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Established brand used to introduce new one
benifits : decrease launch cost and positive feed back effect
drawbacks : brand dilution for the master brand if the extension fails
worest scenario : market share from the master brand not from the competitors
Understanding Brand Extension
“Brand extension is using the leverage of a well known brand name in one category to launch a new product in a different category.”The philosophy of brand extension is not well understood and as a result, brand extension is often implemented incorrectly.Note the components of this definition of brand extension:
Brand Extension is the use of an established brand name in new product categories. This new category to which the brand is extended can be related or unrelated to the existing product categories.
Growth , but also the strategic opportunity to identifying & evaluating alternative extensions for a brand.
Examples :-There are packaging and labeling & brand name increases consumer interest and willingness to try new product having the established brand name with Advertising & promotions.
Very good question and I do agree with Krishna and Khalid
if your existing brand has high enough parent brand penetration and equities then launching new products with similar to parent brand becomes a profit making opportunity. Launching new products give high rates of failure, to avoid this company's use the brand extension strategy as one of the most lucrative growth opportunities. Any brand extension into a new product category must reinforce one of those primary associations without creating new negative, conflicting or confusing associations for the brand.
