- Broaden the appeal of a single product by adding features to it. For example, if your product is a television, you might add a radio feature to it.
- Leverage the appeal of your existing brand name by attaching it to a new product. For example, you might produce a brand of bicycle called "The Ruckus". It's so successful that you decide to start a line of bicycle products: Ruckus Classic, Ruckus Sport, and Ruckus Supreme.
A brand represents an idea in the customer's mind. If you add features to your product that don't relate to the original, core purpose of the product, you run the risk of confusing the established idea in the customer's mind. When you create or extend a line of products, you make it difficult to maintain a single, coherent meaning for the brand name.
If you "pollute" your brand, it will be a less powerful force for driving your prospective customers to buy your products.
Laura Ries has a recent entry about brand extension on her Origin of Brands blog.