Why are designer brands opting for brand extensions instead of creating a new private label brand?

Brand extensions are a common technique used by designer brands, whereby a designer brand uses their brand name to launch a new or modified product into the market.

A brand extension can save a company the cost of promoting a new name, save tremendous amounts of money and creates instant brand recognition of the new product line, immediately.

This is a way to diversify the product line and introduce new products and increase the breadth of products in the assortment.

The brand extension usually is specific, whereby it may be introducing a new style, new pricing, or new product category such as a athleisure line or lower priced basics, or moving into completely new products, without compromising what the original brand name is known for. This is the cheapest and easiest way when we are referring to apparel. If a brand wanted to create a completely new unrelated brand, this would be much more expensive, time consuming, and more difficult.

We see many designer brands, such as Chanel, Dior, Tom Ford with brand extensions in accessories, fragrances, cosmetics, home decor and more.