Customers will buy any product that meets their criteria, and there are advantages to having two products in a segment. Let's suppose that it is round one and you are considering moving your original High End product "Bid" to the Traditional segment. Timing is important, because Traditional customers want different specifications than High End customers. If you try to "straddle" the two segments, you end up giving neither of them what they want.

Traditional customers want an Age of two years, When the project concludes, Traditional customers will want prices between $19 and $29, Positioning in the center of the segment, and MTBF of at least 14000 hours. High End will want cutting edge Positioning, Age of zero, MTBF of at least 20000 hours, and a price of $29 to $39. Straddling places your product in the middle with Price $29, Age 1.0, MTBF 20000 hours, and positioning where the two segments overlap.

A Better Plan

Therefore, a better plan would include an R&D project that drops the MTBF rating (lower material costs allow you to drop your price) and perhaps moves Bid squarely into the Traditional segment. Since decisions are made on January 1st, your planning would include a Revision Date as early in the year as possible, a January price cut, and perhaps additional automation to reduce unit costs. The goal is to convert your product from High End to Traditional in one step. 

 
Effects of Two Products in a Segment

Having two products in a segment offers benefits similar to, say, offering toothpaste in regular flavor and mint. Although the second product does cannibalize the first to some extent, your overall share increases. Suppose that 10,000 units are split equally between five identical products from five competitors. Each gets 2,000 units. Now you introduce a sixth identical product. You now get 3,333 units (two sixths) while your competitors each get 1,666. To match you, competitors must invest in a second product of their own, and their gain cannot be as good as your original gain. Furthermore, both products' sales budgets contribute to your accessibility for that segment, which helps to differentiate your product line from the competition.

On the other hand, there is a downside to having multiple products in a segment. Your R&D expenditures in the segment double, as do your promotion and sales expenses. Your fixed costs increase, and you give up the opportunity to place the second product in some other segment. A third product in the segment produces less gain than the second, as does the fourth. In short, your costs increase faster than your market share as you add products.