Brand extension: Use existing brand for new product. Dove soap → Dove shampoo (line extension, same category). Dove soap → Dove chocolate (category extension, different category). Line extension success rate: 71%. Category extension: 37%. Distance from core = risk.
Two Extension Types
Line extension: New product in same category. Coca-Cola → Diet Coke, Coke Zero, Cherry Coke. Colgate toothpaste → Colgate whitening, Colgate sensitive. Low risk, leverages existing equity.
Category extension: Same brand, different category. Virgin Airlines → Virgin Mobile → Virgin Galactic. Caterpillar construction → CAT boots. Higher risk, higher reward. Tests brand elasticity.
When Extensions Work
Logical connection: New product relates to existing brand promise. Dove = gentle care. Dove soap → Dove lotion = logical. Dove = gentle → Dove chocolate = confusing (different Dove brand, actually).
Consumer expectation: Would customer expect you to make this? Nike shoes → Nike apparel = expected. Nike → Nike toothpaste = jarring. Category fit matters.
Brand permission: Does your brand have "permission" to play in new category? Google = information. Google Maps, Google News = natural. Google+ (social) = lacked permission. Failed.
Trademark Scope
Nice classification matters: Dove soap trademark (Class 3). Dove chocolate trademark (Class 30). Different classes, different owners, both valid. Category extension requires filing new classes.
File broadly early: If you think you'll extend, file trademark in likely future classes now. Costs $350-500 per class. Blocks competitors, enables extension. Cheaper than fighting trademark opposition later.
Dilution Risk
Spreading brand thin: Pierre Cardin licensed name to 800+ products. Brand became meaningless. Luxury perception destroyed. Extension quantity inverse to brand value.
Failed extension damages core: Colgate Kitchen Entrees (frozen meals) flopped. Who wants dinner that tastes like toothpaste? Consumers couldn't separate associations. Hurt toothpaste sales temporarily.
Success Factors
Quality parity: Extension must match parent brand quality. Luxury brand releasing budget line = dangerous. Perception of one affects other. Maintain standards across portfolio.
Marketing support: Can't just slap existing brand on new product. Need launch budget. Explain connection. Educate why extension makes sense. Under-resourced extension = failure + brand damage.
Vertical Extensions
Up-market: Mass brand goes premium. Toyota → Lexus (new brand, not extension). Marriott → Ritz-Carlton (separate brand). Safer to launch new brand than risk diluting mass appeal.
Down-market: Premium brand goes budget. Usually fails. Gap → Old Navy (succeeded by using new brand name, not Gap Budget). Michael Kors → Michael Michael Kors (lower tier, struggled).
Sub-Branding Strategy
Endorsed brands: Parent + sub-brand. Courtyard by Marriott. iPhone by Apple (originally). Signals connection without full equity transfer. Allows differentiation while borrowing credibility.
Separate enough to fail safely: Sub-brand flops? Core brand less damaged. iPhone flops (hypothetically)? Apple survives. "Apple Phone" flops? Worse for Apple parent brand.
Ingredient Branding
Component as brand extension: Intel Inside (CPU → brand). Gore-Tex (waterproof membrane → brand). NutraSweet (sweetener → brand). B2B component becomes consumer-facing extension.
Trademark strategy: File trademark for ingredient separately from master brand. Intel owns "Intel" + "Pentium" + "Core" + "Inside" as distinct marks. Portfolio approach.
Co-Branding Extensions
Two brands, one product: Uber + Spotify (music during rides). GoPro + Red Bull (extreme sports). Leverages both brands' equity. Shares risk. Splits reward. Trademark complexity: Who owns what?
Licensing agreement critical: Define trademark usage rights, quality control, termination clauses. Both brands' reputations at stake. One partner's failure hurts both.
When to Create New Brand
Target different customer: Existing brand associations wrong for new audience. Honda (reliable family cars) → Acura (luxury). Toyota → Lexus. Same company, different brand architecture.
Enter unrelated category: Virgin works across categories (brand = maverick disruption). But most brands lack Virgin's flexibility. Entering unrelated space? New brand safer.
Trademark Lens checks proposed extension names - even using existing brand name, new product category requires new Nice class trademark filings and separate clearance searches.