There seems to be some confusion outside of marketing departments as to the difference between a line extension and a brand extension. Hopefully I can help remove the confusion and help ensure the proper terminology is used.
A line extension is when you develop a new product closely related to one of your existing product brands and launch the new product under the same brand name in the same category. The new product is designed to meet somewhat different needs of customers. By using a successful brand name to introduce additional items in a given product category, line extensions typically represent a less expensive, lower risk alternative for increasing sales. An example of this is Oreo sandwich cookies introducing Double Stuf and Oreo Minis.
A brand extension is when you use one of your existing brands to launch a new or modified product in a new category. A brand extension gives a new product instant recognition and faster acceptance while saving much of the high advertising costs usually associated with launching and building a new brand. The brand extension strategy, however, is not without risk because you run the risk of confusing or diluting the image and value of the original brand. Sure there are successes such as the Honda brand being able to simultaneously remain healthy in several categories such as cars, motorcycles, lawnmowers and generators, but Bic was unsuccessful in launching women’s underwear, Harley Davidson perfume never went anywhere and nobody really wanted McDonald’s pizza.
When choosing a new product strategy , remember that a brand is an identifiable entity that makes specific promises of value and those promises of value might not make sense in a new category. The same brand name must stand for the same promises.
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