The Italian-based Diesel brand has grown since its founding in 1978 from a jeans house to a powerful fashion brand, under the leadership of Renzo Russo. Diesel enjoyed great success in the mid to late 1990s due to its fashion-forward designs, high-quality garments, and controversial advertising which challenged consumers with its humour and irony, all contributing to the rebellious and provocative image of the brand. The Diesel brand also channelled buzz though cutting-edge communication methods, such as strong product placement in popular films/video-games, being a pioneer in Internet presence, and even owning a fashionable, celebrity-favoured hotel in South Beach. The Diesel portfolio consists of D-Diesel (the core denim/clothing line) with strong licensing power into horizontal extensions (e.g. sunglasses, luggage), Diesel Kids, and 55DSL (sportswear).
In 1998, Russo had begun to wonder if Diesel could extend upward into the luxury casual-wear market with a new line called “StyleLab”, which would be more sophisticated and expensive than the usual Diesel offerings which could be seen as heavily urban. This was a tempting opportunity because consumer willingness-to-pay for this market had been increasing and the new line could help counter Diesel’s increasingly mass-market appeal, possible brand dilution due to attraction of older clientele, and an overall drop in status. Additionally, a new segment could be attracted, which was older but still unconventional, trendy, and which would never consider buying traditional Diesel products or had simply outgrown them. Russo also wanted to give his prized designers the creative outlet they needed with a new challenge and in a different sphere. The new StyleLab line would advertised in high-fashion publications only and be sold only in specialized boutiques and department stores; it would compete with, for example, MiuMiu (Prada downward extension) and D&G (Dolce and Gabbana downward extension) in the luxury casual market. The question Russo had to consider before the launch of StyleLab in1998 was its branding strategy (i.e. sub-branding, endorsement, or independence) and consequently how to succeed in an effective upward brand extension.
Although the case-scope limits our choice of recommendations only within the branding of StyleLab, our objective conclusion would be not to launch StyleLab at all post review of all options proposed (see notes in the analysis above and Appendix D). First, the parent (Diesel) identity comes into question and if Diesel associates itself, in any way, with the StyleLab brand and tries to access the lucrative “luxury” casual segment, it is straying from its original identity with an over-ambitious lack of branding focus. Diesel needs to realign its already-established brand with the core of its identity.
If Russo conducted market research without relying only on his intuition, it would be helpful; he cannot assume that StyleLab will be successful if it is simply creative and trendy. Luxury goods carry more than quality and the prestige value is most critical. A no-name new brand, even if it is of higher quality or more progressive design, will never be preferred over an established brand like D&G or MiuMiu because the latter two hold brand-representation power in the symbolism of their parent brands. It is doubtful that a current target-consumer for StyleLab will find appeal in any associations it has with Diesel. This is one justification for the independent brand; but more importantly, there is the issue of Diesel itself and its identity-crisis which an upward extension cannot solve. D-Diesel is the strongest and is marketed as cutting-edge, anti-status quo, rebellious, ironic, however this needs to be reinforced and effectively filtered to the consumers through innovative advertising/strong branding and a close representation of “counter-culture”/aversion to mainstream values. This approach is adaptable as social norms change, but an upscale new brand associated with a rebellious/counter-culture parent is a pure paradox and dangerous for Diesel. It will alienate current consumers and the intended future consumers.
In the Diesel case, there is the risk of diminishing brand equity (which must be protected and updated continuously for brand-power) if Diesel pursues implementation of associated StyleLab brand as “luxury”. This counters the brand associations of Diesel as being anti-luxury and also prevents StyleLab from truly belonging to the luxury-segment because of its affiliation with Diesel. Ultimately, the Diesel image should be reinvigorated but within the framework which made it uniquely Diesel and a brand extension, in either direction, will only work with a strong brand to begin with. A new brand association with StyleLab will not address the diminishing appeal of Diesel nor can StyleLab by itself provide any new, unique qualities to the luxury casual-wear market which do not already exist in buyers’ minds. Furthermore, it is unlikely that StyleLab, if associated or not, will help sell more Diesel products. The needs that Diesel satisfies in the consumer’s mind are different than those of StyleLab and the symbolic/experiential representations and meanings of the two brands are not congruent thus any synergies will be doubtful and dilution likely. Ultimately, this upward extension will be hard to carry out since the value-proposition of the new line is not that unique or strong, while the parent-brand is weakening; even if Diesel were to gain back its momentum, the efficacy of any upward brand extension would take time to assess.