Cannibalization of products | 2022

Product cannibalization is the decline in sales of a particular item, generally due to the fact that it has been substituted for another.. The substitute does not necessarily come from the competition, but from the same company that offers the replaced product.

In other words, the cannibalization of products is generated when the sales of a product decrease because it has been replaced or renewed by another.

For example, a computer company improves the original version of a computer, adds more features and launches it on the market. In order not to distribute the market share and boost sales, the company’s interest is focused on this new computer being the one that consumes the largest market share.

The cannibalization of products can occur for various reasons. It is necessary to assess how to carry out this process, since it can pose a problem in the marketing strategy and in the advertising of the brand.

One of the things that the brand must take into account is the product catalog it has, as well as the actions it will carry out. For example, substitution of articles, promotions, discounts, among others.

Why cannibalization of products occur?

There are some causes that give rise to this process:

  • Not only can it happen in the company itself, but it can also be done when the competition launches an article that is similar to ours and with better characteristics. In the same way, it can be carried out in the opposite direction, being the brand itself the one that produces a product that tries to counteract that of the competition.
  • The improvement or implementation of a new version of a company item. In that case, the company would be interested in boosting the sales of this new product.
  • The high degree of competition that exists in the market also greatly influences the fact that this happens. When it comes to similar products, you have to assess the needs of the consumer and maximize the launch of an item so that it is the one that reaches the largest market share to the detriment of the competition.
  • A brand can also create an extensive line of products with similar characteristics and encourage cannibalization, which would be counterproductive for itself.
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Example

Steve Jobs indicated that it was more conducive to cannibalizing within the same brand than losing market share due to the competition. In fact, he himself put his words into practice.

For example, in this case, at Apple they always promote the latest version of their products to the detriment of the rest because they prefer to cannibalize themselves and not be at the expense of the competition.

However, to carry this out and obtain optimal results within this process, it is important to define a good strategic line, develop a good product and be aware of the demands and needs of users.

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