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What are brand extensions?

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Are brand extensions an important brand-growth strategy or can they endanger brands? Perhaps start with a definition of brand extensions?

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Brand Extensions:

The concept of a "Brand Extension" is a sort of "cheating" mechanism where marketers seek to use a very well known brand name on a new product that might only be tangentially related to the original. As a result, several things can happen: First, the new product may sell rapidly, and with less investment in marketing (than would be the case in a totally new product). This is the desire. The second thing that might occur is that the new product might "dilute" the meaning of the first, creating less connection between the two products, as well as harming the recognition of the established primary name (Loken and John, 1993).

The main issue then becomes how "close" the new brand is relative to the old one. In a well known example, a famous soap maker ...

Solution Summary

The expert determines why brand extensions are important brand-growth strategies.