How do extensions impact a brand or company?
It seems there are three potential impacts -- broaden the financial footprint, add value to the franchise, and transform the product or company.
Three current ones come to mind:
1. eBay Express -- the auction selling firm, now selling at fixed price. Laura Reis of "Origins of Brands" wasn't terribly shocked that it wasn't doing well because it violated a fundamental rule of staying true to a brand's identity.
2. American Idol Singer's Advantage -- sure it is a licensing arrangement, but it also happens to be the singing coach of a number of former contestants on the show. Certainly better than the list shown on AdAge's current poll that includes ice cream and theme park rides: Is there more promotional opportunity for 'American Idol'?
3. Apple iPhone -- not only is it an extension of their other products, it is at the root of changing the company's name from Apple Computer to just Apple.
The decision to extend should not be tilted toward short term finances.