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Luxury carmakers are everywhere, though not always in the places you might expect. Well-known names such as Bentley, Lamborghini, Ferrari, and Porsche increasingly insert their brands and logos into non-automotive markets, seeking to leverage their brand cache into a wider range of sales.

BXP27863hClothing emblazoned with Ferrari’s horse logo has long been available, allowing enthusiasts to proclaim their devotion to the fast cars by putting on a baseball cap or jacket. But the latest licensing strategies go far beyond just clothing, to include sunglasses, perfume and cologne, skis, hotel suites, guitars, phones, LEGOs, leather bags, watches, jewelry boxes, and dice—among other things. Ferrari alone has licensed its logo to 68 different products, prompting its chief executive to admit that cars are “almost incidental” to the brand.

Colognes and perfumes are among the most common products aligned with luxury car brands. From Bentley to Porsche to Hummers, consumers can pay to smell like something that evokes these brands. Even though new Hummers are no longer available as vehicles in consumer markets, its branded cologne keeps the name familiar, recognizable, and distinct for those consumers. In so doing, the brand can maintain its trademark protection, just in case the company ever decides to start producing sport utility vehicles again.

The reason for such extensions is pretty clear: The cost of a luxury car is so far out of reach of most consumers, these brands need to find offerings that a wider market of shoppers can afford. Few people can spend $400,000 on a Lamborghini, but more of them might be willing to pay $4000 for a Lamborghini watch produced by a high-end watchmaker, or even $188 for a pair of Lamborghini-branded swimming trunks. The product line extensions give aspirational buyers a pathway to connect with the brand, while also helping with “brand awareness, brand enhancement and, sometimes, brand reinvigoration.”

However, the strategy requires some caution too. Licensing a valuable luxury brand indiscriminately would inevitably lead to brand dilution. Their appeal stems largely from their rarity. If anyone can own a Bentley—whether that’s a Bentley polo shirt or a Bentley vehicle—the high prices charged by the luxury brand might not be supportable any longer.

Discussion Question:

Why can luxury brands charge such high prices for products marked by their brands or logos?

SOURCE: Rebecca R. Ruiz, “Luxury Cars Imprint Their Brands on Goods from Cologne to Clothing,” The New York Times, February 20, 2015, http://www.nytimes.com

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