Brand Extension

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When a company uses an established brand name to introduce a new product or when a new brand is combined with an existing brand, this is known as brand extension. A brand extension can also be a sub-brand, and the parent-brand is the brand that gives birth to a brand extension. If the parent brand is already associated with multiple products through brand extensions, it’s called a family of brands.

There are two main types of brand extensions:
1. Line Extension
2. Category Extension

Now let’s look at these extensions in detail.


Line Extensions

Marketers apply the parent brand to a new product that targets a new market segment within a product category with adds a different flavor, ingredient, or size.

There are two types of line extensions:

  • Horizontal line extension
    When an established brand name is used to enter a new segment of the market in the same product class
  • Example – Coke to launch diet Coke.


  • Vertical line extension

Same name used to introduce a related brand in the same product category but with a different price and quality balance.

  • Example – Dove.

1.Upscale – Higher price/Better quality

2.Downscale – Low price/quality drop


Line Extensions Advantages

  • Diversity of customers
  • Customer need for variety
  • Pricing breadth
  • Capacity utilization
  • Increasing profitability
  • Competitive reasons
  • Trade demand
  • Counter competition
  • Image benefit


Category Extensions

Marketers apply the parent brand to enter a different product category from the one it currently serves. There are 3 types of Category extensions.

  1. Category related extension – Launches a brand related to the same category as the parent brand
  2. Image related extension – Same brand image used to introduce a brand in a different product category
  3. Unrelated extension – Brand diversification meaning new product categories.


Importance of Brand Extensions

•Improve brand image & clarify brand meaning

  • Reduce risk perceived by customers
  • Increase the probability of gaining distribution
  • Increase efficiency of promotional expenditures
  • Reduce costs of introductory & marketing activities
  • Avoid cost of developing a new brand
  • Allow for packaging & labeling efficiencies
  • Permit consumer variety-seeking
  • Bring in new customers into brand franchise
  • Revitalize the brand
  • Permit subsequent extensions through equity


Drawbacks of Brand Extensions

  • Can confuse or frustrate consumers
  • Can encounter retailer resistance
  • Can fail or harm parent brand image
  • Can cannibalize sales of parent-brand
  • Can diminish identification
  • Can dilute brand meaning & identity
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