Harrods Brand Extension To Hotels: Good or Bad?
According to news sources, such as as Reuters and Bloomberg, Qatar Holding Co., the owner of Harrods, decided to invest the brand name in luxury hotels. A hotel chain that will start in Kuala Lumpur, then to Italy, London, China, Paris, and New York.
So, Harrods Hotels, good or bad?
How Does Brand Extension Work?
Basically, when you have a strong brand, you try to invest part of its leverage in other areas. Brands have value, like money, which is to some extent transferable. But the side effect of extending your brand can either damage your original brand or fail to bring your new brand (the extension) to a high level brand. (Brands Identity System).
In the case of Harrods, the name means ‘British Luxury Department Store’. When we create Harrods Hotels, we might try to position it as, or the world might think of it as, ‘A Luxury Hotel Chain’. As time passes, Harrods (the brand name) might confuse the world of what it means to them.
An example of that, Xerox failed to make Softwares because their name as photocopy machines were stronger. As Kleenex means tissues and Tide means laundry detergent, Harrods might fail here.. Maybe not..
What is Harrods?
It is not Qatar holdings decision what Harrods mean to the world, its the world who decides it. But any business owner have the power to influence peoples perception of their brands. So, what should Harrods hotel and department store represent?
The one thing in common between a department store and a hotel that would work for Harrods is ‘Luxury’. Harrods should sell luxury, not luxurious apparels, or room service, or food, or any other thing. Perhaps they can strengthen the brand by representing the ‘British Luxury’ instead of luxury alone. Because luxury could easily face competition from other brands.
In order for Harrods to maintain a strong position without affecting its name negatively, it should always maintain the British luxurious position through locations, decor, staff manners, and through all touch points.
Disney did it!
This concept is not new. Disney is a name for movies and theme parks at the same time. It is also well known in apparels, toys, books, and cruises. The reason it works for them is because they focus on ‘Family Entertainment’. There are other brands known for movies, apparels, and cruises, but only Disney can beat them when a family thinks of entertainment.
Harrods is a big name, it can be well invested in other area’s. But doing it recklessly might cost more than we think.