All of the Following Are True About Product Line Extensions

question 326

Multiple Choice

All of the following are true about product line extensions EXCEPT:

• A)this strategy practice can result in lower advertising and promotion costs.
• B)a risk that comes with product line extensions is that sales of an extension may come at the expense of other items in the company's product line.
• C)a product line extension raises the level of brand awareness.
• D)line extensions work best when they provide incremental company revenue by taking sales away from competing brands.
• E)product line extensions involve using a current brand name to enter a different product class.

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Definitions:

Purchase Money

Funds that are used specifically for the acquisition of assets, often related to real estate transactions or personal property.

Installments

Payments that are made periodically towards a debt, allowing for the total amount to be paid off over time rather than all at once.

Financing Statement

A document filed by a creditor to give public notice of a security interest in property of the debtor, used in UCC filings.

Security Interest

A legal claim or lien on collateral that secures the performance of an obligation, typically the repayment of a debt.