What is a 'Brand Extension'

Brand extension is a common method used by companies to launch 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.

BREAKING DOWN 'Brand Extension'

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. Even worse, if a brand extension is unsuccessful, it can harm the parent brand.

Brand Extension Methods

Brand extension can be as simple as offering an original product in a new form such as frozen pizza offered by a made-to-order pizza restaurant or a restaurant selling a proprietary sauce in stores. Another form of brand extension is combining a product with another such as a chocolate company working with a pretzel company to offer chocolate-covered pretzels. Another method is to leverage a brand's reputation to move into new product categories such as a car company known for its engineering prowess starting a motorcycle division and selling those motorcycles based on superior engineering qualities. A company could also create companion products; a peanut butter company could start offering jelly to leverage its brand and the natural relationship between the products. Another method is to leverage a designer brand or status to offer products seemingly different from the original; a band grows popular through its music, and then it starts branding clothing with its logo.

Examples of 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, with the ice cream flavors based on the flavors of Frappuccinos that Starbucks sells 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. Perhaps one of the most successful brand extensions is with Clorox expanding from a laundry disinfectant/bleach product into a full-blown disinfectant line to include not only laundry products but also disinfectant wipes, sprays, toilet bowl cleaners and bleach pens to remove stains on demand.

Brand extensions can go bad; some of these include brand extensions from soda products into sauces and marinades. Dr. Pepper, 7-Up and A&W Root Beer were not successful in catching on as condiments and marinades as they were as soda products. Other bad examples include Zippo, known for lighters, and Harley-Davidson, known for motorcycles, expanding into the women's perfume market. Both companies have since ended their offerings in the women's perfume market.

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