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 FAQS
  1. How do name-brand products compete with their generic competitors?

    On April 2, 1993, Phillip Morris announced that it was cutting the price of its cigarettes to compete with the growing number ... Read Full Answer >>
  2. What is market cannibalization?

    Market cannibalism is defined as the negative impact a company's new product has on the sales performance of existing products. ... Read Full Answer >>
  3. How does a long tail become profitable?

    A long tail becomes profitable because the costs to produce, market and distribute a product or service in a niche are low, ... Read Full Answer >>
  4. How do companies with a large product portfolio use BCG Analysis?

    BCG analysis is used to evaluate an organization's product portfolio in sales planning and marketing. It is specifically ... Read Full Answer >>
  5. How can I use a regression to see the correlation between prices and interest rates?

    In statistics, regression analysis is a widely used technique to uncover relationships among variables and determine whether ... Read Full Answer >>
  6. What are the similarities between product differentiation and product positioning?

    Product differentiation and product positioning are important elements in a marketing plan, and most marketing strategies ... Read Full Answer >>
Related Articles
  1. Professionals

    Advertising, Crocodiles And Moats

    Memorable advertising is a brick in the fortress that keeps competitors at bay.
  2. Investing

    3 Secrets Of Successful Companies

    Make smart investments by spotting up-and-coming success stories early.
  3. Professionals

    How Top Advisors Innovate to Stay Ahead

    Successful advisors are innovative, reaching out to a new generation of clients by embracing new technology.
  4. Economics

    Understanding Management by Objectives

    Management by objectives is a process in which a manager and an employee agree on specific performance goals and then develop a plan to reach those goals.
  5. Stock Analysis

    Will Jet.com Revolutionize Shopping?

    Jet.com has arrived and will look to steal market share from Amazon over the next several years. Will it be successful?
  6. Professionals

    How to Respond to 'I Already Have an Advisor'

    Every advisor has met someone who already works with an advisor. Here are some tips for keeping the door open.
  7. Economics

    What Does Going Concern Mean?

    Going concern is a concept used in business and accounting to describe the fiscal health of a company.
  8. Fundamental Analysis

    Calculating the Capacity Utilization Rate

    Capacity utilization rate is a ratio used to compare a current usage level against a maximum potential level.
  9. Professionals

    How Financial Advisors Can Woo Wealthy Clients

    To woo wealthy clients, offer the resources they need and design a strategic website and marketing plan to bring those desired clients into your firm.
  10. Economics

    Explaining the Supply Chain

    A supply chain is the cumulative network involved in moving raw materials, components and finished products from original suppliers to end users.

You May Also Like

Hot Definitions
  1. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  2. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  3. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  4. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  5. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  6. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!