Kotler and keller (2009), suggests that brand extension is the introduction of new products into a market by a company, under an already existing strong brand. This could be an extension of the brand or may not have anything to do with the existing brand. An existing brand that gives rise to the brand being extended is known as the parent brand. There are advantages and disadvantages involved in brand extensions.
David A. Aaker though limits brand extension to “the use of a brand name established in one product class to enter another product class”.
Jim Riley looks at brand extension as the introduction or re-lunch of products through an existing successful brand name in the same market, and also companies enter markets, come up with new brands and product categories through successful brands. He also talks about brand stretching which is introducing branding in unrelated markets. An example Giorgio Armani, a cloth production company or designer entering into fragrances, Starbucks, a coffee house entering into ice cream and the production of liquor.
Brand extensions has its own advantages and disadvantages, with some of the advantages being facilitate new-products acceptance, provide positive feedback to parent brand and company, reduces risks, reduce costs of introductory lunch campaign, packaging cost is cut down too, serves as basis for other extensions and acceptance of new products are made easier. On the other hand, these advantages have its corresponding disadvantages being; brand line extension can cause a parent brand to loose its identity, brand dilution, confusion among costumers, loss of reliability, damage to company’s integrity, spurious linkages, and if the brand extension has no advantage over its competitive brands in the new category, it will fail.
Facilitate new-product acceptance, due to the brand name and goodwill of parent brand costumers
References: 1: kotler,P and keller,k (2009). Marketing Management. 13th ed. New Jersey: pearson education,inc . p298-p300. 2: Belsky, G. (2012). The 10 Best Brand Extensions Ever. Available: http://business.time.com/2012/03/14/the-10-best-brand-extensions-ever-according-to-me/slide/rolls-royce-aircraft-engines/. Last accessed 04th Nov 2012. 3: David A. Aaker, Managing Brand Equity, The Free Press, NY, 1991, pg. 208 4: Riley, J. (2012). Brand Extension & Brand Stretching. Available: http://www.tutor2u.net/business/marketing/brands_extension_stretching.asp. Last accessed 4th Dec 2012. 5: Halve, A. (2012). brand extension:good or bad?. Available: http://www.business-standard.com/india/news/brand-extension-good-or-bad/461868/. Last accessed 7th Dec 2012.