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When is an introduction classified as a new product rather than a line extension?
AWhen it is sold at a price above the existing line
BWhen it is made in a factory the firm has just built
CWhen it has a new brand name in a new category
DWhen it is advertised on a channel not used before
Answer & Solution
Correct answer: C. When it has a new brand name in a new category
1. The label depends on the brand name used and on the product category entered.
2. A product with a new brand name in a category new to the organization is classified as a new product.
3. Keeping the brand name and the category makes it a line extension instead.
4. Price level, factory location and advertising channel play no part in the classification.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 11 "Creating Products and Pricing Strategies to Meet Customers' Needs", section 11.7 Creating Products That Deliver Value_
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