Which Statement Is Not True Regarding a Brand Extension Strategy

question 37

Multiple Choice

Which statement is not true regarding a brand extension strategy?

• A)It is best to have high brand equity before pursuing a brand extension strategy.
• B)A brand extension strategy allows new products to profit from recognition the brand already enjoys.
• C)Brand extensions must be implemented with an eye towards avoiding cannibalization.
• D)Firms must make sure that the extension lives up to the quality consumers expect from the brand.
• E)A brand extension strategy is the same thing as a product extension strategy.

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Definitions:

Total Asset Turnover

A ratio calculating how effectively a company utilizes its assets to produce sales income.

Return on Equity

A measure of a corporation's profitability, indicated by the amount of net income returned as a percentage of shareholders equity.

Return on Assets

A financial ratio indicating how efficiently a company uses its assets to generate profit.

Equity Multiplier

An equity multiplier is a financial ratio that measures the proportion of a company’s total assets financed by its shareholders' equity, demonstrating the degree of financial leverage being used.