A brand extension is the launch of a new product or service under an existing name. Its advantage is savings – the new offering inherits trust and recognition, so it does not need to be built from scratch. It only works, however, when a logical connection exists for the customer between the original and the new category, and when the company is credible in the new area. If the connection is missing, the extension confuses customers and weakens the original position, because the brand stops clearly standing for one thing. There is also a risk that the failure of the new product will damage the reputation of the whole brand. An alternative is a separate brand, which protects the original but requires its own investment. The decision rests on the question of whether a customer would naturally expect such a product from this company.
See also: Brand architecture, Brand positioning, Category design.
