Brand expansion for luxury brand
Luxury brands expand through brand stretching. Brands can be extended either vertically or horizontally. The vertical extension involves upscaling (same brand, high price/quality) or downscaling (same brand, low price/quality). The horizontal extension can involve line extension (same brand, new product lines) or brand extension (same brand, new product). Shang Xia deals in furniture, home décor, jewelry, accessories, and gifts. This line can be extended by adding new luxury items such as watches and leather products such as shoes and handbags. Shang Xia uses vertical brand extension by providing cheaper luxury brands at a reduced cost of $27 to $75,000. The brand is accessible and exclusive. However, Shang Xia is careful not to downscale its products by attempting to build a brand empire. An attempt to increase output can compromise the quality of the brand. The company focuses on refining the skills of traditional craftsmen so that they can produce products of the best quality. The products are released in batches several times throughout the year and in limited quantities. The failure to scale production helps the company to maintain the perception of exclusivity. The company emphasizes the story behind every product category and the manufacturing process. The stories of bamboo weaving, sculpting, porcelain use in its products are showcased on its website. Employees are equipped with knowledge about the stories behind the product so that they can inform the customers. Besides, Shang Xia accepts the customization of products at premium costs. The brand strategy tells the deep commitment to the quality and exclusivity of Shang Xia.
Brand expansion for luxury brands is challenging, especially in the world of counterfeiting. Counterfeiting dilutes the brand value by penetrating the non-target groups and mass market. It occurs when a brand has reached a wide awareness threshold. Shang Xia serves customers who are not interested in logo-flashing of well-known brands. Shang Xia does not desire to overexpose since it can lead to the dilution of brand equity through commoditization. The fashion brand focuses more on balancing Chinese traditions and modernity. It fears that succumbing to growth and revenue pressures may compromise its uniqueness and craftsmanship. Shang Xia must follow its creative vision of accessibility and exclusivity to avoid the drawbacks of overexpansion.