True or false? Cash Cows allow the firm to capitalize on their reservoir of existing brand equity.

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BlackTom AI · Accepted Answer

The statement presents a true/false evaluation about Cash Cows in portfolio theory. 
First, consider what Cash Cows are: they are business units or products with high market share in a low-growth market, which typically generate steady and substantial cash flow with relatively little incremental investment. 
Second, the phrase 'capitalize on their reservoir of existing brand equity' is describing how firms leverage the strong, established brand to sustain profitability and fund other ventures. Since Cash Cows typically have strong brand recognition and loyalty, they provide a reliable cash source that can be redirected to support stars, question marks, or new initiatives. 
Third, understanding the strategic role: firms often use the cash from Cash Cows to fund growth areas or maintain the overall portfolio, which aligns with leveraging brand equity to maximize value. 
If someone were to claim false, the critique would be that Cash Cows do not rely on brand equity or do not generate cash, which contradicts core PM theory; or that brand equity is irrelevant to their function, which is inaccurate because the high brand value underpins their pricing power and customer base, enabling cash generation. 
In summary, the statement correctly captures the typical function of Cash Cows: they capitalize on existing brand equity to produce cash that can support other parts of the business.

MKTG-4155-02Sp25 Brand Management Quiz #3 (Final)

True or false? Cash Cows allow the firm to capitalize on their reservoir of existing brand equity.

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