Final answer:
Sony producing games for Playstation 4 and Nintendo Wii U is an example of brand extension, which means using an established brand name for new product categories.
Step-by-step explanation:
When Sony starts producing games for both its Playstation 4 and the Nintendo Wii U, it is engaging in brand extension. Brand extension occurs when a company uses its existing brand name to enter a different product category. This strategy enables the company to leverage its established reputation and customer base to enter new markets while reducing the risks associated with brand development. Product diversification, on the other hand, would imply the company is introducing a range of new products which could be different from its current product lines. Market penetration involves increasing sales of existing products to the current market, not introducing new products to a different market or platform. Hence, the correct answer to this question is B) Brand extension.