An example of a product line extension is the Toyota Lexus brand, which is a high-end extension of the basic Toyota brand that targets consumers looking for bargains. Diet Coke is a product extension of Coke, introduced to meet the need for a low-calorie cola drink.
A product line extension must promote the single idea associated with a brand's positioning strategy in order to be successful. Some critics of product line extensions argue that for a product line extension to be successful, it must be closely related to the core product. Unrelated line extensions create an opportunity for focused competitors to erode a company's market share because such extensions dilute a brand's image. Companies that launch unrelated product extensions typically generate increased sales over the short term, but lose their market position over the long term due to declining sales.
Examples of companies with successful product line extensions include Gillette, which introduced shaving creams as complementary products to its razors, and the Campbell Soup Company, which diversified its soups by introducing chicken flavors, such as creamy chicken noodle.
A company such as IBM incurred heavy losses trying to sell the PC, an unrelated product line extension. In most cases, marketing managers should avoid launching unrelated product line extensions because of the high risk of failure associated with such extensions.