Premium reputation branding can lift budget brands

Children’s clothing retailer Pumpkin Patch and Air New Zealand have both announced they intend to extend their markets by venturing into what could be considered ‘cheaper’ products and services.

Pumpkin Patch is set to launch a ‘discount’ brand of its own and Air New Zealand has announced it will be teaming up with ‘budget’ carrier Virgin Blue to extend its trans-Tasman and routes across Australia. 

It begs the question – why would either provider of ‘premium’ products and services consider tarnishing their brands by moving into the ‘budget’ market? Will they cannibalise their existing customer base and find their more up-market sales suffer?

In my opinion, no. The beauty of brands is that they exist in their own right when managed effectively. Just look at car companies. They’re experts at providing vehicles that meet almost every price-point and user need, from ‘bottom-end’ cheapies to luxury vehicles, highly successfully.

Extending already valued elements from one brand to another makes smart business sense. If the ‘quality’, ‘customer-focus’ and ‘feel-good factor’ a brand exhibits can be transferred to another brand in the same stable, it helps the new brand get up and running more quickly and easily than starting completely from scratch. In Air New Zealand’s case, this is likely to work in their favour.

Pumpkin Patch, on the other hand, says there’s unlikely to be any mention of the Pumpkin Patch name in its new (yet to be identified) ‘budget’ brand.

Still, the lessons Pumpkin Patch has learned in providing its premium products and services won’t go amiss in providing products under its new brand.

One could argue, in fact, that being a ‘premium’ provider that ‘trades-down’, so to speak, will carry a lot of weight and reputational goodwill whereas a ‘budget’ provider trying to ‘trade-up’ may have a tough time doing so simply because of its reputation.

Check out Patrick Hanlon’s article ‘Primal Branding’ at www.AllAboutBranding.com for an insight into why some brands shape emotions and others don’t. It’s an excellent insight into connecting and communicating with customers rather than thinking about logos and fonts.