The Law of Line Extension
Spring - 2014
Line extension is the use of an established product brand name for new item in the same product category. Line extension occurs when a company introduces additional items in the same product category under the same brand name such as new flavors, forms, colors, added ingredients, package sizes etc. Companies try to spread the equity of its brand over many products for the sake of reaching a more diverse customer base and enticing existing customers with new options. Companies that were tightly focused on a single product that is highly profitable and incredibly successful suddenly spread thin over many products in the bid to increase their market share and most often loses money in the process.
Line extension may look profitable in the short-run but it’s most often a total failure in the long-run. To be successful today, a business has to narrow its focus in order to build a position in the prospect’s mind. The leader in any category is the brand that is not line extended. Jack Trout and Al Ries have argued that in an age when brands are becoming more and more niche and specific, it is not a very good idea to dilute the brand by trying to be “something to everyone, instead of being everything to someone”.
The different varieties of line extension may confuse and perhaps even frustrate consumer as to which version of the product is the “right one” for them. Line extension weakens the Company’s ability to develop new brands. The worst scenario with line extension is that not only does it fail, but it also harms the parent brand in the process especially when the extension is inconsistent with the brand image and if the products mismatch customer’s expectation.
A good example where line extension holds true is Disney Storytelling, which released innovative apps that enabled kids to connect with their favorite Disney stories and characters in new and exciting ways. Three apps were...