Brands have for a long time been used to identify and distinguish organizations, companies and products, it can be compared to as the soul of a company. A brand extension is a clear channel for product innovation, which can be a powerful tool to hold a competitive advantage. Product innovations can create differentiation; raise the brands characteristic-values, extend the area of use and block competitors.For 25 years, Panos Emporio has had a leading position in the swimwear industry and in spring of 2011 the company launched their first clothing collection for men and woman, and has recently launched an online store. The company is extending their brand and now that they have a new product category they are facing a challenge, which is underlying in our research question: How can Panos Emporio, a swimsuit brand, expand their brand image and identity to their new clothing line? The purpose of this report is to highlight important factors within brand extension that could be of value to Panos Emporio and other companies facing a brand extension.The report is a qualitative study using an abduction methodology where empirical findings have been studied parallel with the theories and vice versa. We have conducted interviews and observations, and have also collected quantitative data in form of a customer interview, to gain an understanding of the reality. We have chosen to examine and observe the brand Panos Emporio by asking questions regarding the company‟s organization, brand identity and image, as well as customer attitudes. The theoretical framework is underlying in our research study, with the initiation of portraying a brands meaning, importance and structure. Furthermore theories of brand extension with an emphasis on approach strategy and its advantages and disadvantages. The empirical chapter includes, information concerning the company´s brand, collections, costumer and retailers, as well as marketing strategies, which is a part of our data presentation.Out of our theoretical and empirical part we came to the conclusion that Panos Emporio should consider making the consumers more aware of the clothing collection before launching more products within a new product category, since the lack of awareness can throw a shadow over the main product and bring down the brand image which in terms affects the brand equity. Having good knowledge regarding the brands attribute, personality, purpose, identity and the relationship with consumers is more important than whether they should extend the brand or not. Companies need to focus on building their brand equity and image, towards the customers first. Authors believe that companies can take great advantages if a strong brand name and relationship is established at first. / Program: Master in Fashion Management with specialisation in Fashion Marketing and Retailing