A brand extension, simply put, is when a brand moves into a new product category while still competing in its original category. Brand extensions can benefit the parent brand in several ways, including:

Brand extension is one of the most common ways for an established brand to achieve meaningful growth. In our last post, The important Role of Demand in Successful Brand Extension, we described three factors and their collective contributions to successful brand extensions—demand, solution, and brand relevance. We spoke in great detail about the demand and importance of identifying an unmet need or desire in brand extension (or, if one doesn’t exist, the brand must first find a way to create the need or want—a more difficult, but viable path). Here we will focus on the second factor, the solution.

Robust brand extension strategies are vital to maintaining relevance in today’s hyper-competitive marketplace. To a degree, brand extendibility represents the most logical way to achieve profitable brand growth, however, many companies struggle with how far to stretch, where specifically to extend, and how to ensure success. This perhaps explains why the failure rate is as high as 80 to 90 percent. Play it too safe, and the likely result will be boring, short-lived line extensions that underwhelm consumers. Stray too far from your brand’s core positioning, and you risk diluting valuable equity and trust in the parent brand; extended brands should make sense and be a logical step from the flagship product. If not, consumers are left scratching their heads asking, “OMG, what were they thinking?”