1. IS THE HIGH FASHION INDUSTRY DESIGNING ITS OWN DEMISE? Examining the Effects of Diffusion Lines

2. Key Concepts: Fashion Design The application of design and aesthetics to clothing or accessories “Reflects current society as it evolves and changes according to world dynamics and the lifestyle preferences of consumers.” More people are involved in the production, buying and selling of clothing than any other business

3. Key Concepts: Haute Couture Design houses under the leadership of couturiers who design, produce and sell custom-made clothing Present two collections a year, no fewer than 35 ensembles for day and evening wear Prices of dresses and gowns from $30,000-$100,000 (or more) Income from these not enough to sustain business Dior Spring 2012 Collection

4. Key Concepts: Pret-a-Porter French term directly translated as “ready-to-wear” Carries a designer label, but not custom-made Still selective in product approach and distribution Italian designers earn the most worldwide from ready- to-wear lines Not as expensive to create and maintain Lanvin Fall 2012 Ready-to-Wear Collection

5. Key Concepts: Mass Market Made for average consumer Considerably less expensive Standard patterns for everyone Cheaper fabrics Simpler production techniques Industry relies on this form of fashion for bulk of sales Banana Republic Winter 2011- 2012 Collection

6. Key Concepts: Brand Extension American Marketing Association: “A product line extension marketed under the same general brand as a previous item or items.” Horizontal ~ Line: Parent brand creates new product that targets new market segment within product category currently served by parent brand. ~ Category: Parent brand enters product category that is different from that of parent brand. ~ Example: Versace Fine China Vertical ~ Introducing similar brand in the same product category, but at different price and quality point ~ Example: Baby Dior

7. Key Concepts: Diffusion Line Also known as “second line” Step-down line extensions of existing luxury brands Normally less expensive than main-line merchandise Aims to establish close connection with parent brand, but offer more economical alternatives Aims to satisfy consumers’ desire of status Usually short-term period in stores, boost profits

8. Key Concepts: Brand Dilution Brands run risk of over-extension Begins to lose brand associations with a market segment, product area, quality or price Can happen when a brand extends itself to various unrelated categories Causes ~ External: Negative media attention Unauthorized use of trademarks Consumer backlash ~ Internal: Inconsistent marketing mix Brand leveraging problems

9. Effects of Extensions/Diffusion Lines Positive Aspects ~ Boost sales, even if short-term ~ Positive expectations from consumers decrease risk of dilution ~ Don’t have to leave brand family, more to choose from ~ Can enhance brand loyalty ~ Expand market coverage ~ Can also lead to subsequent extensions Negative Aspects ~ Less strongly identified with one product ~ Consumers may question integrity of brand, become confused ~ Complete failure, but only harmful if extension is very similar to parent brand ~ Cannibalization if consumers switch from existing offerings to extension ~ Brand overlooks chance to create unique brand out of extension that develops its own equity and image

10. Diffusion Lines: Target Alexander McQueen Launched in 2009 Promoted through online and national magazines, as well as email Worth $2.1 million to Target Mixed reviews from customers Missoni Launched in 2011 Promoted in more than 40 magazines, social media Stores sold out completely, website crashed Jason Wu Launched in 2012 Use of YouTube to connect with customers Online shopping and hoarding mishaps

11. Diffusion Lines: H&M Karl Lagerfeld Launched in 2004 Promoted through editorial features, billboards and television commercials Sold out in hours, designer and customers disappointed Roberto Cavalli Launched in 2007 Promoted through television commercials, print ads, billboards and preview party Successful, but some mixed reviews Donatella Versace Launched in 2011 Runway show with celebrity guests Implementation of purchasing policy, but still sold out fast

12. Diffusion Lines: Kohl’s Vera Wang Launched in 2006 Name alone stirred buzz and anticipation Remains a highly popular line Narciso Rodriguez Launched in 2012 Promoted through print, broadcast, digital and social media Celebrities photographed in designs

13. Widespread Issues Not enough physical product to satisfy customers, selling out quickly Not strictly enforcing limitations on products purchased Online purchasing malfunctions Reselling of products on auction sites All comes back to risk of brand dilution, for both designers and mass retailers

14. Future of Diffusion Lines Becoming overwhelmingly popular, despite past mishaps Even more extensions coming into fruition Example: Vera Wang’s multiple clothing lines, shoes and cosmetics at Kohl’s Recent Target/Neiman Marcus holiday collaboration, multiple designers represented Kohl’s and H&M both launching Spring 2013 designer diffusion lines

15. Discussion Questions The use of social media has played a crucial role in developing the campaigns of these designer diffusion lines. Has consumer opinion through the different social media networks (YouTube, Facebook, Twitter) negatively or positively affected these campaigns? What steps can be taken to create a more positive consumer opinion? Vera Wang has been criticized for taking away from the exclusivity and uniqueness that the high fashion industry offers through her numerous brand extensions. Do these extensions and diffusion lines reinforce her brand image? Or is it slowly deteriorating the brand equity she has built up with higher-end customers?

16. Discussion Questions When regarding the previously discussed effects that a diffusion line can have, are the positive or negative effects more likely to determine the future of this trend? In discussing the issue of brand dilution, outline the internal and external causes previously discussed for both retailers and designers. What are the common issues? What issues are unique to each sector? Integrated marketing communication is essential to the success of any company or industry. Explain how retailers and designers can use IMC to promote successful diffusion lines.