What is a Brand Extension?

I remember a few years ago when my friends and I went to the now closed Cavalli Club in Florence. From the leopard upholstery, to snake bar, the Cavalli Vodka bottles and the videos of the past runway shows; It was clear we were in a Cavalli world. At that time, I had no idea this club was a clear example of phenomenon called brand extension. Brand extension is a marketing strategy in which a brand uses its name on a new product but from a different category. Since then, brand extensions have become more and more common. We now have Armani hotels and resorts, Christian Louboutin nail polishes, Fendi furniture, Burberry cosmetics and a Gucci museum.

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But why exactly do Brands extend?

There are many reasons why a brand may choose to extend. Brand extensions allow the consumers to become closer to the brand, as they are experiencing the brand in different ways than they did before. Another reason is that it requires less investment. It is simpler and cheaper for a brand to extend its product offering than to create a new brand for that particular product. Finally, consumers are more willing to try the product because they already know the brand.

Personally, I believe brand extensions are a great way for brands to keep up with recent trends that are out of their category of expertise. A well thought-out brand extension may result in increase of sales, stronger brand loyalty. However, brand extensions can also be dangerous for the image of the brand. Consumers might not understand as to why that particular brand would extend into that product category.

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