Current research suggests that social identification processes play an important role in markets. In this study, the authors propose that marketing research has neglected one important factor, which influences the success of a brand extension, namely the group processes between social groups and brand communities framing the new product introduction. Based on social identification theory, the authors derive a framework integrating identification and stereotyping processes, simultaneously testing for drivers of brand extension potential, which have been found to be important in past empirical studies. Using a structural equation modeling approach, the authors test for in-group and out-group effects in two hypothetical brand extension scenarios of one snowboard brand (Burton), and a surf brand (Billabong) into the ski market. They find that the social identification processes underlying the new product introduction significantly drive the potential success of the brand extension. By being the first study to explore the role of identification and stereotype effects in brand extension, the authors make an important contribution to research in this area. Moreover, our study provides important implications for brand managers planning to extend their brands into new product categories.