Brand Extension

AAA

DEFINITION of 'Brand Extension'

A common method of launching a new product by using an existing brand name on a new product in a different category. A company using brand extension hopes to leverage its existing customer base and brand loyalty to increase its profits with a new product offering.


For brand extension to be successful, there usually must be some logical association between the original product and the new one. A weak or nonexistent association can result in brand dilution. Also, if a brand extension is unsuccessful, it can harm the parent brand.

INVESTOPEDIA EXPLAINS 'Brand Extension'

The following are all examples of brand extension:


Starbucks coffee company creating Starbucks ice cream, to be sold not at Starbucks retail stores but in grocery stores. The ice cream flavors were based on the flavors of frappucinos Starbucks sold in its coffee shops.


Quaker, a popular oatmeal producer, creating Quaker granola bars, also made with oatmeal.


Celebrity homemaker Martha Stewart creating the Martha Stewart Home Collection of products such as bathroom accessories and bedding.

RELATED TERMS
  1. Corporate Umbrella

    A masterbrand that provides structure for and lends credibility ...
  2. Product Line

    A group of related products manufactured by a single company. ...
  3. Brand Piracy

    When a product is named similarly to a well-known brand so that ...
  4. Brand Recognition

    The extent to which the general public (or an organization's ...
  5. Brand Personality

    A set of human characteristics that are attributed to a brand ...
  6. Brand Management

    A function of marketing that uses techniques to increase the ...
Related Articles
  1. How do name-brand products compete with ...
    Investing

    How do name-brand products compete with ...

  2. Advertising, Crocodiles And Moats
    Professionals

    Advertising, Crocodiles And Moats

  3. What is market cannibalization?
    Investing

    What is market cannibalization?

  4. 3 Secrets Of Successful Companies
    Investing

    3 Secrets Of Successful Companies

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center