{{History of Brand Extension}}

In 1979, Dr. Edward M. Tauber noticed a few new products that used a well known brand name which had been originally used in other categories. One of these was Jello Pudding Pops; a new product in the frozen supermarket section using the brand name and associations with the parent product Jello, a dry packaged gelatin mix. Tauber presented a paper that year to the Association of National Advertisers calling this new type of product a “brand extension.” This was in contrast to line extensions which extended a brand into the same category as the parent brand such as new flavors of Jello Pudding mix. In effect, the brand owner was extending the brand name into a different category. The distinction was that the new category was in a different section of the store and often had different customers and competitors. The rationale for extending a brand is that there is already awareness and equity in the existing brand name that could be transferred to the new brand extension increasing its likelihood of success. The key to that success is determining whether the brand name is a logical fit to the new category in the minds of potential customers AND that the brand provides leverage or a competitive advantage in the new category. Tauber proposed a consumer research method to systematically pursue these brand extension opportunities.

While there can be significant benefits in brand extension strategies, there can also be risks, resulting in a diluted or severely damaged brand image. A number of academic articles have suggested that poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity.<ref>Aaker,D.A.(1990),"Brand extensions: 'the good, the bad, the ugly'", Sloan Management Review, pp. 47-56.</ref><ref>Martinez and Pina, 2003</ref> Most of the literature focuses on the consumer evaluation and positive impact on parent brand. In practical cases, the failures of brand extension are at higher rate than the successes. Some studies show that negative impact may dilute brand image and equity.<ref>Loken and John, 1993</ref><ref>Roedder-John, D., Loken, B. and Joiner, C. (1998), "The negative impact of extensions: can flagship products be diluted?", Journal of Marketing, 62 (1), pp. 19-32</ref> In spite of the positive impact of brand extension, negative association and wrong communication strategy do harm to the parent brand even brand family.<ref>Aaker, 1990; Tauber, 1981; Tauber, 1988.</ref> In spite of the failure rate, most historical evidence since the 1990s suggests that very little damaging dilution occurs with brand extension. The reason is simple: brand extensions that are non-sequitors generally fail quickly and never have a chance to damage the parent brand. Brand extensions, however, can dramatically change consumer perception of a brand name. Often, this is beneficial. For example, the launch and success of Clorox Clean-Up and many other Clorox disinfecting products changed the image and associations of that brand from when it was simply bottled bleach. These new associations allowed Clorox to launch many cleaning tools and similar disinfecting products that would have seemed to be a non-sequitor at the time the brand was associated only with bottled bleach.

One reason for brand extension failures is the tendency of some brand owners to extend without careful study of the equity, consumer associations and leveragibility of the parent brand. Also, many new products fail because of ineffective marketing, pricing and physical product development. Competitive response can also cause new products to fail. By definition, brand extensions enter an existing category with established competitors. The odds of establishing a significant market share under these circumstances is low. Therefore, one of the keys to brand extension success is the size of the new target category. Newly launched brand extensions generally achieve a small market share due to order entry. Therefore, those entering very large categories have a much better chance to achieve sizable dollar sales and longevity.