Elaboration
A firm’s marketing strategy encompasses both actions undertaken to enhance its performance, and actions undertaken to hurt the performance of its competitors. Pursuit of a product line proliferation strategy entails considerable managerial time and effort, and financial resources. Therefore, optimally, a firm would make its product offering in just enough forms, flavours, sizes, etc., to maximise its profitability. However, rather than solely focusing on maximising their profitability, firms also introduce their highly successful new product offerings (product offerings that are market share leaders) in more number of forms, flavours, sizes, etc., than needed to maximise their profits, in order to hurt the performance of their present competitors and deter the entry of new competitors. In effect, more so than to enhance its own performance, the dominant firm in an industry pursues a strategy of product line proliferation to pre-empt potential entry points into the product-market, and thereby hurt the performance of its present competitors and deter the entry of new competitors into the market.