28. Which of the followings is the most important argument against the use of pr

Question

28. Which of the followings is the most important argument against the use of product-line extension for a firm's new product development strategy? a) It can crowd out genuine new product ideas, potentially reduces brand loyalty, and it b) It increases R&D; costs, potentially reduces brand loyalty, and it cannibalizes demand c) It increases R&D; costs, can crowd out genuine new product ideas, and it cannibalizes d) It decreases patent protection, it can crowd out genuine new product ideas, and cannibalizes demand from other items in the product line. from other items in the product line. demand from other items in the product line. potentially reduces brand loyalty

Explanation / Answer

The most important argument against product line extension is

a) It can crowd out genuine new product ideas ; potentially reduces brand loyalty and it cannibalizes demand from other items in the product line.

When new products are introduces in a product line, it might lead to brand dilution which inturn leads to reduced brand loyalty. A part of customers from the current products move to the new products in the line extension and this leads to the cannibalization of the current products

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