MERCHANDISE extension is the flavour of the season. It is opening myriad doors for a brand to find a place in a customer's heart, besides extending other revenue options too.
MERCHANDISE extension is the flavour of the season. It is opening myriad doors for a brand to find a place in a customer's heart, besides extending other revenue options too. Today's consumer wants everything at one go. He wants to eat, live and feel the brand he shops for. Brands are left with no choice but to be the one-stop-solution brand.
Apparel makers are fast getting into the one-and-be-all mode for fashion lovers. There are plethora of brands opting for segments like accessories, bags, wallets, shoes, etc, which a shopper can combine with clothes. For retailers, brand extension strategy comes as an opportunity to explore other revenue options. However, not all who enter into different segments prove right as there are successes and failures too. Besides, there are other issues like, what segments to get into, how to source the products, right marketing strategy, etc.
For instance, a customer's love for Provogue may not end after purchasing the brand's shirt; he is keen on sporting Provogue shoes as well, thus giving rise to a new footwear line from Provogue. To Provogue's benefit, the brand was clear on the strategy that it would outsource manufacturing of shoes since it is not its core competence. So, licensing came as the right option.
Introducing new segments is a major task in itself. Though there are brand loyalists who do not mind shoes of the same brand from which they get their trousers, at times this can be tricky. Some consumers are not used to buying the other stuff from a store, except for the clothes.
However, greater distribution and universal availability of these products can reinforce brand consciousness in non-traditional outlets and fan desire in non-traditional consumers.
Test the market
The key strategy to introduce a brand extension is to carry forward the relationship of trust a brand has earned with its consumers. A brand can take advantage of brand legacy by getting into logical categories, which are further seen as an extension of the brand. Such innovations actually help in keeping the brand refreshed, as it brings out something new for its consumers.
Tommy Hilfiger launched Tommy Hilfiger pens, expanding its lifestyle portfolio. Tommy Hilfiger accessories complements the Tommy Hilfiger apparel line, which offers a complete lifestyle selection to consumers with its exciting range of watches, eyewear, men's underwear, small leather goods, handbags, fragrances, home bed and bath and now pens and mobile phones.
Mohan Murjani, Chairman, Murjani Group, says, “The Indian consumer has rewarded the brand with incredible support. Within a short span of only six years, Tommy Hilfiger has become the number one international lifestyle designer brand in India. The launch of Tommy Hilfiger pens and mobile phones is another step in our endeavour to provide world-class products to highly educated, brand conscious, discerning Indian consumer, who fully understands and appreciates both the quality and design.”
Rahul Gambhir, Director, Licensing, Tommy Hilfiger, elaborates, “Writing instruments have been an essential part of everyday life for generations. Tommy Hilfiger has rejuvenated this category to that of a high quality designer accessory for the fashion-conscious consumer.” Following this success, Tommy Hilfiger is set to launch exclusive Tommy Hilfiger accessory stores.
It is a safer bet to introduce new products to customers, as the brand has already earned the trust amongst its buyers. But, before you jump into extension mode, think whether this product will further add to your brand's image or not. Certain questions need to be answered, such as, how much is too much or am I trespassing the domain?
Though we have seen a lot of examples building the value of brand extension, the key is to retain the essence of the mother brand. At times, sub-brands can cut into the cost of the main brand. A well-known example in this regard is of Harley Davidson's foray into fragrances, which was never successful. Levi's attempt to launch tailored classic suits was also a failure. Reebok's India introduction of sports salwar-kameez for women bombed. Brand synergies have to be matched and thorough research is required. The idea is to keep the brand essence in mind with which people can relate to.
Manufacturing or outsourcing
Since quality and reputation is attached to a brand, maintain the standard while extending your brand to other products. Due to high cost of infrastructure and inventory involved in introducing a new product line, one can outsource the manufacturing.
Da Milano is in the process of introducing a premium line of high fashion footwear under its new sub-brand Rosso Brunello. Targeted primarily at women, the brand will be available initially at select Da Milano exclusive stores. By September 2010, Rosso Brunello exclusive stores will be established in Delhi and Mumbai. Another brand extension which will be launched soon is leather furniture and home/office accessories under a sub-brand called Da Milano HOME. For making these products available in India, Da Milano has an exclusive arrangement with a manufacturer of premium leather footwear in Spain. The brand will be imported and retailed exclusively by Da Milano in India.
Provogue got into a licensing tie-up with M&B that has expertise in making footwear. Licensing's core crux is to extend your brand power by appointing partners, who can manufacture and distribute products from the non-core categories. The brands gain from the licensing fee. The licensee should be an expert in that category, as manufacturing and design base are the core essentials, besides distribution expertise.
Mass segment retailer Koutons introduced K2One, an entire range of footwear, for men. It even launched accessories for women and men. The accessory range includes bags, clutches and belts for women and a host of products for men, including belts, wallets and cufflinks.
To introduce its product line, Koutons conducted an extensive research. The consumer's aspirations in terms of quality and price were researched. “We do the market research in terms of current size of the market of that particular segment and the future demand. We also conduct test marketing at our stores to understand the customer's choices and preferences,” recalls Singh.
Whenever a new segment is explored by the brand, customer is a little apprehensive whether he will be served the same quality in the new segment as he expects from the brand. Such apprehensions need to be taken care of so that the quality does not deteriorate.
Planet Fashion, the one-stop retail arm of Madura Garments, also caters to the accessory segment like belts, wallets, cufflinks, socks, handkerchiefs and ties, besides apparel. At Madura, consumer research at the store level is usually undertaken before introducing the new segments.
Malik of Da Milano says, “Samples of new product lines are placed in our exclusive stores, where we get feedback from loyal customers and other stake holders. If the feedback and the demand for the product are positive, we go ahead and introduce the line.”
Building a brand is the mool matra many companies are exploring these days. Though many have done it in the past, others are following suit by taking new brands into their fold to extend their portfolio, capture more market and extend brand recall.
Franchisees' introduction to new line-up
While new segments can be introduced by franchisors, the franchisee also needs to be well aware of these extensions.
Franchisees can welcome or trash the new product. Their feedback on how to make new products successful in their location can be vital.
Sahil Malik, Managing Director, Da Milano, says, “Our franchisees are always willing to place brand extensions in their existing set-up. We are a fashion brand and the products introduced will normally sell well at franchise stores too.” Presently, 25 per cent of Da Milano's business is franchise-based.
On training franchisees, Balvinder Singh Ahluwalia, President, Koutons Retail India Ltd, shares, “Whenever a new segment is introduced, we ensure that we impart relevant training to our franchisees. We have placed special company staff to visit stores on a regular basis and give them briefing about the product details. Many a times, we invite franchisees to our head office, where we conduct special sessions to make franchisees aware of the company's USP and its products.”
Shoaib Farooqi, COO, Planet Fashion & International Markets, says, “It is critical for us to ensure that the franchisees share the same passion for this retail model like we do. We make sure we share information and knowledge with them about our new season launches and other market developments. We have a Regional Manager and merchandisers who work with store managers and train them.”
Proper training and timely communication is the right way to introduce the franchisees to new segments.
Highlighting the importance of training, Peter England franchisee Hitesh Shah says, “The franchisor has over the years introduced new product segments like winter wear, flip flops, bags, party wear, humor tees, etc. Once a new product segment is introduced, the franchisor shares details of product quality, scope of business, existing competition in that segment, price advantage training amongst other things.”