Line extension occurs when the parent brand is used to brand a new product that targets a new market segment within a product category currently served by the parent brand.
Example of Line Extension:
Coca-Cola, the famous soft drink is the parent brand of the Coca-Cola company. Coca-Cola, up until 1982, refused to introduce a diet version of its cola as it feared its parent brand would suffer. However, after seeing the success of Diet Pepsi, released in 1964, Coca-Cola decided to target a segment of its soft drink market who desired a low sugar soft drink, hence, Diet Coke became a line extension of the parent brand, Coca-Cola.
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