Final answer:
The local ice cream shop is using a line extension strategy by adding a new flavor to its existing product line.
Step-by-step explanation:
When the local ice cream shop decides to add a new flavor to its menu, the brand strategy being used is called a line extension. This approach involves adding new flavors, colors, sizes, or other variations to an existing product line to attract more customers or to satisfy a wider range of preferences.
By introducing a new flavor, the shop is not creating a new brand but extending its existing line of ice cream flavors.