Which of the following statements about product line extensions is most accurate?

Question

Quizplus · Accepted Answer

A product line extension is a form of multiproduct branding where a company adds new products to an existing line of products under the same brand name. This is different from multibranding where a company introduces new brands to target different market segments or meet different needs. There are risks associated with product line extensions such as cannibalization of existing products and dilution of the brand's image. However, it can also lead to cost savings and increased brand loyalty if done successfully. The statement in option A is incorrect as advertising costs may not necessarily increase with a product line extension strategy. Option B is incorrect as any business strategy carries certain risks. Option C is incorrect as joint advertising with a retailer does not necessarily involve a product line extension.

Which of the Following Statements About Product Line Extensions Is