What major risk is associated with brand extension?

Brand extension refers to the strategy of using an established brand name to launch products in a different category. This approach can be beneficial, but it does come with significant risks. One of the major risks associated with brand extension is confusing customers with unrelated products.

When a brand ventures into a category that seems unrelated to its core offerings, it can lead to a muddled brand image. Customers might struggle to understand how the new product aligns with their existing perceptions of the brand. For example, if a company known for high-quality athletic shoes suddenly starts selling kitchen appliances, it could create uncertainty among consumers about the brand’s expertise in this new area. This confusion can dilute the core brand's identity and may lead to a loss of credibility and trust in the brand overall.

Furthermore, customers may be less likely to perceive the new product as a quality offering, especially if they do not associate the brand with that category. If the new products fail to meet consumer expectations, it can negatively impact the perception of the original brand, leading to long-term damage to its reputation.

This risk highlights the importance of ensuring that brand extensions are thoughtfully considered and aligned with the brand's existing values, expertise, and customer expectations to maintain clarity and trust in the brand’s overall identity.