When a company uses line extension it is
A)manufacturing a product under a new brand name that consumers will view as an entirely new product line.
B)manufacturing a new product with the current brand name to enter a new market segment in its product class.
C)speeding up the movement of a product category through its product life cycle.
D)contracting with another firm to manufacture modified versions of the original products.
E)applying the current brand name to enter a completely different product class.

Question

Quizplus · Accepted Answer

Line extension refers to the use of an existing brand name to launch a new product that falls within the same product class but caters to a different market segment. This is a cost-effective strategy for companies to leverage their existing brand equity and expand their product offerings without investing heavily in brand building or marketing. Option B best describes this practice. Option A refers to brand extension, which involves using an existing brand name to launch a new product in a different product class. Option C is incorrect because line extension does not affect the speed of a product category moving through its life cycle. Option D describes contract manufacturing, which is not related to line extension. Option E describes brand stretching, which involves using an existing brand name to enter a completely different product class.

When a Company Uses Line Extension It Is