Brand Cannibalization
BRAND CANNIBALIZATION: EAT OR BE EATEN
With increasing commoditization of brands, differentiation is hard to come in every industry. Consumers are now flooded with options, single company having several brands in same product category. Positioning, targeting, segmenting can serve as strategies no more. Rather it is the basic hygiene which any company needs to follow if it needs to sustain in the race for market share.
So, what should a marketer adopt as a strategy? There are unconventional approaches followed by Multinationals to address the goal of increasing their market share. With consumer demand for innovation increasing, brand loyalty being a privilege of few companies and E-commerce providing an instant comparison amongst brands, there are few avenues to grow sales and subsequently earn profits. Providing low price - high quality products is the demand of the market. But what company would want to replace a high-priced product with a low-priced product? That 's a good way to end up on the corporate chopping block. These lines aptly determine the paradox of a Marketing term known as CANNIBALIZATION.
Market cannibalization is when sales of one particular product decreases due to the launch of another product from the same company. In the contest of enabling Brand Proliferation, in which a company introduces new brands in the same product line to provide the consumers with variety of options, lies hidden the fear of Brand Cannibalization. It results into increase in sales of one brand at the cost of another by the same company without much effect on the final revenue earned by the company.
In the FMCG Industry, a classic example would be that of “Le Sancy” soap, a new brand which aggressively ate on to HUL (India) flagship brand “Lux” which had to eventually taken out of
the markets. Same was observed by launch of variant “Diet Coke” which resulted into reduced sales of Regular Coke. In recent years, we have seen aggressive intentional
With increasing commoditization of brands, differentiation is hard to come in every industry. Consumers are now flooded with options, single company having several brands in same product category. Positioning, targeting, segmenting can serve as strategies no more. Rather it is the basic hygiene which any company needs to follow if it needs to sustain in the race for market share.
So, what should a marketer adopt as a strategy? There are unconventional approaches followed by Multinationals to address the goal of increasing their market share. With consumer demand for innovation increasing, brand loyalty being a privilege of few companies and E-commerce providing an instant comparison amongst brands, there are few avenues to grow sales and subsequently earn profits. Providing low price - high quality products is the demand of the market. But what company would want to replace a high-priced product with a low-priced product? That 's a good way to end up on the corporate chopping block. These lines aptly determine the paradox of a Marketing term known as CANNIBALIZATION.
Market cannibalization is when sales of one particular product decreases due to the launch of another product from the same company. In the contest of enabling Brand Proliferation, in which a company introduces new brands in the same product line to provide the consumers with variety of options, lies hidden the fear of Brand Cannibalization. It results into increase in sales of one brand at the cost of another by the same company without much effect on the final revenue earned by the company.
In the FMCG Industry, a classic example would be that of “Le Sancy” soap, a new brand which aggressively ate on to HUL (India) flagship brand “Lux” which had to eventually taken out of
the markets. Same was observed by launch of variant “Diet Coke” which resulted into reduced sales of Regular Coke. In recent years, we have seen aggressive intentional
References: : http://blogs.hbr.org/anthony/2011/02/combating_cannibalization_conc.html http://www.citesales.com/712-brand-cannibalization-brand-proliferation-brand-rejuv.html http://seekingalpha.com/article/1189201-the-cost-of-product-cannibalization-dooms-apples-growth http://www.mcngmarketing.com/when-to-cannibalize-your-existing-products/#.UfK9ro03BUN http://ecx.io/en/news/insights/1430/kannibalisierung/ http://aqpq.org/2009/08/03/product-cannibalization-a-risky-business/