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What Is Cannibalization (in Marketing)?

 

What Is Cannibalization (in Marketing)?


Cannibalization is the unwanted tradeoff where sales of a new service or product lower sales from existing products or services and decrease or detract from the full revenue.

What Is Cannibalization (in Marketing)


Market Cannibalization Explained

Market cannibalism is likewise referred to as company cannibalism. When a company manufactures a new product or introduces a new provider, the goal is to draw a few in their present clients and a large variety of recent clients.

Unfortunately, things don’t constantly go as deliberate. Sometimes, the discharge of the new product into the market attracts a massive proportion of its contemporary client base. Failing to increase the company’s marketplace base consequences in company cannibalism.

The new watch turns into successful amongst consumers, and the organization sees a tremendous boom in its income extent. However, it does not take long before the proprietors realize that sales of their authentic watches have taken a sharp fall. The reason? Their preliminary clients have stopped shopping the older watch as they opt for the new belt-fob kind.

Importance of Market Cannibalization

In a few times, the brand new product does not only harm a business enterprise’s income volume and revenue. The worst-case scenario is that the original product gets phased out of the marketplace absolutely.

However, sometimes a commercial enterprise intentionally cannibalizes its present product with a new one. Why would a corporation introduce a brand new product line knowing very well that it’s going to jeopardize the prevailing one? – As a method for developing and expanding its operations.

Assume that ABC, the watch-making company, has been generating luxury watches for a while.

However, for some motive, the watches don’t appeal to the intended target audience. Instead of producing a totally new product, the organization comes to a decision to tweak its current lux watch. The enhancements are supposed to attract the same clients inside the marketplace.

In this example, ABC deliberately launches a brand new line of watches as it aims to maintain its modern-day clients, as well as attract new ones.

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