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

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center