Now That’s a Stretch! Brand Elasticity

A Wall Street Journal article on September 20, 2010, stated that Hyundai is coming out with a new luxury car. A Hyundai luxury car? Isn’t that a bit like gourmet Velveeta? It begs the question, “How far can you stretch a brand?”

A typical strategic position would be to own a spot on the map, really own it. I say Kleenex, you think tissue. I say Xerox, you think copy. I say Hyundai, you think luxury. No, you don’t! I bet you think inexpensive or perhaps value, if you’re the frugal type.

I recently bought a new Toyota, which I like. In fact, the model I bought was originally going to be sold as a Lexus because it has nice features. However, when I’m sitting at a stoplight, I’m quite sure that I have fewer admirers than I would if it were a Lexus.

My previous two cars were Audis. After the warranty expired on both, I paid large sums of money to replace the transmission and many other expensive parts, apparently handcrafted by well-paid German engineers with Ph.D.s in a mahogany-paneled building, judging by the price. After taking my most recent Audi on its last trip to the mechanic (who I believe retired to Monaco), I momentarily lost my enthusiasm for luxury brands and promptly drove to the Toyota dealership.

I’m not averse to looking for a deal. When I make crab cakes, I go to Costco for the crab rather than Whole Foods and save enough money to buy a moderately priced bottle of German Riesling to drink with dinner. I sometimes stop in Nordstrom’s Rack to see if they have any $75 shirts for $30. Even though they may be last year’s design, most of the stuff in my closet is much older.

However, if I were going to buy my wife a large Cartier diamond encrusted watch — I’m not fearless or stupid; I’ll make sure my wife doesn’t see this newsletter — I probably wouldn’t buy it at Wal-Mart, even if they carried Cartier.

How far can a brand stretch? Certainly not as far as the Spandex on some of the people I see in public! Although there’s no pat answer, I’m pretty sure Velveeta can’t effectively sell gourmet cheese, Virgin won’t take on Southwest Airlines, 2 Buck Chuck won’t compete with Château Lafite Rothschild and Hyundai will either have to undergo major surgery or they won’t sell a lot of luxury cars.

How far have you stretched your brand? Does your target audience know what you stand for?



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Todd Ordal helps CEOs and senior leaders connect the dots between current reality and a compelling vision of the future. He consults on strategy and serves as a thought partner for CEOs because he understands from his days as a CEO that it is lonely at the top. You can contact Todd at [email protected] or call 303-527-0417.

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