When Product Line Extensions Work!

Despite the disadvantages of line extensions, there are some cases in which it is not economically feasible to create a new brand and in which a line extension might work. Some of the cases provided by Ries and Trout include:

Low volume product
– if the sales volume is not expected to be high.

Crowded market – if there is no unique position that the product can occupy.

Small ad budget – without strong advertising support, it might make sense to use the house name.

Commodity product – an undifferentiated commodity product has less need of its own name than does a breakthrough product.

Distribution by sales reps – products distributed through reps may not need a separate brand name. Those sold on store shelves benefit more from their own name.

The concept of positioning applies to products in the broadest sense. Services, tourist destinations, countries, and even careers can benefit from a well-developed positioning strategy that focuses on a niche that is unoccupied in the mind of the consumer or decision-maker.