Companies introduce new
products all the time,
many of them within
the company’s existing
product categories; some outside
of those categories. In both
situations, companies have the
option of using existing brand
names or creating totally new
ones. If the company already has
products in the category, it will
often use the same brand. Coca-
Cola does this. When it introduced
a cherry cola, it did so by creating
Cherry Coca-Cola, not by
inventing some totally new brand
name. This is line extension,
where you extend the brand to a
new product in an existing line.
Otherwise the company can create
a new brand within the product
category, a practice commonly
called multi-branding. This is
what Procter&Gamble does in
detergents, where it has several
different brands.
If the product category is new
to the company (no existing line),
it can create a new brand. When
Coca-Cola moved into the new
category of bottled water, it did
not use the Coca-Cola, brand, but
created a new one, Dasani. Or else
the company can adopt an existing
brand, which is being used for
products in other categories. For
example, Marlboro moved into a
new product category, clothing,
but stuck with the Marlboro brand
name. This latter practice of
extending an existing brand to a
new product category is known as
brand extension. Why would one
and when should one resort to
brand extension?



