Final answer:
The statement is generally false as adding more products may increase the risk of cannibalizing existing sales. It's important for businesses to carefully consider their product line expansion to avoid product overlap and ensure market demand is being met.
Step-by-step explanation:
The statement that adding more products to a product line decreases the risk of cannibalizing existing product sales is generally false. As a business expands its product line, there is actually an increased risk of product cannibalization, which is when a company's new product eats into the sales of one of its existing products.
This risk arises because the new and old products may be similar enough that customers might choose the new offering over the existing one, reducing the sales of the original product.
However, adding more products can diversify a company's portfolio and potentially decrease overall business risk by not relying on a single product for the majority of sales.
Yet, in some cases, adding new products can indeed be beneficial. It can lead to increased profits and greater market share if the new products attract additional customers or meet previously unmet consumer needs.
Businesses must carefully consider their strategy to ensure that the addition of new products is actually addressing a gap in the market, rather than just duplicating existing offerings.