Swiss Army Case Study

10155 Words Jan 25th, 2010 41 Pages

1.1 Background of the company

Swiss Army is an illustration of a company that has developed by basing its product expansion on established brand equity. The brand has its roots in its history of knife development from the 1800s. The knife became wildly accepted in the United States when soldiers brought the knives back at the end of World War II. Swiss Army has a strong worldwide reputation built on quality and reliability with 92% brand awareness in the United States alone.

Leveraging the success of the knife, the company expanded into apparel, travel gear, and other product categories. The launch of the Swiss watch was an overnight success; and now 1 out of 5 watches under $500 in the United States is Swiss.
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This approach seeks to measure the awareness (recall and recognition) and brand image (the overall associations that the brand has). Free association tests and projective techniques are commonly used to uncover the tangible and intangible attributes, attitudes, and intentions about a brand. Brands with high levels of awareness and strong, favorable and unique associations are high equity brands.

2. Brand extensions
Brand extension is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. The new product is called a spin-off. Organizations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name). A brand's "extendibility" depends on how strong consumer's associations are to the brand's values and goals.
While there can be significant benefits in brand extension strategies, there can also be significant risks, resulting in a diluted or severely damaged brand image. Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity. Most of the literature focuses on the consumer evaluation and positive impact on parent brand. In practical cases, the failures of brand extension are at higher rate than the successes. In spite of the positive impact of brand extension, negative association and
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