Brand Extension of Rolls Royce: Luxury Watches in Market

This report explores the brand extension strategy of Rolls Royce by launching luxury watches in the market. It discusses the existing brand and brand values, target market, analysis of the new market through PESTLE analysis, and comparative analysis with competition. The report concludes with the importance of brand extension for growth and development.

PRINCIPLES OF
MARKETING

Table of Contents
INTRODUCTION...........................................................................................................................1
METHODOLOGY..........................................................................................................................1
FINDINGS.......................................................................................................................................1
Existing brand and Brand Values................................................................................................1
Description of Target Market......................................................................................................2
Analysis of New Market, Including Trends - PESTLE analysis.................................................2
Explanation of New Product through Tauber’s Brand Extension Options..................................2
Comparative analysis of brand extension with competition identified in new market sector.....3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................5
APPENDICES.................................................................................................................................6
APPENDIX 1 Kapferer’s Brand Identity Prism..........................................................................6
APPENDIX 2: STP Model..........................................................................................................6
APPENDIX 3: PESTLE Analysis...............................................................................................7
APPENDIX 4: TAUBER’S BRAND EXTENSION OPTIONS.................................................8

INTRODUCTION
Marketing can be referred to as the activity which is aimed at developing a strong image
of the brand within the public at large. The current report seeks to gain an insight into the
procedure of brand extension carried out by Rolls Royce, an automotive brand of UK. The entity
is considering to extend the brand by launching luxury watches in market place designed keeping
elegance, class and richness in mind. The total revenue generation of Rolls Royce for the year
2018 was £15,729 million.
METHODOLOGY
The following study was conducted by carrying out secondary and competitor research. The
former refers to a research whereby information is gathered from books, journals, online articles
etc. Competitor research is the methodology where competitive analysis is carried out for a brand
to determine its relative positioning within the market place.
FINDINGS
Existing brand and Brand Values
A brand is defined as the distinct symbol, design or name which creates a unique identify of a
seller in front of the customers. It is important to effectively manage a brand by opting out for a
suitable brand strategy. In this relation, some of the brand models and theories are discussed in
context of Rolls Royce as follows:-
Kapferer’s Brand Identity Prism
As per this, a brand has several unique and distinct characteristics. These are present in the form
of a hexagonal prism which has 6 characteristics to effectually define a brand. The top
management team of Rolls Royce has decided to make use of this model for portraying a solid
and strong image of the brand at the time of brand extension via launch of luxury watches.
Summary: As per the analysis of Appendix 1, it is said that Rolls Royce is a luxury
brand which has in past gained massive appreciation and contentment from customers for its
innovative approach and elegant persona. The firm is looking forward to maintain the same
image while launching luxury watches at market place.
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Description of Target Market
Selection of a suitable target market is an important goal of a company so as to devise and
implement strategies in accordance with it. With reference to this, it is determined that the brand
extension of Rolls Royce is taking place via the launch of luxury watches in market. To
determine the appropriate audience for this, STP model is put to use by the respective top notch
company.
Summary: On the basis of Appendix 2, the market for the luxury watch of Rolls Royce
will be divided in accordance with demographic segmentation. As per income status, the entity
will be mainly targeting the upper class economic section of society. The positioning will be
done by way of social media marketing.
Analysis of New Market, Including Trends - PESTLE analysis
PESTLE Analysis
It is an external environment screening model which is widely used by companies
worldwide for attaining knowledge regarding the external factors and their impact on the
business operations. With reference to this, Rolls Royce has carried out PESTLE analysis to
identify the external environment positives and negatives in relation to brand extension.
Summary: In accordance with Appendix 3, it is determined that the strong political
conditions support the brand extension of Rolls Royce. However, the economic factor named
BREXIT may create adversities for the brand. Further, the brand is only targeting the elite
section of society, so lower and middle class economic sections get ignored. The entity has the
option to leverage latest technologies in the development of luxury watches to effectively appeal
to public at large. Environmental and legal facets of external environment portray that non
adhere to the concerned legislation and laws would result in imposition of fines or dampening of
goodwill.
Explanation of New Product through Tauber’s Brand Extension Options
Tauber’s Growth Matrix consists of 4 suitable options out of which 1 one can be selected
as a brand strategy. These choices encompass new brand, multi brands, brand extension and line
extension.
Summary: In accordance with Appendix 4, it is inferred that Rolls Royce is opting the
option of brand extension as the brand strategy, looking upon the strategy’s capability to provide
boost to the financial performance of the company. For this purpose, the company is coming up
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with luxury watches in market place aimed to capture the attention of upper class economic
section of society.
Comparative analysis of brand extension with competition identified in new market sector
Rolls Royce is coming up with luxury watches in order to extend the brand. These watches will
have all the latest features to be able to appeal to public at large. In this relation, it has been
identified that there are already several brands operating in luxury market across the globe. The
leading brands are LVMH, The Estée Lauder, Compagnie Financière Richemont SA, Luxottica
Group SpA, etc. Rolls Royce has a fair chance to tap the loyalty of its customers and enhance its
loyal base by providing luxury watches with supreme quality and hi tech features. This will
render aid to the brand in attaining a competitive edge over the rivals within the bounds of luxury
market.
(Source: Deloitte Global Powers of Luxury Goods, 2018)
CONCLUSION
Brand extension is one of the key ways to facilitate growth and development of a brand in
market place. In addition to this, it has been determined that there are various theories and
models which are applied by a brand in order to create an impact within the public at large and
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Illustration 1: TOP 10 LUXURY GOODS COMPANIES BY SALES

develop its strong image in the long run. Further, it is acknowledged that secondary and
competitor research are two methods which are widely used by a brand when it undergoes brand
extension. Along with this, it is recognised that external environment consists of opportunities
that should be tapped by the brand to counter the macro environmental threats.
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REFERENCES
Books and Journals
Chernev, A., 2020. Strategic brand management. Cerebellum Press.
Conejo, F.J., Cunningham, L.F. and Young, C.E., 2020. Revisiting the Brand Luxury Index: new
empirical evidence and future directions. Journal of Brand Management, 27(1), pp.108-
122.
Falkowski, A. and Jabłońska, M., 2020. Moderators and Mediators of Framing Effects in
Political Marketing: Implications for Political Brand Management. Journal of Political
Marketing, 19(1-2), pp
Gurzki, H., 2020. The Meaning of Luxury: Decoding Luxury Brand Communications. In The
Creation of the Extraordinary (pp. 147-185). Springer Gabler, Wiesbaden.
Gutsatz, M. and Heine, K., 2018. Luxury brand-building and development: new global
challenges, new business models.
Heding, T., Knudtzen, C.F. and Bjerre, M., 2020. Brand Management: Mastering Research,
Theory and Practice. Routledge.
Iyer, P. and et. al., 2020. Market orientation, brand management processes and brand
performance. Journal of Product & Brand Management.
Kamruzzaman, M., 2020. Brand Management in Hospitality: An Empirical Test of The Brisoux-
Laroche Model [Summary].
Lu, P.X., 2019. International Luxury Brand Strategy. Routledge.
Majerova, J. and et. al., 2020. Sustainable Brand Management of Alimentary
Goods. Sustainability, 12(2), p.556.
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APPENDICES
APPENDIX 1 Kapferer’s Brand Identity Prism
This model is depicted in context of brand extension of Rolls Royce as follows:-
I
llustration 2: BRAND IDENTITY PRISM OF ROLLS ROYCE
(Source: Self Generated)
APPENDIX 2: STP Model
STP model is applied to determine the target market for Rolls Royce as follows:-
Segmentation: The division of market into small segments can be done in accordance with
geographic, demographic, psychographic and behavioural segmentation. For the luxury watches,
market is segmented as per demographic segmentation.
Targeting: Rolls Royce will target the market as per their social status. In this relation, upper
class section of society will be targeted as mainly only they will be able to afford the premium
prices being charged for the brand extension.
Positioning: The luxury watches will be placed within the upper class section of society by Rolls
Royce through social media marketing. This will allow the brand to create a distinct image for
the brand extension carried out it and gain the same loyalty from customers as in the case of cars.
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APPENDIX 3: PESTLE Analysis
Element Description
Political The political conditions of England seem to be stable, thus assisting Rolls
Royce to effectively carry out the brand extension and attain growth in
market.
Economical The tensions arising owing to BREXIT may hold complications for Rolls
Royce as the value of pound has fallen over the course of time. Thus, the
brand needs to take this into consideration while launching the luxury watch
within global market.
Social The target market selected for luxury watches is upper class section.
However, this means that the brand extension is avoiding the lower and
middle class sections of society, thus giving rise to the issue of affordability
and social class difference.
Technological The luxury watches can be improved by incorporating new and trending
technologies within them. This will enable Rolls Royce to tap a larger base of
audience in market place.
Legal There is a chance of non compliance with the statutes set forth by the
government of a country. In case Rolls Royce acts against any of the laws,
then it will have to face legal or financial adversities, leading to creation of
negative image of the brand in front of customers at the time of brand
extension.
Environmental Rolls Royce has sworn to undergo product development practices in a manner
which yields least possible amount of carbon emissions. This assists the brand
to keep up to its brand image in marketplace and gaining the attention of a
large customer base.
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APPENDIX 4: TAUBER’S BRAND EXTENSION OPTIONS
New brand: This is a strategy that emphasizes over launching a new brand in market for
appealing to the public and boosting the financial performance of the company.
Multi brands: This is a kind of strategy whereby several brand are used in a product
category. It offers a method of segmenting within a particular category, even when it’s important
to manage such flanking brands along with their association with the parent brand.
Brand extension: This is a strategy that is focussed over leveraging the already popular
brand name to extend the brand by gaining entry into new product segment. This provides
assistance in inflating the scale and size of brand in upcoming future.
Line extension: This is identified as a strategy whereby already developed brand name is
used to launch a new product in same product segment. This assists the brand in gaining growth
and development in an effectual way.
As per the analysis of the 4 options mentioned above, it is determined that brand
extension is the most suitable option for Rolls Royce and thus the brand is coming up with
luxury watches to seek entry into luxury market. This will aid the company to inflate its brand
value and image in front of the customers, and subsequently attain growth in upcoming future.
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