Luxury Brand Extension Quiz

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| By JARMIKK

JARMIKK

Community Contributor

Quizzes Created: 2 | Total Attempts: 302

Questions: 10 | Attempts: 191 | Updated: Mar 20, 2023

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Questions and Answers

1.

Why are luxury brand extensions tempting to brand managers?
- A.
  
  They make the brand more popular
- B.
  
  They increase the brand capital
- C.
  
  They make the brand more desirable
- D.
  
  If successful, they bring in big profits
Correct Answer
D. If successful, they bring in big profits

Explanation
Luxury brand extensions are tempting to brand managers because if they are successful, they can bring in big profits. By extending the brand into new product categories or markets, brand managers can tap into new revenue streams and expand their customer base. This can lead to increased sales and profitability for the brand. Additionally, successful brand extensions can enhance the brand's reputation and desirability, making it more attractive to consumers and increasing its overall brand capital.

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2.

What does "high premium degree of a brand" mean?
- A.
  
  Customers think it is better quality and more desirable than other brands
- B.
  
  Customers think it is very expensive
- C.
  
  The brand earns higher profits than other brands
- D.
  
  The brand is more expensive than other brands
Correct Answer
A. Customers think it is better quality and more desirable than other brands

Explanation
The term "high premium degree of a brand" refers to customers perceiving the brand as having superior quality and desirability compared to other brands. This means that customers believe the brand offers better value and is more attractive, leading them to choose it over other options. It does not necessarily imply that the brand is very expensive or earns higher profits than other brands.

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3.

According to the article, what is brand adjacency?
- A.
  
  The brand is licensed to other products
- B.
  
  There are many brands that are similar
- C.
  
  Brand sells products that are closely related to each other
- D.
  
  It is a measure of brands premium degree
Correct Answer
C. Brand sells products that are closely related to each other

Explanation
Brand adjacency refers to the practice of a brand selling products that are closely related to each other. This means that the brand offers a range of products that are interconnected, complement each other, or serve a similar purpose. This strategy allows the brand to leverage its existing customer base and brand recognition to expand into related product categories, increasing its market reach and potential for sales.

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4.

What was said about Louis Vuitton?
- A.
  
  It has recovered from past mistakes
- B.
  
  Its focus on quality and marketing make it a star brand
- C.
  
  It has expanded its production to Asia
- D.
  
  Economic downturns can hurt its sales
Correct Answer
B. Its focus on quality and marketing make it a star brand

Explanation
Louis Vuitton is considered a star brand because of its emphasis on quality and marketing. This means that the company places a strong emphasis on producing high-quality products and effectively promoting them to its target market. This strategy has helped the brand maintain its reputation and popularity among consumers.

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5.

What is said about Porsche and SUVs?
- A.
  
  SUVs do not make money to Porsche
- B.
  
  Porsche should exit SUV category
- C.
  
  SUVs can be made into sports cars
- D.
  
  Porsche managed to expand into a category that appeared very different from sports cars
Correct Answer
D. Porsche managed to expand into a category that appeared very different from sports cars

Explanation
Porsche managed to successfully enter and expand into the SUV category, which was initially seen as being very different from their traditional sports cars. This suggests that Porsche was able to adapt and appeal to a wider range of customers by offering SUVs, even though it may not have been the main source of their profits.

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6.

What kind of brands have the best chance of becoming star brands, according to the article?
- A.
  
  Brands that have the best brand managers
- B.
  
  Brands with a long and established heritage
- C.
  
  Brands that have a lot of money
- D.
  
  Premium brands
Correct Answer
B. Brands with a long and established heritage

Explanation
According to the article, brands with a long and established heritage have the best chance of becoming star brands. This suggests that brands that have been around for a significant period of time and have built a strong reputation and customer loyalty are more likely to succeed and become popular. This is because they have already established themselves in the market and have a history of delivering quality products or services, which can attract and retain customers.

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7.

What is the important lesson from Diane von Furstenberg story, according to the article?
- A.
  
  Many extensions bring a lot of money
- B.
  
  She was like Coco Chanel
- C.
  
  Free publicity helps to create a strong brand
- D.
  
  Multiple extensions may work in the beginning but erode the brand value later
Correct Answer
D. Multiple extensions may work in the beginning but erode the brand value later

Explanation
The important lesson from Diane von Furstenberg's story, according to the article, is that multiple extensions may work in the beginning but erode the brand value later. This suggests that while expanding a brand through various extensions may initially bring success and financial gain, it can ultimately lead to a decline in the brand's value and reputation. This highlights the importance of carefully considering the long-term impact of brand extensions and maintaining a strong brand identity.

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8.

What does the article say about Mercedes?
- A.
  
  Quality issues hurt the company
- B.
  
  Competition from BMW and Audi hurt the company
- C.
  
  Its long history makes it a luxury brand
- D.
  
  Mercedes should not make cheap cars
Correct Answer
A. Quality issues hurt the company

Explanation
The article states that Mercedes is being hurt by quality issues. This suggests that the company is facing problems related to the quality of their products, which is negatively impacting their business. It implies that there may be issues with the reliability or performance of Mercedes vehicles, leading to a negative perception among consumers and potentially affecting their sales and reputation.

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9.

What is said about dying star brands?
- A.
  
  The only choice is to go downmarket
- B.
  
  Increasing sales is most important
- C.
  
  Regaining star brand status means increasing quality despite the cost
- D.
  
  Increasing prices is a must if you want to be a star brand
Correct Answer
C. Regaining star brand status means increasing quality despite the cost

Explanation
Regaining star brand status means increasing quality despite the cost. This means that in order for a dying star brand to regain its status, it must prioritize improving the quality of its products or services, even if it comes at a high cost. This suggests that simply going downmarket or increasing sales or prices may not be effective strategies for restoring the brand's reputation and success. Instead, the focus should be on enhancing the quality of the brand's offerings, which can ultimately help it regain its star brand status.

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10.

What does the article claim about brand profitability?
- A.
  
  Premium degree decides how profitable a brand is
- B.
  
  Number of extensions decides how profitable a brand is
- C.
  
  High premium degree and cohesive brand portfolio make a brand highly profitable
- D.
  
  High quality of products means high gross margins
Correct Answer
C. High premium degree and cohesive brand portfolio make a brand highly profitable

Explanation
The article claims that a brand's profitability is determined by having a high premium degree and a cohesive brand portfolio. This means that offering products or services at a higher price point and having a strong and consistent brand image across different extensions or product lines can lead to higher profitability. The article does not mention that the number of extensions or the high quality of products directly determine brand profitability.

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Current Version
Mar 20, 2023

Quiz Edited by
ProProfs Editorial Team
Apr 28, 2019

Quiz Created by
JARMIKK

Luxury Brand Extension Quiz

Why are luxury brand extensions tempting to brand managers?

What does "high premium degree of a brand" mean?

According to the article, what is brand adjacency?

What was said about Louis Vuitton?

What is said about Porsche and SUVs?

What kind of brands have the best chance of becoming star brands, according to the article?

What is the important lesson from Diane von Furstenberg story, according to the article?

What does the article say about Mercedes?

What is said about dying star brands?

What does the article claim about brand profitability?