Cannibalization is the term used to describe the situation where a business's products or services compete against each other. It often leads to a decrease in market share, loss of revenue and profitability. In this post, we'll explore the concept of cannibalization, its impact on businesses, and how to avoid it.
Cannibalization refers to the situation when a business's offerings compete against each other. This competition can occur in various forms such as pricing, features, quality, marketing, etc. For instance, if a company introduces a new product that has all the same features as an existing product but at a lower price point, it may cannibalize sales of the existing product.
Several factors can cause cannibalization in businesses. These include competition from other businesses and changes in consumer preferences. Also, companies may introduce new products or services that overlap with their existing offerings or serve as substitutes for them.
Cannibalization can have several negative impacts on businesses. It can lead to a decline in market share and lower sales of existing products. Furthermore, cannibalization can cause confusion among customers and reduce brand loyalty. The overall result is decreased revenue and profitability.
One way businesses can avoid cannibalization is by conducting thorough market research before introducing new products or services. The research should focus on identifying areas of overlap or redundancy between existing offerings and potential new ones. Additionally, companies should aim to differentiate their offerings from each other by emphasizing unique features or benefits.
Cannibalization is often a result of intense competition between businesses. Companies that compete strongly with each other are more likely to introduce similar products or services that overlap with their existing offerings. This can lead to cannibalization and a decline in market share.
Cannibalization can significantly impact a business's market share. If the company's products or services overlap or serve as substitutes for each other, it can lead to customers switching between them. This results in reduced market share for both products or services.
Cannibalization can have a severe impact on businesses, leading to decreased revenue and profitability. However, companies can avoid cannibalization by conducting market research and differentiating their offerings from each other. By doing so, businesses can maintain their market share and remain competitive.
