Kate Spade New York: Will Expansion Deepen or Dilute the Brand

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The first reason to purchase the brand of new target customer is that new customers think the brand is conformity with their optimistic attitude. The second reason to buy it is for impulse and splurge, such as the shoppers between 40 and 49, who use fashion as a treat and don’t care about the price. The third reason is that shoppers under age 30, who purchase it because they feel it appropriate for each occasion. The fourth reason is that the stay-at-home moms, who think the products is useful for everyday wear.

3. Discuss the pros and cons of the two brand strategy options originally offered in the case: Brand diffusion & Separate brand.

The pros of brand diffusion: It shares the same aesthetic or designer senset, which keeps close ties with the parent luxury firm. Brand diffusion can attract customers with low incomes with a lower price. If it does properly, brand diffusion can bring enormous benefits both to it and to the parent brand. If the name is close to the parent brand, which can tap into existing marketplace awareness and create an aura of quality and trust.

The cons of brand diffusion: If the brand diffusion’s quality slip or its appeal lessens and it closely ties to the parent brand, which will influence the reputation of parent brand.

The pros of separate brand: It creates a different fashion aesthetic and targets different audience than the parent brand totally, which can offer excitement and novelty in the marketplace, and more easily earns free publicity. In addition, the separate brand also serves to safeguard the parent’s image.

The cons of separate brand: The cost of a separate brand is substantial, which means that all product design and marketing costs are duplicating as the new brand is rolled out. It requires a sizeable investment in money, time, staff, and a separate design team.