Question

How successful do you predict these recently proposed extensions will be? Why?

a.    Mont-Blanc (famous for pens): fragrances and other accessories (watches, cufflinks, sunglasses and pocket knives)

b.    Evian (famous for water): high-end spas

c.    Starbucks (famous for coffee): film production and promotion

d.    Trump (famous for hotels and casinos): vodka and mortgage services

Answer 1

a.    Mont-Blanc (famous for pens): fragrances and other accessories (watches, cufflinks, sunglasses and pocket knives)

Mont-Blanc which originally meant masterpiece, is famous for pens. These pens a quite expensive and the people who buy them are well off financially and can afford high priced pens. The target audience for mont blanc pens are hence professionals holding high posts and who need to show off their sstatus to other clients and competitors.

Watches, cufflinks and sunglasses and pocket knives that are under the mont blanc brand, would definitely be priced at a premium level. In order to afford such expensive products, the target audience need to be financially strong. Mont blanc going for these extensions can be a success taking into consideration the target audience. People who can afford expensive pens can definitely afford watches or sunglasses of the same brand. Pocket knife may be an exception to from the list of products as business men with high financial stability need not always carry a pocket knife and hence may not buy those.

b.    Evian (famous for water): high-end spas

Evian brand is famous for water which is sourced from different places. Evian is currently owned by Danone, which owns other lines of products. Danone Group also uses the Evian name for a line of organic skin care products as well as a luxury resort in France. The main product lines that Danone are into are dairy products, baby nutrition, Danone waters and medical nutrition. Customers hence see danone products as consumer products that can be used on a day to day basis. Even through Danone has venti=ured into luxury resorts in France, venturing into high end spas is a different service line altogether. High-end spas can complement high income customers who visit luxury resorts, but for the brand Evian which is famous for water, high-end spas will not be the best idea. This venture into spas will not be that successfull as it's existing product lines and this may be a dead investment.

c.    Starbucks (famous for coffee): film production and promotion

Starbucks brand is famous for it's authentic coffee. Starbucks moving into film production and promotion is a big step towards diversification. Big companies usually go for diversification when they need to move into new markets with a new product. Venturing into film production is definitely a diversification strategy being taken by Starbucks. This move would bring a lot of media involvement into advertising the brand and in turn increase the reach to new customers. This move into a new extension like film production may not become very successful, the reason being the lack of expertise in film production domain. Starbucks has a very good distribution network which can be used for other new product lines, but customers will not spend time in sitting down to watch a film because of their brand loyalty towards a coffee brand(Starbucks).