Brand extensions have a number of benefits. They provide a quick way to take advantage of an already well-known brand name. They spread the costs of brand-building across multiple products. On the other hand, brand extensions can create confusion in the marketplace — what does that brand actually stand for if there are many (potentially only remotely related) products sharing the same brand name?
There has been a fair amount of academic research to discover what types of brand extensions make sense. A poll of 11,000 Adweek readers voted from a list of 10 — and Zippo The Woman Perfume (yes the company that makes lighters that use that smelly fluid — at least that is how I remember Zippo) topped the list. I didn’t know that Dr. Pepper was making a BBQ sauce and a marinade — of course 7 Up and A&W are in the same product-market. For the whole list, see the Business Insider “See The 10 Worst Brand Extensions Currently On The Market” (February 9, 2013). We have also posted this at Learn the 4 Ps.
This might provide an interesting opening to a broader discussion about branding. You could start by showing students these brand extensions, and then ask: Why do firms use brands? What conditions favor the development of brands? What are the potential benefits and costs of brand extensions? Under what conditions should brand extensions be used?