What Is Brand Extension?

Brand extension is the use of an established brand name for a new product or new product category. It's sometimes known as brand stretching.

How Brand Extension Works

A brand extension leverages the reputation and popularity of a well-known product to launch a new product. To be successful, there must be a logical association between the original product and the new item. A weak or nonexistent association can result in the opposite effect, brand dilution. This can even harm the parent brand.

Brand extension fails when the new product is unrelated to the original, or even creates a negative association, such as Colgate Lasagna.

Successful brand extensions allow companies to diversify their offerings, increase market share, and boost profits. The existing brand serves as an effective and inexpensive marketing tool for the new product.

Unsuccessful brand extensions are a mismatch and seem peculiar at a glance. Why would Arizona, the iced tea brand, bring out a line of nachos and cheese dip? Or consider a historic blunder in brand extension: Zippo perfume. Yes, it was a perfume bottle in the shape of a cigarette lighter, presumably for women who wanted to pretend they were lighting themselves on fire.

Examples of Brand Extension

Brand extension can be as obvious as offering the original product in a new form. For example, the Boston Market restaurant chain has launched a line of frozen dinners under its own name, offering similar fare.

Another form of brand extension combines two well-known products. Breyer's ice cream with Oreo cookie chunks is a matchup that relies on consumers' loyalty to either or both original brands.

Brand extension also may be applied to a different product category. Google's core business is a search engine, but it has attached its name to new products such as Google Wallet, the tap-to-pay app.

In the best examples, the brand extension is natural and arises from a recognized positive quality of the original product. Arm & Hammer produces a deodorizing cat litter under its brand name. Black & Decker makes a line of toy tools for children. Ghirardelli sells a brownie mix.

The creation of complementary products is a form of brand extension. The many varieties and flavors of Coca-Cola are an example.

Disadvantages of Brand Extension

The cost of introducing a product through brand extension is lower than the cost of introducing a new product that has no brand identity. The original brand communicates the message.

However, brand extensions fail when the product lines are a distinct mismatch. The brand name may even cast a disagreeable light on the new product. For example, Colgate, a brand synonymous with dental care products, once tried to extend its brand to a line of frozen dinners. Consumers just didn't want minty-fresh lasagna.

Key Takeaways

  • Brand extension is the introduction of a new product that relies on the name and reputation of an established product.
  • Brand extension works when the original and new products share a common quality or characteristic that the consumer can immediately identify, such as Oreo ice cream.
  • Brand extension fails when the new product is unrelated to the original, or even creates a negative association, such as Colgate Lasagna.