A Component is a reference integrated in an assembly. A component possesses characteristics related to how it is integrated in an assembly (for example, its relative location in an assembly)
A new component will behave very similar to a new product, with the exception that a component will not be saved separate from the product it was created in.
•Select Insert 
New Component, or in the specification tree, select desired component and click the 
New Component icon. The New Component icon is also available in the Product Structure Tools toolbar.
The structure of your assembly now includes Product1(Product1.1).