What does the term 'extension' refer to in a business context?

In a business context, the term 'extension' typically refers to the expansion of product offerings. This means introducing new products or enhancing existing ones to meet market demands or reach new customer segments. Product extension can help businesses diversify their portfolio, mitigate risks associated with relying on a single product, and potentially increase market share.

The concept of extending a product line often involves leveraging the established brand equity of existing products, which can make it easier to gain customer acceptance for new items. This strategy can also involve variations of existing products, such as new flavors, colors, sizes, or other attributes that appeal to consumers.

While the idea of total cost of products being purchased is important in business, it does not align with the specific use of the term 'extension.' Understanding the correct definition of 'extension' is crucial for grasping strategies that businesses use to grow and adapt in competitive markets.