Brand Elasticity: How Far Can Your Brand Stretch Before It Breaks?

Price elasticity is a metric used by marketers to measure how a change in a product's price affects its demand. This concept of elasticity also applies to how sensitive consumer preference is for a certain brand when it moves into new categories. A brand with perfect elasticity will suffer a negative change in consumer preference, while a brand with perfect inelasticity can move into any category without damage to its brand image. Marketers often use conjoint studies to measure the elasticity of a brand in relation to a new offering.

Brand architecture is a complex practice area within brand strategy, and understanding the concept of brand elasticity is a meaningful approach to extending brand equity without stretching a brand too far. Perfect elasticity implies a dramatic shift in consumer preference, while perfect inelasticity implies the brand can move into any category without much change in customer preference. Price elasticity is a rear-view mirror metric that allows marketers to measure the impact of a change in price after the fact.

When deciding how best to brand a new offering, marketers should consider how proximate the new offering's core attributes are to those at the center point of another brand in their portfolio. Market research can help inform this decision, such as through a conjoint study where the brand representing the offer is varied while price and other factors are held constant. This helps to measure the degree to which the brand drives preference for a particular product category.