The Contribution of the Experience Economy to Brand Extension Strategy

Abstract

One of the challenges of brand management in today’s over-cluttered world of information is to generate strong and positive feelings towards a specific brand - and therefore, build its equity. The avenue of solution I propose to achieve this is to design experience-based brand extensions. The literature review and case studies suggest that experience-based brand extensions can potentially increase the original brand equity, and this, to a larger extent then product-based extensions. The theoretical framework of this paper links the experience economy to brand extension strategy. My approach first consisted in analyzing brand extension success factors coming from several studies and papers published between 1979 and 2011. Noticing that there was a missing link in the literature reviewed to properly evaluate the extension potential of the core brand prior to making correlations with variables related to the extension category, I designed the The Brand Elasticity Assessment Square with two aims. First, determine if a brand should be extended or not and in the event it should, determine how it should be extended. This tool was applied to the three experience-based brand extension cases that were studied in the context of this research - Giorgio Armani, Aveda and Nescafe - and obtained plausible results. Brands can be classified in three categories: low elasticity brands, medium elasticity brands and high elasticity brands, resulting in strategic brand extension implications. Because experiences are more personal and intimate than other economic offerings, they engage the consumer further on the emotional level, which means, on the design level, experiences built on three principles : mystery, sensuality and intimacy. Linking the brand extension and the experience economy learning, I concluded that high elastic brands were very well suited to deliver powerful brand experiences, medium-high elasticity, suited, but to a lesser extent than high elasticity brands and low elasticity brands do not have the full potential to deliver–yet–a real emotionally engaging consumer experience. I then established a six-step methodology that I called The Brand Extension Definition Process and applied it to Kerastase in order to define its extension range of possibilities. Two experience-based brand extension concepts, KERABAR and KERA-SPA were developed and with a stronger recommendation towards KERA-SPA.