Thursday, August 6, 2009

Got Luxury?

Do consumers buy something because it's marketed under a luxury brand? The answer, in many cases, is yes, according to recent research. But extending a luxury brand can only go so far. How exclusive can a luxe brand be when it's on hundreds and hundreds of items, including many that are far removed from the original branded product category? Brand extensions do have their limits.

Another factor: Will other people be able to see what brand the buyer is buying or using? It's one thing to pay more for an upscale brand of clothing or another product that is publicly visible or even prominent...quite another to pay for a luxury that's used in private, never to be seen by someone else.

Coach, which makes highly-recognizable branded products, has created the new Poppy line of affordable luxury handbags to deal with the economic turmoil that has dampened sales of many high-end items. With Poppy, customers can enjoy the cachet of the Coach brand, and the company avoids discounting its well-known top-priced bags. Although profit margins have narrowed a bit in recent months, the Poppy line seems like a good way to avoid watering down the brand's overall luxury halo.

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