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

Question

Quizplus · Accepted Answer

A product line extension is a strategy where a company introduces a new product into an existing product line with the same brand name, and it is generally used with multiproduct branding. There are risks associated with this strategy, such as cannibalization of sales from existing products, but it can also lead to increased profitability by leveraging existing brand equity and reducing advertising and promotional costs. Option A is incorrect because advertising costs may go down or stay the same with a product line extension. Option B is incorrect because there are risks associated with this strategy as mentioned. Option C is incorrect because advertising with a retailer is not the same as a product line extension. Option E is incorrect because multibranding refers to a strategy where a company has multiple brands in the same product category.

Which of the Following Statements About Product Line Extensions Is