New Products and Brand Extensions

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When a firm introduces a new product, it has three main choices as to how to brand it:

It can develop a new brand, individually chosen for the new product.
It can apply, in some way, one of its existing brands.
It can use a combination of a new brand with an existing brand.

A brand extension is when a firm uses an established brand name to introduce a new product. When a new brand is combined with an existing brand, the brand extension can also be called a sub-brand. An existing brand that gives birth to a brand extension is referred to as the parent brand. If the parent brand is already associated with multiple products through brand extensions, then it may also be called a family brand.

In 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. A line extension often involves a different flavor or ingredient variety, a different form or size, or a different application for the brand (e.g., Head & Shoulders Dry Scalp shampoo). Most new products are line extensions—typically 80 percent to 90 percent in any one year. Moreover, many of the most successful new products, as rated by various sources, are extensions (e.g., Microsoft Xbox video game system, Apple iPod digital music player, and BMW mini automobile).

Extensions can come in all forms. One well-known branding expert, identifies the following seven general strategies for establishing a category—or what he calls a franchise—extension

Introduce the same product in a different form. Examples: Ocean Spray Cranberry Juice Cocktail and Jell-0 Pudding Pops
Introduce products that contain the brand’s distinctive taste, ingredient, or component. Examples: Philadelphia cream cheese salad dressing and Haagen-Dazs cream liqueur
Introduce companion products for the brand. Examples: Coleman camping equipment and Duracell Durabeam flashlights
Introduce products relevant to the customer franchise of the brand. Examples: Gerber insurance and Visa traveler’s checks
Introduce products that capitalize on the firm’s perceived expertise. Examples: Honda lawn mowers and Canon photocopy machines
Introduce products that reflect the brand’s distinctive benefit, attribute, or feature. Example: LysoFs “deodorizing” household cleaning products and Ivory’s “mild” cleaning products
Introduce products that capitalize on the distinctive image or prestige of the brand. Examples: Calvin Klein clothes and accessories and Porsche sunglasses

Advantages of Brand Extensions

For most firms, the question is not whether the brand should be extended, but when, where, and how the brand should be extended. Extensions can certainly suffer from some of the same shortcomings faced by any new product. Nevertheless a new product, introduced as an extension, may be more likely to succeed, at least to some degree, because it offers the advantages described in the following subsections. Well-planned and well-implemented extensions offer a number of advantages to marketers. These advantages can broadly be categorized as those that facilitate new product acceptance and those that provide feedback benefits to the parent brand or company as whole.

1. Improve Brand Image

One of the advantages of a well-known and well-liked brand is that consumers form expectations over time concerning its performance. Similarly, with an extension, consumers can make inferences and form expectations as to the likely composition and performance of a new product based on what they already know about the brand itself and the extent to which they feel this information is relevant to the new product These inferences may improve the strength, favorability, and uniqueness of the extension’s brand associations. For example, when Sony introduced a new personal computer tailored for multimedia applications, Vaio, consumers may have been more likely to feel comfortable with its anticipated performance because of their experience with and knowledge of other Sony products than if the product had been branded by Sony as something completely new.

2. Reduce Risk Perceived by Customers

One research study examining factors affecting new product acceptance found that the most important factor for predicting initial trial of a new product was the extent to which a known family brand was involved Extensions from well-known corporate brands such as General Electric, Hewlett-Packard, Motorola, or others may communicate longevity and sustainability. Although corporate brands may lack specific product associations because of the breadth of products attached to their name, their established reputation for being able to introduce quality products and stand behind them may be an important risk-reducer for consumers Thus, perceptions of corporate credibility—in terms of expertise and trust-worthiness—can be valuable associations in introducing extensions Similarly, although widely extended supermarket family brands such as Betty Crocker, Green Giant, Del Monte, and Pepperidge Farm may lack specific product meaning, they may still stand for product quality in the minds of consumers and, by reducing perceived risk, facilitate the adoption of extensions.

3. Increase the Probability of Gaining Distribution and Trial

Because of the potentially increased consumer demand resulting from introducing a new product as an extension, it may be easier to convince retailers to stock and promote an extension. For example, one study indicated that brand reputation was a key screening criteria of gatekeepers making new product decisions at supermarkets

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