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?
Please feel free to pass this newsletter along to others, or sign up to receive these informational articles by email.
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 firstname.lastname@example.org or call 303-527-0417.