What is a 'Brand Extension'

Brand extension, also known as brand stretching, leverages the reputation and popularity of the well-known brand to increase demand for new products. Brand extension is the use of a well-established brand name for a new product or new product category.

BREAKING DOWN 'Brand Extension'

For the brand extension to be successful, there must be a logical association between the original product and new item. A weak or nonexistent association can result in the opposite effect, brand dilution. Even worse, if a brand extension is unsuccessful, it can harm the parent brand.

Brand Extension Examples

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

There are many ways companies can extend the popularity and reputation of their brand into new territories. Brand extension can be as natural as offering an original product in a new form. As an example, a made-to-order pizza restaurant may offer the sale of frozen take-home pizza or sell its name brand proprietary sauce in retail stores.

Another form of brand extension is with the combination of products. For combination extension, two businesses, or branches of a single company, will come together to offer a new twist to their unique existing products. The extension of both brands can be seen in the partnering of a chocolate and pretzel company to provide chocolate-covered pretzels. 

Moving into a new market segment and capturing a more significant market share of the market are other forms of a brand extension. A car company, known for its engineering prowess, can start a motorcycle division, selling those motorcycles based on their superior engineering history of quality. The creation of complementary products can help to increase market share.  For example, a peanut butter company could offer jellies and jams to leverage its brand and the popular relationship between the products. 

The risk of failure through brand extension is lower than the risk and the cost of introducing a new product with no associated established brand.  The success of the brand communicates a message of value and serves as an acceptable standard.  

Brand Extension Disadvantages

Brand extensions fail when the brand extends to products or product lines so distinctly unrelated that the general perception of the brand is skewed. For example, Colgate, a brand synonymous with dental care products, failed when it extended its brand to food products.  Most people associate minty-flavored toothpaste with Colgate, and that association was a barrier to the successful adoption of Colgate foods. 

Other brand extension failures include Zippo, known for lighters, and Harley-Davidson, known for motorcycles, expanding into the women's perfume market.  The original brands were associated with lighter fluid and fuel odors, respectively, and just like Colgate, consumers could not disassociate that experience from the brands well enough for the extensions to be successful.

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