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?