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.