Ferrari is hoping that by diversifying its range it can appeal to a broader range of consumers.
“This circular vision encompasses the various expressions of Italian creativity, with a view to adding F for Ferrari to the three Fs – Fashion, Food, Furniture – that identify ‘Made in Italy’ as an ambassador of Italian culture across the globe,” Ferrari said.
Dr. Abas Mirzaei, senior lecturer in marketing at Macquarie Business School, said that Ferrari’s decision to extend into fashion, is a great example of a brand leveraging its expertise and personality or image.
“Ferrari’s expertise being around luxury, speed, and excitement, allows it to extend to categories where such qualities are sought after. And it will come across as a natural fit, and a reasonable and relevant extension,” Mirzaei told Inside Retail.
“Ferrari launching a fashion line is therefore supported by its known quality and expertise around luxury and excellence in quality, and lesser about the speed and excitement. However, Ferrari’s extension to theme parks [in Abu Dhabi] is more based on speed and excitement and less about luxury.”
Burgers and boybands
For fast food giant McDonald’s, a popular tactic is to align with influential figures. In May, McDonald’s debuted its much anticipated collaboration with South Korean boy band BTS.
As well as adding the band’s “signature order” to the menu, a line of merchandise, inspired by these menu items, launched on the Weverse Shop app. The collection includes hoodies, bathrobes, socks and sandals with a colour scheme that marries BTS purple with McDonald’s red and gold.
McDonald’s has also featured the band’s single “Butter” in its latest commercial.
“This type of extension resonates well with extending through leveraging a celebrity lifestyle. A celebrity who has a lifestyle that attracts aspirational-minded existing consumers or potential consumers can help create a new product endorsed by the celebrity,” Mirzaei said.
Confectionery brand Haribo, which celebrates its 100th anniversary next year, is collaborating with a number of well known brands that share similar values. Just this week, Haribo released the second drop in its consumer products program with IMG. Goldbear candy is the inspiration behind the redesign of some of Puma’s classic apparel and footwear.
In July, the brand will release a range of Haribo-branded shoes for kids in collaboration with European footwear retailer Deichman. And as part of a multi-year global deal with leading US toymaker JAKKS Pacific Inc. and KidsOne tableware in Korea, a colourful suite of toys, collectibles and homewares will hit the market.
Andreas Kuhnle, head of global marketing Haribo, highlighted the importance of having shared values with these brands.
“Haribo is undoubtedly one of the best-known and most popular brands in many countries around the world. Our lives are full of adventures and challenges. Every day and all over the world, little and big heroes face new tasks. For all of them, we at Haribo create small, carefree moments of childlike happiness with our products. That’s why brands that also stand for these little moments of joy in everyday life are a perfect fit for Haribo,” Kuhnle said.
Risk to brand image
Mirzaei said brands have several motivations to extend into new categories, such as tapping into new markets as well as new customers. But there are a number of risks to consider.
“Brand extensions can alter the associations consumers have with a brand – sometimes enhancing its value and sometimes degrading its value,” he said.
“Among the risks of category extension, such as failure, and diversion, a major consumer related risk is confusion.”
According to Mirzaei, expertise and image transferability is crucial for a successful category extension.
“If consumers have NRMA in their mind as an expert in insurance, extending NRMA to grocery store may confuse consumers and dilute the image consumers have in mind about NRMA. Similarly, Woolworths extending their brand to insurance may confuse consumers, who have a clear expertise in mind that is not easily transferable to other categories,” he said.
And if a product is of poor quality it can have a detrimental impact on brand image.
“New products that have poor quality can damage the parent brand by reversing the positive image people have of them,” he said.
“Launching down market extensions especially in luxury categories can also dilute a brand. The Cadillac Cimarron, an inexpensive car, damaged the Cadillac brand.”