Magazine article Marketing

Mark Ritson on Branding: Build an Extension outside Home Turf

Magazine article Marketing

Mark Ritson on Branding: Build an Extension outside Home Turf

Article excerpt

The rumours began in 2007, and ran rife throughout the annual Baselworld Watch Fair in April. This month we have official confirmation: Tag Heuer is about to launch a mobile phone.

The Tag Heuer Meridiist will be assembled from 430 components and constructed from the same corrosion-resistant steel and unscratchable sapphire crystal used in the brand's luxury watches. The first glimpses of the phone online reveal a sleek, masculine design, very much in line with the style of Tag's watches. The time display on the top of the phone adds an innovative twist that tips its hat to the brand's origins The Meridiist will go on sale in the UK in September through select watch and jewellery retailers, priced at about pounds 3000.

This is a textbook brand extension. Tag Heuer is a very successful watchmaker, but, like most brands, it is not averse to exploring additional sources of revenue by launching products into other categories. A successful extension can also reinforce a brand's position due to the increased publicity and consumer excitement that it generates. In Tag Heuer's case, the Meridiist will also cement its position as a leading brand among watch retailers, which will vie to stock the phone.

But what about the downsides? Will the Meridiist dilute Tag's brand equity in its original category of watches? If it turns out to be a disappointment, will it damage Tag's exemplary image? The short answer is no. Too many marketers continue to labour under the misconception that a bad brand extension represents a hazard to the parent brand's equity. However, a mountain of research has now been compiled in Europe and the US indicating that it is extremely difficult for an extension to damage a brand's reputation in its original category.

Let us assume for a moment that the Meridiist turns out to be a terrible phone. Will this change the perception that Tag Heuer makes fantastic watches? No. Consumers aren't morons. They realise that the skills necessary to make a great watch are not the same as those used in manufacturing a mobile phone. When a company such as Tag makes a leap into a new category, it takes its brand equity with it, but closes the door on any potential negative spill-over into its original business.

So why don't companies like Tag Heuer launch thousands of extensions? …

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