There are three ways for a firm to brand a new product: a new brand, an existing brand, or a combination. A brand extension uses an established brand name for a new product, which can be a line extension targeting a new market segment or a category extension entering a new product category. The existing brand that spawns a brand extension is the parent brand. Multiple brand extensions form a family brand. Brand extensions have advantages like improving brand image and reducing costs, but also risks like confusing consumers or failing and hurting the parent brand.

1. Brand Extension
Dr. Gopal Thapa
Tribhuvan University

2. Brand Extension
 There are three ways in which a firm can brand a
product when a firm introduces a new product.
These are:
i. It can develop a new brand, individually chosen for the
new product.
ii. It can apply in some way, one of its existing brands.
iii. It can use a combination of a new brand with an existing
brand.
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3. Brand Extension
 A brand extension is when a firm uses an
established brand name to introduce a new
product. Brand extensions can be broadly
classified into two general categories:
i. Line Extension: The parent brand is used to brand a new
product that targets a new market segment within a
product category currently served by the parent brand.
ii. Category Extension: The new brand is used to enter a
different product category from that currently served by
the parent brand.
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4. Brand Extension
 Sub brand
 The brand extension can also be called sub-brand
 Parent brand
 A existing brand that gives birth to a brand
extension is called parent brand
 Family brand
 If the parent brand is already associated with
multiple products through brand extension, then it
is called a family brand
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5. Ansoff’s Growth Share Matrix
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6. Advantages of Extensions
1. Extensions that facilitate new product acceptance can:
• Improve brand Image
• Reduce risk perceived by customers
• Increase efficiency of promotional expenditures
• Reduce costs of introductory & follow-up marketing
program
• Avoid cost of developing a new brand
• Allow for packaging and labelling efficiencies
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7. Advantages of Extensions
2. Extensions that provide feedback benefits to the parent
brand and company can:
• Enhance the parent brand image
• Bring new customers into brand franchise and increase
market
 coverage
• Revitalize the brand
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8. Disadvantages of Extensions
• It can confuse or frustrate consumers
• It can encounter retailer resistance
• It can fail and hurt parent brand image
• It can succeed but cannibalize sales of parent brand
• It can succeed but diminish identification of any one
category
• It can dilute brand meaning
• It can cause the company to forgo the chance to
develop a new brand
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