Final answer:
The statement that line extension refers to extending an existing brand name to new product categories is true. It leverages the established brand's equity to market new products, preserving a unified brand reputation.
Step-by-step explanation:
The statement, 'Line extension refers to extending an existing brand name to new product categories,' is true. A line extension involves taking an established brand name that is well-known and trusted by consumers and utilizing it to launch new products in different categories.
This practice capitalizes on brand equity to promote the new items while aiming to maintain a unified brand identity. Successful brands with national reputations value their brand name as a critical asset, considering that consistent quality in the products associated with their name builds trust and reduces the potential risk from the inconsistent actions of sales staff.