Don’t Get Eaten! Understanding and Handling Cannibalization Risk

Mason Charlotte () and Jayaram Kaushik ()
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Mason Charlotte: Professor and C. Herman and Mary Virginia Terry Chair of Business Administration University of Georgia, USA
Jayaram Kaushik: University of Georgia, USA

NIM Marketing Intelligence Review, 2018, vol. 10, issue 1, 34-39

Abstract: To minimize the potential loss of market share and profits, it is important to understand factors that drive cannibalization. Key brand variables for cannibalization risk concern how the new product compares in price and quality to existing products. Other relevant variables are the category, the type of product and a company’s distribution system. Also, whether a new product will coexist with or replace the existing product needs to be considered. Estimating cannibalization risk should assess possible effects on company operations. The positioning of new products needs to be planned and communicated carefully. Too many similar options may confuse the consumer. Brand and category factors as well as the consumption context can help managers mitigate the extent of cannibalization. Profit impact is more relevant than changes in sales figures. A lower-margin product cannibalizing a higher-margin product eats away at profits, but a higher-margin product cannibalizing a lower-margin one is potentially worth the cannibalization risk.

Keywords: Cannibalization; New Product Introduction; Fighting Brand (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:gfkmir:v:10:y:2018:i:1:p:34-39:n:6

DOI: 10.2478/gfkmir-2018-0006

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