Brand extension refers to the use of a successful brand name to launch a new or modified product in a same broad market. A successful brand helps a company enter new product categories more easily. Companies use this strategy to increase and influence brand equity. The success of brand extension depends on how strong consumer's associations are to the brand's values and goals. A new product is not only time consuming but also needs a big budget to create awareness and to promote a product's benefits. Brand extension is one of the new product development strategies which can reduce financial risk by using the brand name to improve consumer’s perception due to the core brand equity. While there can be significant benefits in brand extension strategies, there can also be significant risks, resulting in a weak and damaged brand image. Poor choices for brand extension may weaken the core brand and damage the brand equity. Mostly the failures of brand extension are at higher rate than the successes. Brand extension research mainly focuses on the consumer evaluation of extension and attitude of the parent brand.
When consumers face thousands of products, they are initially confused, but also try to categorize the brand association or image with their existing memory. When two or more products exit in front of consumers, they might reposition memories to frame a brand image and concept toward new introduction. The extension makes sense when there is a strong brand associations that provide a point of differentiation, or when the category does not support the resources needed to establish a new name. The failure of extension may come from difficulty of connecting with the main brand, a lack of similarity and familiarity. These failures of extension make consumers create a n ...