A brand extension is when a well-known brand uses its name, logo, or marketing materials to introduce a new product or brand category into the market.
As brands gain recognition and equity among their customer base within the market, their assets (logos, symbols, names, etc.) generate a level of identifiability that helps them build trust and loyalty with customers. A brand extension occurs when the brand uses its identifiable materials to launch a new product or category into the market.
A brand extension holds two main functions: to drive awareness to the new product or category and to expand the core brand’s customer base.
By drawing on the equity and recognizability of the existing brand, the new product or brand category gains a bump in brand awareness. The parent brand simultaneously gets access to a new demographic of customers, which can increase its popularity.
If the brand extension doesn’t effectively connect with its parent brand, it can damage both brands’ reputations. A cohesive brand experience between the parent and extension brand, however, can benefit both.