aveda tied itself to the oriental medicines and practices such as ayurveda
and yoga. This heritage that initiated with founder Horst Rechelbachers encounter with two
ayurvedic experts is still communicated to the consumer through the spas specially designed to
take care of a persons external and internal beauty.
The Aveda Lifestyle Concept Salon and Spa in Osaka, Japan includes unique design elements such
as recycled glass floor pebbles, a garden platform made of reclaimed oak wood planks from an old
warehouse. A locally harvested wood has been used in the retail area for architecture walls while
retail displays are made from recycled wood. Aveda made the extra environmental effort for the
Japanese market as the Japanese continue to embrace values of sustainability (), says Aveda's
vice president of product development for Asian markets, Roxana Daver to Womens Wear Daily.263
Sensuality
Aveda is a true senses expert. Heres a extract of journalist Susan V. Seligsons narrative of her
experience at the Aveda Spa at St. Croix River, Wisconsin :
Here, in a prairie-style mansion on the Wisconsin banks of the St. Croix River, every
beauty treatment is designed to make its recipient return to her harried routine not just
primped but peaceful. Gone is the acrid cloud of ammonia dyes and sulfur perms, the
drone of those infernal hooded hair dryers, the laundromat ambience. At Aveda, a
haircut is paired with a scalp massage, a pedicure with tension-busting acupressure. My
cellulite hidden under celestial white robes, I inhale the scent of pure vanilla, robust as a
spice market in Madagascar. I sip a cup of herb tea and browse shelves full of wellness
manuals while awaiting the cheerful attentions of stylists wielding potions whose
ingredients read like an exotic incantation: ylang-ylang and clary sage, roman chamomile
and moroccan [sic] rose.264
Another example is Avedas use of its Pure-Fume aromas to contribute to a persons wellness
explains Pure-Fume & Lifestyle manager Mary Kwoka to Global Cosmetics Industry :
Though the plans and flowers Aveda uses to blend Pure-Fume aromas are the most
fragrant materials available, we use them because they interact with our minds and bodies
naturally, promote wellness, and because they are a sustainable natural resource. We
believe these are the benefits that cannot be duplicated synthetically and for that reason
are ignored by the perfume industry. These are aromas that are good for your body, and
good for the environment.265
Aveda also involves its consumers into the sensory journey. With Aveda Personal Blends, Aveda
allows the customers to create their entire personalized product line, and this from head to toe. At
the start, the customer explores nine Aveda Key Element Pure-Fume aroma and blends of plant
and flower essences that reflect the characteristic properties of earth, water, fire, air, and infinity.
After her or she has become comfortable with the elements, he or she can add the aroma that
makes her feel her best to head to toe beauty products.266
Intimacy
Aveda creates intimacy with its clients through very personalized experience during which the
expert shares his expertise. For instance the Aveda Lifestyle and Concept Spa includes
262
263
264
265
266
Ibid.
Hirano, Aveda Opening 2nd Japan Flagship.
Susan, V. Seligson, Beauty and Soul, Health, 11, issue 7 (October 1997), p.92.
Creating a Healthy Business, Global Cosmetic Industry, 16.
Ibid.
57
appearance atelier service stations, where clients enjoy hair, scalp and stress relieving treatment,
hair cut, styling consultation and a lesson with the Aveda products267
Aveda also connects with its clients thanks to the intimate nature of the service, for instance the
face and body treatments available at its spas. Aveda went a step further with its Chakra Balancing
Massage, which includes deep-tissue massage, foot reflexology, and energy work. This massage is
meant to interconnect the mind, body and spirit.268
3.3.5 Analysis of Este Lauders Aveda case history
Business effects
The Aveda Company has quickly evolved from a small Minneapolis shampoo business to an
international beauty company. Its growth is attributable to many different factors such as its strong
ideology, the quality of its products, etc. It is difficult to isolate Avedas experience-based
extensions effects; however, it is reasonable to think that they probably helped the growth. Aveda
started experience-based extensions in 1990. In 1995, it opened its Aveda Lifestyle Concept and
Spa flagship in New Yorks SoHo. And only two years later, Este Lauder, New York based
company purchased it, for $350 million. It made it one of its top-selling brands. Avedas annual
sales almost doubled in a two-year period.269
Horizontal experience-based extension effects
The press enthusiasm about the Aveda Lifestyle Spa and Concept, perceivable in the numerous
qualitative press reviews, is a good indicator of the quality of the experience and of the difference
it makes for the consumer. Through its branded environment extensions, Aveda has successfully
communicated its values, its brand essence, and more importantly, connected on the emotional
level with its consumers thanks to experiences that exploit mystery, sensuality and intimacy.
3.3.6 Learning from Este Lauders Aveda case history
Avedas case history teaches us the importance of preserving the brand essence and using it as a
communications motor in the experience-based environment. It also shows the potential of a
product-based beauty brand to add experiential spaces to its business model. In addition, the
case demonstrates that the nature of the brand facilitates the creation of true emotional
experiences. With its extension addition, Avedas elasticity is still increasing. Throughout the years,
we saw the company expanding, first from its expertise, and then from its image, a significant
indication of the evolution of its elasticity. Looking at the depth and quality of its experiences,
Aveda is ready for the next stage : transformations. The fact that Aveda not only affects the body,
but the self well-being, raises the level of the experience as well as the abstractness of the brand.
4. Application of The Brand Extension Definition Process to Krastase

The next section will consist in applying the methods developed and the case history learning to
Krastase in order to define its possible range of extension and suggest two experience-based
extension concepts. Krastase is one of the 23 brands of the LOral Group and therefore, its
mother company will first be introduced.
Aveda Opens Esthetique in New York SoHo, American Salon.

Marc Zollicoffer, Massage: A blend of Body Work, Reflexology and Energy Work, Massage and Body Work, (March
and April 2010), 1-9.
269 Sacks, It's easy being green.
267
268
58
4.1 Krastases vision and objectives

The first step consists in getting basic strategic knowledge about the brand and the company, and
then defining the brands vision and objective.
4.1.1 LOrals Krastase : Company and brand presentation
LOral Group
Founded in France, in 1909, with sales of 19,5 billion in 2010, LOral is the first cosmetics group
worldwide. In 2010, its operating profit reached 3,56 million. LOral manufactures, distributes
and markets 23 beauty brands sold in 130 countries.270 Driven by its vision to meet universals
needs and expectations and propelled by its Research and Development, for more than a century
LOral has been pushing back the boundaries of science to invent beauty and meet the aspirations
of millions of women and men. Its vocation is universal: to offer everyone, all over the world, the
best of cosmetics in terms of quality, efficacy and safety, to give everyone access to beauty by
offering products in harmony with their needs, culture and expectations.271 Sustainability and
corporate responsibility are the companys two long-term principles to carry out its mission.272 The
brands of the LOral Group are reparsed into four divisions : Consumer Products, Luxury
Products, Active Cosmetics and Professional Products. Krastase belongs to the latter, the
Professional Products division, which accounts for 15% of the sales of the Group.273
Krastase
Contrary to some other brands of the Group that were acquired throughout the years, Krastase
belongs to the family of brands that were created from scratch by LOral. Krastase was
strategically launched in 1964 by to provide a solution in the hair market where there were unmet
needs : treatment service. The brand is considered a pioneer of the development of hair care. It
also contributed to the evolution of the hairdressing profession, thanks to its close relationship
with the Krastase consultants, and the innovative tools and products that Krastase put at their
services.274 Propelled by the power of the Advanced Research of the LOral Group, today
Krastase has achieved the position of world leader and an international references in hair care in
hair salons.275 Through technology-advanced product formulas, Krastase is dedicated to
enhancing the beauty of natural hair according to every persons needs. Inherent to the brands
experience is also the hairdressers expertise and the rituals conceived to procure care and beauty
in complete well-being and relaxation.276
4.1.2 LOrals business strategy
LOral
LOrals business strategy is to continuously invest in Research and Development in order to
bring new product innovations to the market and continuously renew its product offers. The
health of its financial sheet is due to its diversified business portfolio in terms of consumer
categories and its ability to penetrate new market categories.
LOral Annual Report 2010, 1 and 82, http://www.loreal-finance.com/eng/annual-report.

LOral Annual Report 2010, 2.
272 LOral Annual Report 2010, 2.
273 LOral Annual Report 2010, 14.
274 Vianney Pivet, 1964-1994 : Thirty Years of Krastase, 2.
275 Ibid., 2.
276 About Krastase : Our mission, Krastase Usa, http://www.kerastaseusa.com/_en/_us/conso/aboutker/ourmission.aspx.
270
271
59
Krastases contribution to the Group

We can separate the brands of the Group into two main dimensions science versus beauty and
accessibility versus luxury. In addition to the hair brands within the professional division
Krastase, LOral Professionnel, Matrix, Mizani, Pureology, Redken, and Shu Uemura Art of
Hair the mass consumer brands Garnier, LOral Paris and Softsheen Carson also offer hair care
and style products. Krastase has a strategic positioning within the LOral Group and the
Professional Products Division. After Shu Uemura Art of Hair, Krastase is the most premium
brand of the professional category, and is situated at the axis intersection between science and
beauty.
4.1.3 Krastases business strategy
Some of Krastases key strategic components are : the prescriptive role of the hairdresser, its
selective distribution, its innovative products and the quality of its relationship with its consumers.
Prescription
Prescription refers to the prescriptive role of the Krastase consultants (hairdressers) towards the
consumers. Once Krastase has made an agreement with a hair salon, the brand provides
qualitative training to the salons hairdressers. Hairdressers are taught the brands guidelines with
regards to diagnosis, client-hairdresser relationship and product application and rituals.277
The hairdresser is the central character in the Krastase approach. The development and
enrichment of his prescriptive function has always constituted a strategy priority for the brand.
According to the brands philosophy:
The hairdresser, through his hair expertise is the only person who really has the
competence to establish a diagnosis and determine the most suitable haircare programme
for each particular client (made-to-measure haircare). This prescriptive role is
indispensable because the effectiveness of such highly advanced products, such as
Krastase, depends on proper suitability for the type and condition of the hair and scalp
to be treated. The hairdressers involvement guarantees the choice of the right
treatment.278
It is through the hairdressers know-how that the sensorial dimension of the brand is added. The
rituals provided by the hairdressers transform treatment into a moment of relaxation and wellbeing.279
Selective distribution
Krastases products are currently available at the Krastase salons and institutes which are both
third-party owned. To preserve the brands luxury status, Krastase initiated in 1994 a policy of
salon selectivity. To be selected by Krastase, the hair salon must have a minimum size, a
minimum number of working hairdressers and the right geographical situation. Today, additional
qualitative criteria such as the hairdressers expertise and talent have been added and have taken
priority over quantitative criteria.
In addition, clients must go to a salon or an institute and receive professionals diagnostic since the
products are not (legally) sold through the online channels. Today, Krastase USA is one of the
only branches in the world that sells Krastase products online.280
277
278
279
280
Pivet, 1964 - 1994 : Thirty years of Krastase, 24.

Ibid., 24.
Ibid., 24.
Shop Products, Krastase Usa, http://www.kerastase-usa.com/Shop_Products/index-Shop_Products.htm.
60
Innovation
Innovative technology is at the heart of Krastases values. Since its early beginnings, Krastases
strategy has always been to bring the latest innovation to the consumers through the latest
discoveries of the Recherche Avance de LOral. For instance, in 2008, Krastase launched a line
named Bionic including probiotics ingredients to cure severely damaged hair.281 Another example
is Vita-Ciment, a formula based on an innovative cellular treatment to recondition the hair where
needed.282 Krastase also launched diagnostic tools to evaluate the condition of hair, such as a new
diagnostic camera recently. In 2010, the brand launched Chronologist, positioned as the finest
hair treatment by Krastase.283 Not only the products themselves, but also the products
combined to the hairdressers expertise represent the full scope of an innovation, affirms Nicolas
Hieronimus Managing Director, Professional Products Division, in the companys annual report :
In professional beauty, value is added by a combination of high performance formulas
and the know-how of an expert hairdresser. The services we create, such as long-lasting
hair-straightening or thickening treatments, are genuine factors of success for
hairdressers, who add value with their technical expertise, and a source of satisfaction for
customers. Fiberceutic by LOral Professionnel or Chronologiste by Krastase, for
example, have been proving very successful. These services, which have been generating
traffic, go beyond hair colour and include texture and hair care services. It is with these
products that we ensure the loyalty of our customers and build long-lasting commercial
relationships.284
Consumer relationship
Brand-consumer relationship is part of the brands strategy. The relationship is created through
the Consultant-Hairdresser, who is responsible of the quality of the diagnostic and of the
treatment application as much as the quality of the pleasurable sensorial experiences.285
4.1.4 Krastases brand extension strategy
Until 1980, there has been no attempt to extend the Krastase brand. Krastase grew its product
offering in adding specific lines to respond to specific needs or entering new markets such as
children and men.
In 1980, though, a first extension in face care saw the day under the name of Krastase
Cosmtique. Dialectic was the name given to the first product line and was sold only at the hair
salons. This line included cleansing, day care and night care products. The communication effort
aimed to link skin care and hair care You will find Dialectic at your hairdressers. Starting now, let
him get your skin in tune with your hair.286 However, the line did not meet the expected success
and was quickly withdrawn of the market.287
After this unsuccessful attempt, Krastase returned to its core expertise and continued adding
product lines that completed its architecture.
In the past, the Krastase products and rituals were only offered at the Krastase Salonsthirdparty owned salons that have concluded an agreement with Krastase for the use and the sales of
Du Biotic chez Krastase, Cosmetique Mag, 89, (June 2008),12.

Amy B. Barone, Hair care in Italy : Untapped potential, DCI, (April 1997), 12.
283 Products : Chronologiste, Krastase USA, http://www.kerastaseusa.com/_en/_us/conso/products/chronologiste/index.aspx.
284 LOral Annual Report 2010, 38
285 Pivet, 1964 - 1994 : Thirty years of Krastase, 28.
286 Ibid., 14.
287 Ibid., 14.
281
282
61
its products. Then, in the early 2000s, Krastase launched its first Krastase Treatment Institute,
which we can consider as Krastases first experience-based extension. Like the salons, Krastase
Institutes are third-party owned hair salon but a special Krastase luxurious corner has been set-up
in order to deliver the complete Krastase experience. The concept has quickly expanded : in 2004,
there were already around 30 Krastase Institutes around the world.288
In 2007, Krastase added dietary supplements against hair loss to its product architecture with
Krastase Nutrients that aims to achieve beauty from within, ()acting right from the bulb of
the hair fibre.289 This launch is thus a horizontal brand extension stretched from Krastases
expertise, hair care, affecting the form of the treatment. Krastases scientific origins give it the
legitimacy to innovate and bring dietary supplements to the market. In addition, LOral has the
manufacturing expertise to produce dietary products thanks to its partnership with Nestl
Nutritional Research for the production and commercialization of alimentary beauty supplements
Inneov.290
In 2008, Krastase made a second attempt to stretch into skincare with a line called Kraskin
Esthetics. Contrary to Dialectic, Kraskin Esthetics is a true professional skin care line that also
includes esthetics-specific products. It is also positioned at the prestige end of the market, slightly
higher in prestige than Krastase, with prices of 100 per hour for salon service and 150 for antiaging cream. The distribution is also limited to 2,000 high-end hair salons in the world for the five
first years.291 Thus, this extension is a step-up (pyramid model). The stretch came from a point in
between Krastases expertise and image on the extension strategy spectrum (similarly to Aveda
when it launched its skincare line).
With Kraskin Esthetics, Krastase aimed to have an offer to respond the trend of "hand over
their beauty routine to somebody else."292 Kraskin Esthetics first launched exclusively in
Alexandre Zouari, Paris and was then launched in the U.S. and the rest of the world. 293 "It's an
historic step for our division," said Jean-Jacques Lebel, vice president and general manager of
L'Oral's Professional Products Division to WWD : Womens Wear Daily, a year before the launch.
"The luxury hair salon business has changed, he explained. 294 Customers want a total service,
not just a haircut."295 "In the salon business, we've created all kinds of new experiences : Disco
salons, spa salons, salons with restaurants, bars, environmentally friendly salons," he said. "Today,
we feel that professional skin treatment is one of those niches. Our competition is not necessarily
other hair salons but anywhere that offers head-to-toe beauty treatment," said Lebel.296
This was LOral communicated to the media at pre-launch, but it was then decided to detach the
new brand from Krastase.
Kraskin Esthetics beauty treatments involve a 30-minute skin diagnosis, after which the
beautician mixes professional concentrations of active ingredients for use in massage techniques.
The "professional esthetics" positioning is also evident in the product names, for instance Serum
288
289
290
291
292
293
294
295
296
Andrea Nagel, Krastase Adds Spa Feel with Hair Haven, Womens Wear Daily, 188 (August 2004), 10.
Products : Nutrients, Krastase UK, http://www.kerastase.co.uk/products/nutrients.aspx.
Inneov, http://www.inneov.com/.
Krastase Branches into SkinCare, International Cosmetics News, October 2008, p.21.
Ibid., 21.
Ibid., 21.
Krastase to enter Skin Care by Year End, WWD : Women's Wear Daily, 193 (June 2007), p.8.
Ibid., 8.
Ibid., 8.
62
3C + C-Dose 5%, Aqua Lipidium 1. The treatment protocol includes a two-step skin diagnosis.
First clients are examined with a skin chin camera. Then another device is used to analyse their
pigmentation. The treatment is customised on the spot for the client and is applied using a device,
having the same effect than a massage. However, the success of Kraskin is mitigated. According
to Angelo Taverniti, owner of the salon named after him, it is difficult to connect Kraskin
Esthetics with Krastase since Kraskin is more premium than Krastase, and does not attract the
same customer, he explains during our interview. In addition, he said, there is a lack of synergy
between the two brands, according to him.297
4.1.5 Krastase Institute experience
As explained earlier, the Krastase products and rituals are offered in two types of environments,
the Krastase Salons and the Krastase Institutes. The Krastase salons are third-party owned
salons that have concluded an agreement with Krastase for the use and the sales of its products.
The Krastase Institutes are also third-party owned salons but contrary to the regular hair salons,
they include a luxurious Krastase treatment centre where the complete Krastase experience is
delivered.
Mystery
Krastases stories come from the consumers who see immediate, unique results, told me
Angelo Taverniti.298 Krastase has literally changed the look and feel of the hair of many clients
and since nothing is worst than a bad hair day for many women consumers, Krastase can
enhance how they feel in their daily lives.
Senses
In response to the well-being trend, Krastase was a pioneer in the development of a pleasure
approach to hair care as early as the 1990s. This moment of relaxation and well-being is delivered
thanks to the products formulas, which include pleasant perfumes and sensorial textures as well as
through the specific expert gestures of the Consultant Hairdresser.299
Intimacy
Intimacy is created through the special relationship that is created between the client and the
Krastase Consultant. In addition of providing technical advices, the hair dresser literally touches
the client, and thus creates a true moment of intimacy and trust. In the Krastase Institutes, the
customer receives hair and scalp treatment and massage. A New Zealand Heralds journalist
testifies :
Leaving a salon with well blow-dried hair is always a good feeling, but if that feeling
extends for days and leaves your hair noticeably softer than usual, then its a real boon.
Thats one of the benefits of having a good hair treatment, or what the Krastase hair
company calls a ritual. () A brief questionnaire about my hair's condition is followed by
Kirsty using a magnifier to check out its condition up-close, while asking about any
specific concerns I have. This process allows the consultant to prescribe the best ritual
for my hair and scalp needs and, should I want, advise on the right take-home care and
styling products. (). Around 20 minutes after the ritual begins, it's blowdry to my liking
time, keeping the curl, but smoothing it down. It looks good, and feels good too. Kirsty
tells me clients often choose to add a ritual on to a colour appointment to ensure
optimum hair condition. 300
297
298
299
300
Caroline Fraser, Interview with Angelo Taverniti, Angelo Taverniti Hair Salon, September 2011.
Ibid.
Pivet, 1964 - 1994 : Thirty years of Krastase, 28.
Janetta McKay, Beauty : Ritual glamour, The New Zealand Herald, (August 2011), Section Entertainment, General.
63
4.1.6 Analysis of Krastases experience-based extension

Business effects
There are a few indicators that allow me to advance that the Krastase Treatment Institutes have
contributed to Krastases business growth. Krastase opened its Institutes in the early 2000s and
its sales grew by 28% between from 2002 to 2003 and were projected to grow by 30% from 2004
to 2005, a year of expansion for the Krastase Treatment Institutes.301 Looking at the number of
Institutes today in 2011, and their early expansion, we assume that the Krastase Institutes were a
success as much for the company than for the hairdressers and the customers.
4.1.7 Learning from Krastases extension history
Krastases two unsuccessful extensions trials into skincare tell us two things. First, the brand
might not have the adequate elasticity levels to stretch into a diverse product category yet. It
should maybe first extend from its core (the hair category) and then into product categories.
Furthermore, an avenue of solution would be to design a new place where the new product
category could be experienced, since the two attempts to bring professional skin care into hair
salons have failed.
4.1.8 Krastases long term brand vision
Despite its technical progress and worldwide expansion, Krastase remained faithful to its original
vocation aimed at making women more beautiful, creating total beauty, through haircare.302
4.1.9 Krastases objectives
Krastases objectives are to step-up in luxury, increase brand experience and reach new consumer
segments.
4.2 Krastases elasticity assessment
The second step consists in using The Brand Elasticity Assessment Square to evaluate the
Krastases elasticity potential. After having made broad comments, I will go into details and make
recommendations for each criteria using the Brand Extension Recommendations Table.
4.2.1 Krastases elasticity evaluation
I will now use the The Brand Elasticity Assessment Square to evaluate Krastases elasticity potential.
Krastase has very high awareness levels in its product category, but lower general awareness.
Therefore, Krastase ranks medium-high in awareness. In terms of abstractness, first of all, the
fact that Krastase is a prestige brand, positions it at the prestige/abstract end of the spectrum
versus the functional/concrete end. However, the hair care product category is less abstract than
other beauty categories such as perfume and make-up, so it diminishes its overall abstractness
ranking to medium-high. As for its associations, they are most of the time positive, but they do not
infer an entire world of connotations such as Avedas. Krastases associations are more related to
product category : the world of hair and beauty; therefore, they are not so distinctive (in terms of
imagery, not of results) that of the competition. As a result, Krastases associations are medium.
However, the brand has a high consumer-brand relationship. Thanks to the touch and the
expertise of the Krastase Consultants and the quality of its products, it has high brand loyalty
levels. In sum, Krastase is a medium elasticity brand.
301
302
Nagel, Krastase Adds Spa Feel with Hair Haven, 10.

Pivet, 1964 1994 : Thirty years of Krastase, 2.
64
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Figure 4.1 Krastase, a medium elasticity brand

4.2.2 Krastases elasticity implications
The first implication of Krastases medium elasticity is that the brand should first be extended
from its functional attributes and then, when its elasticity has increased, from its brand image.
Although its extension positioning strategy should be more alike that of low elasticity brands than
that of high elasticity brands, e.g. stretching from the expertise level versus the image level,
Krastase can potentially find a good middle ground between expertise and image, especially after
a few extensions.
4.2.3 Krastases brand extension recommendations
Based on the Extension recommendations for the four elasticity criteria I will make
recommendations for Krastase according to its score for each of the four brand elasticity criteria
awareness, abstractness, associations and consumer-brand relationship. Krastase has very high
awareness levels in its product category, but lower general awareness. It means that the extension
would benefit more from the strength of Krastases brand if it were primary targeted at actual
consumers. Krastase has medium-high abstractness. The brand should thus play it safe and
stretch its new offering from its expertise. However, it should use its abstract qualities to also
exploit its brand personality, concept and imagery but only in terms of branding and
communications marketing. In addition, its prestige status should either be maintained intact or
scaled up. Krastases associations are medium. It is still important to extract its strongest qualities,
define which ones represent the core of the brand and then determine in which product category
they could be highlighted. Since Krastases associations are medium, it is even more important to
provide adequate marketing support in order to help consumers making the links between the
original and the new brand. And finally, Krastases strong consumer-brand relationship enhances
Krastases current clients understanding of the links between the original and the extension.
4.3 Krastases brand essence assessment
The assessment of the brand essence is the key step prior to defining the extension possibilities.
As explained in an earlier section, this process should start with an historic research and finishes
with the brand essence definition, using the strategic tools mentioned at the Brand Definition
Process Section.
65
4.3.1 Krastases history and original mission

Krastase was strategically launched in 1964 by the LOral Group to provide a solution in the hair
market where there were unmet needs : treatment service.303 At the time, Krastase was a new
product range created to implant the treatment service in salon. It was thus an advancement for
both the consumers and the hairdressing profession and represented an important business
opportunity, as explained by Franois Dalle, LOral former CEO in 1964 : When we see how
much women feel the need to care for their hair, when we see how lost they are when faced with
unhealthy hair, we realize that the market exists and that it is gigantic.304 There were some forms
of treatment products but they could only be found in pharmacies. They were somehow drastic
and provided disappointing results.305 On a business point of view, the LOral Group, although
very strong in the perm and colour segment of the hair market with launches of LOrol, Imdia
D, and Rg Color, lacked a hair care dimension to its hair product portfolio.
In addition, in salons, there was no hair care service as such. The role of the hairdresser was purely
aesthetictheir role was to enhance womens beauty. At this time, Vianney Pivet explains that the
basic service in the salons consisted in the plixante setting, obtained thanks to a strong heat
supply and maintained with the help of a great deal of lacquer. 306 The products used for cold
perms and colours were very different from today and much more damaging for the hair.307 The
hairdressers service did not include a treatment dimension and there was no range of professional
treatment products at their disposition. Thus, the hairdressers technical expertise could not be
fully exploited by lack of means.308
This is in this context that Krastase was launched with original vocation to make women more
beautiful and create total beauty, through haircare.309 In the eighties, Krastase became the first
hair care brand in Europe.310 From 1984 to 1989, there was a huge increase in marketing support,
which certainly contributed to thee brands average growth of 15% per year.311 From 1990 to
1992, the competition tightened; there were 22 brand competitors against five back in 1985.312
However, during these years, Krastase reinforced its brand capital to become in 1994 the
reference brand and the worldwide leader in salon haircare.313
4.3.2 Krastases brand image evolution
1964 1973 : Medical positioning
Krastase was launched in 1964 with a scientific positioning. The look and feel of its product
packaging inspired a pharmaceutical product while the tone of its communication was serious,
official:
With the aim of counterbalancing pharmaceutical propositions in the selective salon
network, it adopted from the very first a very medical positioning: the products, with
complex names looked like medical products (phials and bottles) the range name itself
had a medical connotation (KERASTASE, from the Greek kerastos which means
303
304
305
306
307
308
309
310
311
312
313

Ibid., 4.
Ibid., 4.
Ibid., 4.
Ibid., 4.
Ibid., 2.
Ibid., 15.
Ibid., 19.
Ibid., 24.
Ibid., 22.
66
cornea), the signature LOral-Recherche evoked a scientific approach and products

stemming from highly advanced technology.314
At launch, Krastases brand message was almost considered provocative since prescriptions had
never existed in hair salons. Hairdressers did not have credibility with regards to hair problems
that were not aesthetics related.315 Therefore, Krastases medical positioning was key to establish
its credibility. There were also two diagnostic tools that were provided to the hairdressers during
this period in order to reinforce their prescriptive role : the Krastest and the Krascope.316
1974 1983 : Shift from medical positioning to beauty
From 1974 to 1983, Krastases brand image softened, which shifted its medical positioning to
beauty : () without modifying its original vocation in any way whatsoever, in 1974, the brand
enters into a long phase of maturation, during which time it develops a personality of its own.317
During that period, the brand codes evolved. The symbolic K appeared, the communication
became warmer younger and closer to people, almost amusing at times.318 Krastases language
became the one of beauty. The signature LOral Laboratories changed for LOral and the
shape of its packaging became rounder and the brand colours, warmer. 319
1984 1993 : definition of a personality of its own, balanced between science and beauty
From 1964 to 1984, the brand had gone from one extreme to the other, had left its scientific
background aside and arrived in the early eighties with a strong beauty connotation. Therefore,
there was a need to go back to its technical and scientific image which was at its origin and
vocation to offer hair treatment, explains Pivet.320 It is with the launch of the Nutritive product
line that Krastase found its balance between treatment and beauty positioning. Nutritive was
positioned as a range that corresponds to a new concept in hair cosmetics, built around a parallel
with skin.321 New graphic guidelines were defined for Krastase. Its balanced positioning between
science and beauty was communicated through the combination of a cosmetic language with
typical pharmaceutics codes.322
4.3.3 Krastases brand values and identity today
In the nineties, Krastases image stabilized. The brand remained faithful to its original vocation
to offer women total beauty through made-to-measure haircare in hair salons. 323 Today,
Krastases image is built on 6 pillar-values :
1.
Human Expertise. Human expertise refers to the Consultant Hairdresser, which is central
to the brand origins and its evolution throughout the years. One of the differences between
Krastase and the hair care brands available in pharmacies is the service that accompanies
Krastase at all times. Todays Krastase advertising visuals often show the professional
aspect of the brand thanks to the expert hands placed on the clients head.
314
315
316
317
318
319
320
321
322
323
Ibid., 5.
Ibid., 5.
Ibid., 7.
Ibid., 10.
Ibid., 12.
Ibid., 14.
Ibid., 17.
Ibid., 17.
Ibid., 23.
67
2.
Beauty. Beauty refers to the cosmetics results delivered by the products. The advertising
visuals focus on the health and the beauty of the subject. In addition, beauty is communicated
through the well-being state that characterizes the subject.
3.
Sensoriality. Sensoriality refers to the treatment experience that is meant to be a moment of

relaxation and of well-being. The effects of this sensorial experience are long-lasting and
affect the subjects physiological and psychological well-being.
4.
Personalization. Personalization refers the service and the treatment rituals that are adapted to
all hair types and to specific capillary problems. Personalization is communicated through the
brands product architecture, constructed by function.
5.
Science. Science refers to the treatment origins of the Krastase. Krastase is a product of
LOral Laboratories and was conceived to respond, similarly like would a pharmaceutical
product, to specific capillary needs. The visual identity of the brand puts science forward
thanks to the sharpness of the letter K, the Recherche Avance LOral signature and the
molecules visuals that often accompany the brands communications.
6.
Performance. Performance refers to the results that are immediately perceivable by the
consumer. In the brand communications, performance is communicated through the sleek
and precise lines of the visuals advertising and through the beautiful hair results show cased
on the communications.
4.3.4 Krastases Brand architecture

Today Krastases brand architecture includes, with its latest launch Krastase Fusio Dose Ritual,
thirteen product lines : Nutritive, Biotic, Rsistance, Homme, Spcifique, Chronologiste, Age
Premium, Soleil, Rflexion, Elixir Ultime and Nutrients. Each product line responds to specific
needs, and in parallel owns a unique visual world and colour codes. As mentioned above,
Krastases Nutritive was the launch that definitively set Krastases identity, through the parallel
established with skincare (skin nutrition). Because Nutritive is so key to what Krastase has
become today, let us examine the positioning of this line when it was launched in 1984 : Just like
your skin, your hair needs to be nourished, said Nutritives first communications. 324 Nutritive has
marked a millstone in the brand history since it was the first range that targets normal, dry and
sensitised damaged hair. Krastase Nutritive gives beautiful, light and easy to style hair results.
With time, the line evolved through the addition of different nutrition ratings (from instant to indepth). Nutritives colour codes are still the same today than when it was launched : creamy beige
and orange.325
4.3.5 Krastases identity prism
I introduced Kapferers identity prism in the section in the brand identity definition section. The
identify prisms purpose is to codify a brand identity. Using the information I have cumulated
about Krastases history and culture, I will now define its six facets :
1.
Brand physique. The brand physique is visible through the codes, signs, colours and traits that
characterise the brand.326 Krastase has smooth, sleek and precise lines. Its K symbolizes its
324
325
326
Pivet, 1964 1994 : Thirty years of Krastase, 29

Ibid., 29.
68
rigorous scientific background, while the green, orange, fuchsia, gray and other colours are
used to differentiate the products that connote customization and personalization.
2.
Brand personality. The brand personality is described through the same character traits that
define a person.327 Using Jennifers L. Aakers five personality factors as a framework,
Krastases two main personality traits would be sophisticated and competent.328 The two
other traits that could respectively be added to these two factors for further explanation are
sensual and expert.
3.
Customer reflected image. This is the external mirror of the brand, the image of the brands
clients.329 Krastase offers the reflection of a beautiful woman, in peace with herself.
4.
Customer self-concept. This concept is similar to the previous one, but refers to the clients
self-identity construction through the brand.330 Krastases client constructed identity is : My
beautiful appearance reflects my health and wellness.
5.
Culture. The culture represents the brands DNA, and deep values from which we can
reinvent inspiration.331 For Krastase it is a combination of medicine, pharmaceutics, beauty
and spa culture.
6.
Relationship mode. This facets refers to the nature of the relationship between the brand and
its clients.332 In the case of Krastase, this relationship is established through the hairdressers
contact. It is therefore a report of expert versus client.
4.3.6 Krastases Chinese portrait

The Chinese portrait technique is another brand identitys definition method that had been
introduced in an earlier section. In consists in illustrating a brand with concepts outside its
categories. Six questions have been drafted for Krastase. If Krastase were
1.
A place? It would be a laboratory. The laboratory reminds brands scientific background,

Advanced Research signature, precision, and innovative products and techniques.
2.
An animal? It would be a butterfly. Milan salon owner, Angelo Taverniti says that Krastases
main differentiator are the instant visible results perceivable after product application.333
The brands communication efforts are also focused on this theme. Here are a few examples
of the brands communication tone : visible effects, incredible cosmetics results, indepth transformation, etc.
3.
A profession? If other than a hairdresser, it would be a doctor, for his prescription ability.
4.
A food? An Italian gelateria, for its sensual ice-cream textures and its range of flavours
presented through different colours.
5.
A material? Silk, for the silky texture and luminous appearance of the Krastases formulas.
6.
A natural phenomenon? A rainbow, for the chemical reaction that allows the transformation
to happens.
327
328
329
330
331
332
333
Ibid., 123.
Jennifer L. Aaker, Dimensions of a Brand Personality, 347
Ibid., 123.
Ibid, 124.
Ibid, 125.
Fraser, Interview with Angelo Taverniti.
69
4.3.7 Krastases brand essence equation

These two brand exercises lead me to conclude that Krastases brand identity is built on three
pillars :
1.
Expertise : expressed through diagnostic.
2.
Science : expressed through treatment.
Experience : expressed through sensoriality.

*+,$(-$(."/,$%0".12$-)3%
3.
These three pillars construct Krastases brand essence, which is Metamorphosis : expressed through
results (Figure 4.2).
.45.,-)(.
60)$7%3(-)89
(8).%8.
6-,.$-:.%-9
.45.,).%8.
6(.%(3,)$&)-'9
:.-$:3,5;3()(
6,.(2&-9
Figure 4.2 Krastases brand essence and brand equation

4.4 Krastases brand extension legitimacy
Now that we have clarified Krastases brand essence, the next step consists in defining its
extension legitimacy circles, which refer to the concepts related (closely or remotely) to the brand
essence. Here, the concepts can either be extracted from the brands expertise or from!"#"$%$&'()(
the brands
image. Then, I will position Krastase between positioning poles in order to generate new ideas.
4.4.1 Krastases potential extension categories
Krastases core expertise is hair care. What would be its potential extensions categories? Hair
relates to two larger concepts : beauty (the aesthetic appearance of the hair) and health (the
healthy state of the hair). These two larger concepts put together are included in a larger category :
wellbeing. Well-being refers to the aesthetic aspect of beauty (beauty affects self-perception and
state of mind) and the internal aspect of health (health affects general wellness and state of mind).
That means that Krastases remote stretching categories are abstractly related to the pursuit of
well-being, while its close stretching categories are related to physical beauty and health.
Consequently, Krastase could be stretched from hair care, to face, body, mind and soul.
4.4.2 Krastases extensions positioning dimensions
Now, the potential extensions can be positioned across four dimensions, which modify a little or a
lot Krastases positioning depending on the space between its actual and new positioning. These
dimensions are for Krastase :
1.
Sensoriality versus functionality
2.
Aesthetics versus health
3.
Accessories versus products
4.
Service versus self
Figure 4.3 illustrates Krastases brand extension legitimacy, through its potential extension
categories and positioning dimensions.
70
($$,++'-&,+
(,+%2,%&$+
+,#+'-&()&%*
+,-.&$,
3,%(4
2(&- 3'-/2'+&+
!($,
1'0*
+'")
+,)!
!"#$%&'#()&%*
2,()%2
/-'0"$%+
Figure 4.1 Krastases brand extension legitimacy

4.5 Related trends
The boundaries of the Krastases extension legitimacy guide the trends research.
4.5.1 Schizophrenic world
Slow versus fast
We live in a society of contrasts. On one hand we assist to the raise of the slow movement :
slow food, slow living, slow cities, slow travel, slow design, slow money etc.334 This slow
movement coexists with the fast-paced society in which we live : the need for prepared for food,
ready-to-eat need, fast-food service (taking new forms such as take-away sushis), the online
shopping, the 24 hours fitness center/supermarket, etc.
Service versus self
The same phenomenon is visible on the service level. There are more and more economic offers
that include very high levels of service such as an the Faena Hotel in Buenos Aires that assigns an
experience manager to every client who stays at the hotel, the personal shopper, Virgin Airliness
in-flight massage services, etc. At the same time, there is a visible trend of self service : self checkin at airports and in and increasing number of hotels such as the Majestic hotels in Australia or the
Qbic hotel in Amsterdam, the self-bar or DVD rental and Tescos self-check-out.
Luxury vs no-frills
According to Silvia Barbieri from Future Brands, today the new brand or company concepts that
have the most success are either focused on extreme luxury or at the other end of the spectrum,
on the no-frills, low-cost.335 There is an emergence of seven stars hotel such as the Seven Stars
Galleria Milano, Dubais Burj Al Arab, the Emirates Palace Abu Dhabi, notably and a few more
are under construction in Asia and in the Middle East. On the other hand, there is a lot of
enthusiasm for no-frills airlines such as Ryan Air, no-frills supermarket, such as Aldi and no-frills
hotels such as Easyhotel and Citizen M.
334
335
Slow food, http://www.slowfood.com/ and Slow movement, http://www.slowmovement.com.

71
East vs West
With the growth of Asia economies, the western world has developed a growing interest towards
the Asian way of living and healing : yoga, vegetarianism, acupuncture, etc. On the other hand, the
Western procedures are usually still the official way to cure (western medicines, esthetical surgery)
and to live (for instance, Canadas Food Guide by Canadas Ministry of Health).
4.5.2 Body is first priority
Despite the worldwide economic crisis, the beauty industry continues to grow. Consumers have
not stopped buying cosmetics products, proving true the 1950s adage of Leonard Lauder that
lipsticks sales grow in hard economic times. Euromonitor International projects the global
cosmetics and personal care product market to increase 9% by 2013, for a total of nearly $364
billion.336
According to trends agency, Future Concept Lab, 11th September 2001 changed many things,
amongst which the concept of comfort, which had in any case been gradually evolving over the
years. () There has been a notable increase in spending for food and body care all over Europe,
after the collapse of the Towers. 337 This is a sign that the individual is seeking overall well-being,
through a more relaxed approach to life and a preoccupation for physical and mental health.338
Time and body are the new luxuries that redefine the new though in actual fact time-honouredpriorities of the post-11th September age, claims Future Concept Lab. 339 One of the industries
that has grown thanks to this trend is the Spa Industry. Only in the U.S., the spa industry
generated $12.8 billion of revenue in 2010, which represents an increase of 4.3% compared to the
previous year. According to the International Spa Association, over a decade, the amount of spa
revenue has more than doubled.340 Indeed, the spa trend is highly visible. According to American
Salon, Spas come in all shapes and sizes. The most common classification includes day spas,
resort spas, medical spas, club spas, cruise spas, destination spas and mineral spring spas. The
largest industry segment by far is the day spa, menu of specialized massage and body care services,
including body wraps, salt scrubs and mud treatments.341
4.5.3 The medicalization of society
The Medicalization of Society is the name of a book written by Peter Conrad in 2007. Witnessing the
increasing presence of medicine in everydays life, Conrad argues that what were once considered
normal human events and common human problems - birth, aging, menopause, alcoholism, and
obesity - are now viewed as medical conditions.342
In consequence, hospitals are crowded. This opens the door to private medicines and self-healing
(self-diagnosis and self-prescription) thanks to the availability of resources on the Internet and the
over-the-counter medicines (both pharmaceutics and natural).
Rachel L. Grabenhofer, Inventing Success, CGI Magazine, February 2010, 24.

Francesco Morace, Ed., Living Trends : The 5 Scenarios and 10 Trends of Domesticity and Living, (Milano : Libri Scheiwiller,
2006), 11.
338 Ibid., 11.
339 Ibid., 11.
340 Industry Stats : The U.S. Spa Industry Fast Facts, International Spa Assocation,
http://www.experienceispa.com/media/facts-stats/.
341 Step Up to the Bar, American Salon, 132 (January 2009,) p.32.
341 Francis X. Acunzo., The Spa Experience, Massage Magazine, (October 2007).
342 Peter, Conrad. The Medicalization of Society : On the Transformation of Human Conditions into Treatable Disorders, (Baltimore :
The Johns Hopkins University Press 2007), p.4.
336
337
72
4.5.4 Asia, the new centre of the world

The economic growth of Asia has opened the worlds eyes on the Asian culture. Asian food,
design, philosophy and medicines are in vogue. Many western spas that have nothing to do with an
ashram, have been inspired by the connection between soul, body and mind oriental
philosophy. Some examples of spas following this trend are SHA Wellness Clinic in Alicant, Spain
(www.shawellnessclinic.com), Clinique La Prairie in Montreux, Switzerland (www.laprairie.ch), and
Euphoria in New York City, USA (http://euphoriaspanyc.com/). They include yoga, shiatsu, Thai
massage, Ayurvedic medicines, and acupuncture.343 The trend is also visible in cosmetic products.
For instance, the New New Yorks HBA Spring 2008 conference featured a conference about
Ayurvedic Medicines for Antiaging and Skin Care Cosmetics.344
4.5.5 Med spa
This micro-trend is the result of the combination of the three previous macro-trends. The
increasing interest in health and wellness pleasurable body experiences, the medicalization of
society and the worlds turning its eyes on Asia promoted the growth of the medical spa.
According to Alexis Ufland of Lexi Design Spa Definition, Design, Development, with the
arrival of the latest trend, the Medica Spa, the two fields have converged [Western Medicine and
Spa and Fitness Industry] and caused a veritable explosion making this new trend the wave of the
future.345 Different types of medical spa are emerging with different levels of expertise and
different degrees of sensoriality. Some of the services offered include dermatology, esthetics,
dental care, dietetics and physiotherapy.346
4.5.6 Good bye Sex in the City, welcome to the Eat, Pray, Love era
This trend symbolizes the return to a more holistic approach to beauty, life and wellness. Women
are trading their high heels against yoga matt. They also turned themselves towards organic,
natural cosmetics products, a trend that contrasts the Bottox trend of the nineties. It is also the
end of the superwomen. Eat, Pray, Love have given the right to women not to conform to the
society of performance, but to live up to their dreams and discover their inner-selves. The
phenomenon has also demystified and popularized the practice of yoga and meditation.
4.5.7 Do it yourself
There is a new dimension in the experience economy, which is becoming increasingly important.
People want to be active in their experience. As mentioned in the experience economy section,
experience that involves an active participation from the participants are more engaging. In
response to that trend, companies are collaborating with consumers in order to improve or
enhance their offering. Examples are LaFraises business model (www.lafraise.com) or Ubi-Softs
appeal to consumers to solve a bog in a video-game.347
SpaFinders 2011 Spa Trend Report : The Top 10 Global Spa Trends to Watch in 2010, SpaFinder,
http://www.spafinder.com/about/press_release.jsp?relId=205.
344 Nancy Jeffries, Live from New York : HBA Addresses Industry Trends GCI (May 2008), 38.
345 Ufland Alexis, The Medical Spa : The Next Generation of the Spa Industry, Spas.about.com,
http://spas.about.com/cs/medicalspas/l/aa063002ga.htm.
346 Ibid.
347 Cova, Consumer Tribes & Brand Communities : A Mediterrenean Approach to Branding Strategies.
343
73
5. Project conceptualization
Finally, the last step of the extension definition process consists in matching the trends to
Krastases potential extensions while ensuring coherence with its brand essence and identity. I
will suggest two experience-based brand extensions concepts and use the evaluation tools to assess
their validity and make a recommendation towards one of them.
5.1 Concept 1 : KraBar
KraBar is a concept that matches the Do it yourself trend that was introduced earlier as well as
the concept of consumers active participation or role in a brand experience.
5.1.1 KraBars description
KraBar is a professional self service hair bar where the citys top hairdressers transfer their
expertise to consumers in an environment that allows the convergence of convenience and
sensoriality. KraBar is supported by the expertises transfer concept.
5.1.2 KraBars inspirations
KraBar is inspired by the beauty bar trend. These new spaces aim at offering a service in an
environment that allows the client to get actively involved, and freely touch and feel the products
trough his or her senses. The bar facilitates the tactile discovery and encourages the clients to
experience the products more than the normal displays. Some examples are :
Bumble and Bumble Styling Bar (Bloomingdales New York, USA)

http://www.bumbleandbumble.com/salons/bbsalons/bloomingdales.tmpl, offers 20 minutes
styling service without appointment and the possibility to experiment products and to get free
tips.
Shu Uemura Lash Bar (World Wide Department Stores) http://www.shuuemurausa.com/_us/_en/accessories/false-eyelashes/tokyo-lashbar.aspx, exhibits a variety of falseeyelashes and offers make-up session.
Marie-Sophie Dion Opticienne Bar Lunettes (Montreal, Canada)

http://www.msdion.com/, over 1,000 selected frames from a worldwide selection are
available for the client to choose. The fitting session happens while sitting comfortably at the
bar.
Style School at Urban Retreat Harrods (London, UK)

http://www.urbanretreat.co.uk/Harrods/Hair/Style_School.aspx : professionals show
clients how to use the products and perform a salon style that they can reproduce at home.
Hair styling techniques are taught according to the demi-demo model (the assistant does one
half and the client completes the other half). The Style School also accommodates party of
five.
5.1.3 KraBars target market

Krastases current customers are 35-45 years old women in Europe and 25-35 years old in Asia.
63% to 67% have coloured hair. With KraBar, Krastase can connect with younger European
customers and new customers that do not use hair colour. KraBars primary target market is the
young professional early adopter woman who is conscious about her appearance, and who lives a
fast-paced life.
5.1.4 KraBars usage scenarios
Clients go to KraBar for three main reasons :
74
1.
Immediate hair care and style needs : KraBar Scenario A
Brigitte leaves her home at 7:30 am, dressed smartly to go to work at Publicis, the advertising
agency. On one shoulder, she holds her Chlo bag and on other, her yoga matt within an organic
cotton bag. At lunch time, she attends a yoga class at the small studio near her office. The studio is
very minimalist (ashram style). The changing rooms include basic showers but no products nor
hair dryers or other hair accessories. Brigitte crosses the street and enters at KraBar. The
receptionist recognizes her and greets her warmly. She gives her a silk robe to wear over her
clothes, a head towel wrap and an extra towel to keep her shoulders dry. Brigitte walks to the wash
unit (called Hair Bath Unit) and comfortably places her knees on the specially-designed ergonomic
kneeling chair. She pumps the large cream and orange Nutritive shampoo bottle dispenser and
starts washing her hair. She rinses with the with pull-down spout sprayer of the detachable faucet.
After having wrapped her hair into the towel wrap she goes to the style station and uses the
Krastase lixir Ultime put at her disposition prior to blow-drying her hair. While she does her
brushing, a hair stylist walks close by and shows her a new blow dry technique. She does it once
for Brigitte, and then Brigitte tries in front of the hair stylist until she gets it right. Brigitte looks a
last time at herself into the mirror. Satisfied, she walks toward the exit, picking up her yoga matt
at the reception prior to saying goodbye to the receptionist.
Other similar occasions to scenario A : unplanned business meeting or social event, sudden bad weather,
outside physical activity, etc.
2.
Learning purposes : KraBar scenario B
Sophie has been colouring her hair for the last 10 years. She tried blond highlights at the age of
eighteen and since then she never went back to her natural chestnut. She would like to learn how
to better take care of her coloration at home to preserve the beautiful colour effects she notices
when she leaves the salon. She learned about KraBar on the Krastase website when looking for
tips and advices. When she arrives at KraBar the receptionist greets her and asks her if it is her
first time. Sophie says yes, so the receptionist gives her a tour of the place while explaining how
the concept works. Sophie demonstrates interest towards the private hair care lesson. Marco
arrives, smiling and shakes Sophies hand. Sophie follows him to the service station where he uses
Krastase hair diagnostic camera to magnify the scalp surface and make an accurate diagnosis.
Marco explains to Sophie that her coloured hair suffers of dryness. He prescribes her the Chroma
Riche range of the Rflexion line to give her hair back its softness and colour brilliance. In
addition, he suggests Sophie to treat her hair with the Masque Chroma Riche and to protect them
prior to style them. They go together to the wash unit. Marco shows Sophie how are organised the
product ranges with shampoo bottle dispensers. Under each of them, there is a small description
of the hair type and the product. Marco pumps some shampoo and massages Sophies hair scalps.
He points at a flat screen running a film that shows how to auto-massage the hair scalp during the
hair wash in case she needs a reminder once she is alone. At her turn, Sophie tries to auto-massage
her hair scalp under the guidance of Marco. Marco explains to Sophie how to apply the Masque,
how much time to leave it, etc. After having blow-dried and styled her hair, Sophie leaves the hair
style station and walks to the reception. The receptionist prints a card with Sophies customized
product line and hair care ritual (including some of Marcos personal notes). While the receptionist
75
is printing, Sophie takes the Masque Chroma Riche from the shelf. The receptionist fills her
personal information in the computer and sets a check-up with her after three-months. Sophie
pays for Masque Chroma Riche and leaves KraBar, happy to have learnt something new and with
a little white bag in hands.
3.
New Experience : KraBar Scenario C
Samantha, Fanny and Clara always spend their Saturday afternoon together. Sometimes a Saturday
is dedicated to a pedicure session and other times to a shopping-spree. This Saturday, the girls
have decided to participate to a FUSIO-DOSE workshop at KraBar. Upon their arrival at
KraBar, Sonia greet them and conduct them to the private room. Some lounge music is playing
when they enter. There is a small buffet with fresh fruits, small cakes, and warm and cold
beverages. Sonia kindly invite the girls to help themselves and sit comfortably on the lounge sofas.
Sonia ask them a series of question about their hair and help them to see their own specific hair
needs. She uses the magnifying camera and to project footage of the hair fibre on the flat screen to
illustrate better her explanation. Once Samantha, Fanny and Claras hair needs have been
determined, Sonia invites them to follow her to the Lab where the girls can mix their own
formulas. The concentres and the boosters are already ready-to-be mixed. Only the right
combination, according to ones needs is missing. Sonia shows the girls how to infuse the products
on the hair. After rinse, the three girls walk to the hair style stations with their silk robe. Fanny
notices the tactile screen on the mirror. She selects the straight hair look and watches some tips
while blow drying her hair. During this time, Sonia shows Clara how to protect her hair prior to
using the curling iron. Prior to leaving KraBar, Sonia gives each of them a sample of their
customized formula, which is exclusive, since not available for sale.
5.1.5 KraBars services
KraBars services are divided into two main categories, hair bar services and hair workshop services.
Basically, the hair bar services are attended self-service stations. Wherever the client is, there is always
someone available to help her and to teach her. In addition, tutorials videos and signage are
conveniently placed closed to the bar areas.
Hair Bar Services :
1.
Wash & treat*
2.
Style*
*Included : Robe, hair wrap and towel, Krastases hair care and style products, style accessories
Hair care/style workshop
1.
Hair care/style lesson*
2.
Fusio-dose workshop*
*Included : Robe, hair wrap and towel, Krastases hair care and style products, style accessories. Either individual
or in group up to five
A light food and drinks menu is available during the workshops and the space includes a small
retail environment.
76
5.1.6 KraBar experience

Mystery
At KraBar, the client participates actively in an experience that transforms her into a semi-hair
professional. Thanks to the expertise she brings back home, her daily experience increases in
quality.
Senses
Since KraBar is responsible of only a portion of the clients experience (because of the active
participation positioning of the concept), KraBar ensures the highest levels of quality for all the
controllable variables, such as the lighthing, the comfort of the wash basin, the water pressure, the
adjustable style chairs, the quality of the accessories, the music playing, the sound isolation to
block the noise of the blow dryers, etc.
Intimacy
Although KraBar is a participatory experience, the client is never left totally alone. There is always
an expert who comes around to give a tip, have a chit chat. Because of the two-ways nature of the
relationship, intimacy is developed.
5.1.7 KraBars physical environment
The KraBar space is not far away from the Krastase institutes in terms of aesthetics. A white,
aseptic space with product colour highlights. Large mirrors, change in lighting depending of the
environment, softer near the wash unit and brighter near the style stations. Ideally located
downtown on a street corner, with windows allowing consumers to see what is going on inside.
(Angelo Taverniti says that this strategy-hair style station behind floor to ceiling windows giving
on the street-made him double his sales numbers).348
5.2 Concept 2 : Kra-Spa
Kra-Spa responds to the medical spa trend, as well as the Asians vision of healing which aims to
bring soul, body and mind in harmony.
5.2.1 Kra-Spa description
Kra-Spa is a hair medical spa where advanced hair science meets the ultimate hair sensorial
experience. Kra-Spas sublime cures for the hair and the scalp transform hair in-depht and insurface.
5.2.2 Kra-Spas inspirations
Kra-Spa is inspired by the medical spas that deliver high quality health services while offering a
pleasurable sensorial experiences, for instance :
1.
The Blue Spa (Los Angeles, USA) http://www.bluespa.com/ : named uber spa by Los
Angeles Magazines Best of LA edition and One of the Top Spas in the Nation by
LaunchPad Magazine. Provides medical beauty services such as laser, IPL, injectable
technologies. Its design made of water, light and glass with nuances of cool whites and blues
() reinterprets a spa as the ultimate beauty lounge ().349
2.
The Therme Vals (Vals, Switzerland) http://www.therme-vals.ch/ : has been ranked in 4th
position in the world amongst other Medical, Thermal and Natural Spa by Cond Nast
348
349
Fraser, Interview with Angelo Taverniti.

Why Blue, Blue Spa, http://www.bluespa.com.
77
Travellers Reader Spa Awards. Its architecture made of mountain stone and water symbolizes
force and sensuality at the same time.
3.
The Capri Beauty Farm (Capri, Italy) www.capripalace.com/flash/SPA/en/treatments.html :

has a simplified menu offer that facilitates the choice but details the selection if needed with
health benefits.
5.2.3 Kra-Spas target market

Kra-Spas primary target market are women 35 and over, preoccupied about their hair
appearance. Most of them dye their hair and have special needs.
5.2.4 Kra-Spas usage scenarios
Clients go to Kra-Spa for three main reasons :
1.
Feel beautiful
For some women, a bad hair day feels like the end of the world. There is even an official definition
for the expression. A bad hair day is a day on which one's hair seems unmanageable. Also
extended to mean a day when everything seems to go wrong. 350 In fact, what comes immediately
apparent is the relationship between the self-image and the psychological state of mind. A persons
self-reflection about her own hair affects her psychological well-being, how she feels about the
day. Gaining back the control over her hair will help her to gain back control over her life.
2.
Relax
One of the common reason to go to a spa is to de-stress and escape from daily preoccupations.
Hair condition can appear to be mainly aesthetic but reveals about ones physiological and/or
psychological health. In fact, some physiological hair problems, such as hair loss are caused by
stress, especially amongst women.351 Thus a person who has hair concerns, may benefit as well
from the health benefits of the spa, such as the scalp massage or the light therapy offered at KraSpa.
3.
Treat a Specific Hair Problem : Kra-Spa Scenario
Solanges hair is thin and fragilized. She cant hardly stylize them, her hair seems to have no life.
She reads a magazine review about Kra-Spa and decides to give it a try. Upon her arrival, she
immediately feels she enters another world. The room is impressive. The minimalist design
combined to the robustness of the marble material and the soft ambiance light makes an
impression on her. The receptionist greets her and softly explains her how the spa works. There
are four main professional areas : Diagnose, Cure, Energize and Beautify. There is also a Relax room
that can be used between the four treatment steps or at the end if desired, she says. You can
either change yourself completely and wear the bathrobe and the slippers like you do in a
traditional spa, or if you prefer, you can keep your own clothes and protect them with this silk
robe designed to wear over. The changing room is now at your disposal, she adds. Once Solange
comes back, she is escorted to the Diagnose area where she is introduced to Jean. The room is white
and stylised. There is a head to toe mirror, a flat screen and a few lounge sofas. Jean gets up and
come to greet her. The receptionist hands a menu card to Solange before leaving the room. Jean
and Solange slowly start to talk. A waitress knocks slowly before entering the room and ask
Solange if she would like to eat or drink something. Solange orders a lemon juice and a fresh crab
350
351
Bad Hair Day, in The Phrase Finders, http://www.phrases.org.uk/meanings/bad-hair-day.html.

Stress And Hair Loss, MNT : Medical News Today, http://www.medicalnewstoday.com/releases/72021.php.
78
and cucumber salad. Once Solange have expressed her needs, Jean proceeds to her hair diagnosis.
Solange can see the detail of her hair thanks to the flat screen. A moment later, Jean escorts her to
the Cure room. The rooms lighting, aromas and ambiance music are adjusted to fit her hair
condition and diagnosis. She lays comfortably on the cushioned chair and puts her head on the
headrest. Jeans touch is magical. He first massages her shoulder, than her neck prior to going up
on the back of her head until he reaches her forehead. He then massages the sides of her head
before proceeding to the treatment, which includes the latest hair instruments and ingredient
technology. Once the Cure is over, Solange is brought to the Energize room. She receives another
massage that stimulates her hair scalp and promotes treatment action. It also enhances her feeling
of well-being. Then a cascade of fresh water falls on her head to energize her. After Energize, Jean
asks her if she would like to take a break prior to the ultimate Beautify step. Solange nods so
together they walk to the the Relax area. This area is at the back of the building. Large floor to
ceiling windows illuminate the room with natural light. Solange sits on a lounge chair near the
window. The room attendant brings her a warm tea while she looks at the menu. Solange rests
comfortably, feeling peaceful. After 15 minutes, Jean comes back and since she is ready for the
ultimate step she follows him to the Beautify area. But prior to blow-drying her hair, Jean escorts
her to the changing room, so she is ready to go back to her normal activity after the Beautify
session. Together they discuss the desired hair style. Jean begins. He shows her a few tricks when
styling her hair. Solange is very pleased with the look. Prior to leaving Kra-Spa, they sit together
in a private office. Jean shows her the short film of her hair diagnostic. He explains her how to
take care of her hair back home and gives her a portable hard drive, with follow-up treatment
information. He then asks Solange if she would be interested in sharing her hair condition with all
the Krastase Institutes around the world through an electronic information system. Solange
agrees. The next time she will go to the Krastase Institute near her home, her hairdresser will
have her diagnostic as well as the suggested treatment. When Solange leaves Kra-Spa, she feels
lighter. Her happy hair bounces on her shoulder. Its a good hair day.
5.2.5 Kra-Spas services
The Kra-Spa experience is meant to be delivered from beginning to the end since there is a
logical link between all steps, and withdrawing one would not have the same end effect. The
ultimate Kra-Spa Hair Transformation experience includes :
1.
Diagnose (Electronic profile, Elaborated diagnosis and prescription file)
2.
Cure (Light therapy, scalp massage, product rituals)
3.
Energize (Scalp massage, cascade of fresh water)
4.
Beautify (Hair style)
*Included : Bath robe or Robe, sleepers, hair wrap and towel

The space also includes a retail store, a changing room, a relax room and a light drinks and food
menu.
79
5.2.6 Kra-Spa experience

Mystery
The consumer stories depict Kra-Spas profound effects on their well-being and self-image. KraSpa is a place that literally transforms how a person feels because of the physiological and
psychological benefits associated with the treatments and the experience.
Senses
Kra-Spas effects are beyond the final aesthetic results. The light therapy, which is medically
recognized for pain management, accelerates hair growth and improves blood circulation. 352 In
addition to helping against seasonal depression, light therapy has also been suggested in the
treatment of non-seasonal depression and other psychiatric disturbances, including major
depressive disorder, bipolar disorder and postpartum depression.353 The scalp massage, in
addition to stimulate hair growth, contributes to stress reduction: it helps secrete serotonin and
melatonin, creating a calming effect on the body and mind.354 It can help stimulate the nerves and
blood vessels while calming muscle tension around the head. In India, it has been used for over
5,000 years to prevent stress and illness.355
Intimacy
The relationship between a woman and her hairdresser is unique. There are not many people a
woman visits regularly, confides in and trusts enough to alter her physical appearance, sometimes
radically.356 At Kra-Spa, intimacy is established through the special relationship of trust between
the hair specialist and the client. The visible results, and the psychological and physiological
benefits create a special bound between the two.
5.2.7 Kra-Spas physical environment
Kra-Spas environment is luxurious, minimalist. Long-lasting material of great quality such as
marble is used in the architecture. The place seems almost majestic. The light is used smartly, at
times to create a pure relaxing atmosphere and at times, to energize or cure. The place is also very
aseptic, alluding subtly at Krastases origins. Each room has a different look and feel, as each
room serves to different purposes.
6. Concepts Evaluation
Both concepts will be evaluated thanks to the tools that been created previously.
6.1 Positioning assessment
We had previous said that the brands extension legitimacy circles refer to the concepts related
(closely or remotely) to the brand essence, either based on its expertise or on its image. We had
also said that Krastases core expertise is hair care and that the brand can potentially be stretched
from hair care, to face, body, mind and soul. Both KraBar and Kra-Spa are experience-based
extensions stretched from the very core : hair care. Then, these two extensions can be positioned
Light therapy, in Wikipedia, http://en.wikipedia.org/wiki/Light_therapy

Ibid.
354 Shannon Sexton, Yoga International : Radiant Beauty, Himalayan Institute,
http://www.himalayaninstitute.org/yoga-international-magazine/health-articles/radiant-beauty.
355 Karrie Osborn, Indian Head Massage, Massagetherapy.com,
http://www.massagetherapy.com/articles/index.php/article_id/885/Indian-Head-Massage.
356 Sara Ebner, Intimacies, The Guardian, (June 2011), http://www.guardian.co.uk/world/2001/jun/11/gender.uk.
352
353
80
across four dimensions, which affect Krastases positioning depending on the distance between
Krastases actual position and the new concepts position
Let us compare Krastases current positioning with KraBar and Kra-Spa :
1.
Sensoriality versus functionality
Kratases positioning lies in the middle of sensoriality and functionality. Kra-Spa preserves
Krastases current positioning, while KraBar occupies the space between the centre and the
functional end of the spectrum.
2.
Aesthetics versus health
Again here, Krastase and Kra-Spa are positioned in the middle of the aesthetics and health axes,
while KraBar is in between the centre and the aesthetics end (Figure 6.1)
+,#+'-&()&%*
KRA-SPA
(,+%.,%&$+
HAIR TRANSFORMATION
.,()%.
KRABAR
!"#$%&'#()&%*
Figure 6.1 KraBar and Kra-Spas positioning compared to Krastases (aesthetics vs. health &
sensoriality vs. functionality)
1.
Accessories versus products
Krastase is positioned completely at the products end of the spectrum. Both KraBar and KraSpace are positioned in-between the two axes.
2.
Service versus self.
Krastase is positioned between the centre and the service end of the spectrum, KraSpa
completely at the service end of the spectrum and KraBar, closer to the self end. Krastases
current positioning is closer from Kra-Spa than KraBar. Kra-Spa is therefore closer to the
Krastases core brand identity (Figure 4.2).
81
!"#$%&"
.&&"!!*#%"!
KRA-SPA
HAIR TRANSFORMATION
KRABAR
!"'(
)#*+,&-!
Figure 6.2 KraBar and Kra-Spas positioning compared to Krastases (products vs. accessories
& service vs. self)
Looking back at Krastases brand objectives, i.e. stepping up in luxury and reaching new
customer markets, each of the concepts responds more to one of the objectives than the other,
Kra-Spa allows the brand to access a more luxurious market, while KraBar has more potential to
reach new customers, in the younger age category for instance. Kra-Spa has also the potential to
reach new customers, those looking for hyber luxury experiences or those with more specific hair
problems. On the other hand, KraBar does not help the brand to step-up in luxury, it is a step
down. Therefore Kra-Spa is stronger.
6.2 Krastases elasticity versus fit strategy
I have explained in the second section that there are two possible strategic directions when
stretching a brand : extensions based on brand expertise and extensions based on brand image.
Then, based on the analysis of brand extension success factors, I have concluded that brands with
medium elasticity levels like Krastase should be first extended from their functional attributes and
then, from their brand image, as with time, their elasticity will increase with the number of
previous extensions. Both Kra-Spa and KraBar respect this golden rule, as both concepts are
stretched from the expertise.
6.3 Effects on Krastases elasticity
Both the research and the case studies have shown that that a brands elasticity increases with the
number of previous successful brand extensions because it increases the consumers associations
with the original brand concept. Let us see how Krastases elasticity can increase with KraBar
and Kra-Spa
Awareness
Like a sort of flagship store, KraBar will be more visible than Kra-Spa and will therefore have a
slightly more positive effect on its awareness.
Abstractness
The Kra-Spa concept is more prestigious and broader than KraBar, therefore has more potential
to increase its abstractness.
82
Associations
In terms of associations, both are equal but have different effect. KraBar raises Krastases
expertise, authority, seriousness, while KraBar brings some lightness proximity to the brand.
Relationships
Both have a similar impact on the consumer-brand relationship.
In conclusion, because Kra-Spas bigger potential to increase Krastases abstractness, it will have
a greater impact on Krastases elasticity. KraBar would also have a favourable impact but to a
lesser extent and leading to a different world of future extensions.
6.4 Experience assessment
We have seen that experiences could be positioned across two main dimensions : customer
participation (active and passive) and environment relationship (immersion and absorption),
leading to the definition of four main categories : entertainment which falls into the absorption and
passive participation dimensions, educational event, which falls across the absorption and active
dimensions, escapist which falls into the immersion and the active participation, and lastly, esthetic,
which falls into immersion and passive participation. Krastases current experienceThe
Krastase Treatment Institutesbelongs to the esthetic category, and so does Kra-Spa, but with a
deeper immersion. Because of the active participation of the clients, KraBar belongs to the
escapist experiences. Although KraBar follows the trend of active consumer participation,
according to Pine and Gilmore, the sweetspot is in the center of those four realms, therefore KraSpa and KraBar are equal in strength.
6.5 Customer emotional engagement assessment
KraBar belongs to the sphere of experiences, while Kra-Spa reaches the sphere of
transformation thanks to its deeper physiological and emotional effects on the person. Therefore
Kra-Spa has more potential to establish deeper emotional connections with the consumers and to
strengthen the brand equity.
6.6 Recommendation
My recommendation goes towards Kra-Spa. Amongst the five assessment methods, Kra-Spa has
demonstrated superiority in three categories, while the two other ones are equal. Therefore it is the
most valid concept according the assessment tools used in the context of this research.
7. Critical aspects and future developments

In the last section, I will hightlight the main contribution of this research in the field of brand
management as well as the limitations of the key findings.
7.1 Key brand extension and experience-based brand extensions guidelines
The importance of this work resides in the establishment of key brand extension guidelines, e.g.
when it is appropriate to extend a brand and on which aspect it should be stretched. Secondly, this
work has established a brand extension definition process that could be applicable to future cases.
Lastly, this research has showed the potential positive brand equity effects of experience economy
to brand extension strategy.
7.2 Limitations and future research
To be more exact, quantitative values could be assigned to the four variables of The Brand
Elasticity Assessment Square. In addition, a quantitative method could be designed to evaluate a
brands elasticity, using the square, but with a more exactitude and precision in the assessment. In
83
addition, a profitability assessment would be necessary to verify the business viability of the
concept recommended.
84
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The contribution of the experience economy to brand extension strategy

A brand extension project for Krastase

Master in Business Design Academic Year 2010-2011

One of the challenges of brand management in todays over-cluttered world of information is to

Theoretical framework : literature review and analysis

Application of The Brand Extension Definition Process to Krastase

4.1.9. Krastases objectives

Critical aspects and future developments

Bibliography and references

2. Theoretical framework : literature review and analysis

Proprietary brand assets such as patents, trademarks and channel relationships.16

2.3 Brand extension

Distinctive taste/ingredient/component in the new item : isolating an ingredient of a product

Same customer franchise : visa travellers checks

branding strategy is employed, a wrong combination of brands, or a combination of brands of

Figure 2.1 Brand extension models

Figure 2.2. The two strategic brand extension directions

Aaker and Keller, Consumer Evaluations of Brand Extensions, 38-39.

2.3.6 The Brand Elasticity Assessment Square

Strong consumer-brand relationship. Consumer-brand relationship refers to brand loyalty or

Figure 2.3 The four criteria of brand elasticity in order of importance

Figure 2.4 Example of a brand with high elasticity (Armani)

Figure 2.5 Example of a brand with medium-high elasticity (Aveda)

Figure 2.6 Example of a brand with low-medium elasticity (Nescaf)

The 100 Top Brands, Bloomberg Business Week, http://images.businessweek.com/ss/08/09/0918_best_brands/29.htm

2.3.7 Brand elasticity assessment implications

Implications for brands with low elasticity levels

Figure 2.6 Brand elasticity implications on brand extension strategic direction

Moreover, brand managers

Consider a brand extension strategy

Reconsider or delay brand extension strategy until the brand

Consider a brand extension strategy based on image and in

Stretch from the brand functionality or expertise

Determine what are the strongest and more salient qualities

Build a marketing strategy to communicate the qualities you

If the extension is targeted to existing consumers, can stretch

Expand in closer categories

Figure 2.7 Extension recommendations for the four elasticity criteria

2.3.9 The Brand Extension Definition Process

Figure 2.8 The Brand Extension Definition Process

Kapferer and Bastien, The Luxury Strategy, 122-123.

Kapferer and Bastien, The Luxury Strategy, 148

Theme the experience. It must convey a unified story.

Eliminate negative cues

Diagnosing Aspirations : understanding what the consumer truly wants to become.

Staging Transforming Experiences : what is needed to achieve experiencesand more. The

2.5 Linking the experience economy to brand extension strategy

brand according to its elasticity.

Figure 2.9 Experience-based extension potential by elasticity

Saviolo, Brand and Identity Management in Fashion Companies, 14

3.1.3 Giorgio Armanis extension model and strategy

Giorgio Armani Annual Report 2008,

Nestls Nescaf and Nespresso : Company and brands presentation

Fraser, Interview with Silvia Barbieri.

Corporate Backgrounder, Nespresso, http://www.nespresso.com/mediacenter/index.

Este Lauders Aveda : Company and brand presentation

The Este Lauder Companies Inc. Annual Report, 7.

About Aveda : History, Aveda.

4. Application of The Brand Extension Definition Process to Krastase

Aveda Opens Esthetique in New York SoHo, American Salon.

4.1 Krastases vision and objectives

LOral Annual Report 2010, 1 and 82, http://www.loreal-finance.com/eng/annual-report.

Krastases contribution to the Group