Which of the following, if true, strengthens the CEO’s argument for br

QUESTION

Which of the following, if true, strengthens the CEO’s argument for brand extension?

A) Apple has been successful in brand extensions.
B) Grips could launch the new products under an entirely new brand name.
C) Grips had to recall its products twice in the recent past due to quality concerns.
D) Top management at Grips is concerned that other companies will launch brand extensions that threaten Grips’ core business.
E) Grips has a strong reputation among consumers for innovative products.

ANSWER

Answer: E
Explanation: E) Brand extension makes more sense if the underlying brand is strong. Choice E, therefore, strengthens the argument, whereas Choice C undermines it. Choice A does not matter since the Apple case is very different from the Grips case. Choice B does not help because choosing a new brand name undermines the purpose of a brand extension. Choice D is a reason for Grips to be concerned, but the fact that other companies want to extend their brands to compete with Grips does not indicate that Grips should extend its brand.