DECA Sports and Entertainment Marketing Practice Exam

What is created when a company launches a new product that carries the same brand name as previously established products?

1. Brand Loyalty

2. Brand Equity

3. Brand Extension

4. Brand Recognition

The correct answer is: Brand Extension

When a company launches a new product that carries the same brand name as previously established products, this is referred to as brand extension. Brand extension is a strategy where an existing brand expands into a new category or product line while using the established brand name to leverage the credibility and recognition that comes with it. This approach allows companies to benefit from existing customer loyalty and brand trust, providing a significant advantage in marketing the new product. By utilizing the same brand name, the company aims to enhance customer acceptance of the new product based on their previous positive experiences with the brand. This strategy can lead to increased sales and market presence, as consumers may feel more comfortable trying a new product from a brand they already know and trust.