how to prevent market cannibalization
it is important to consider how the two products are branded to prevent new products from cannibalizing older ones products with similar pricing and placement such as new flavors or added features pose a high risk of market cannibalization according to the nuremberg institute for marketing decisions 2this risk can be reduced through more distinctive branding for example creating inexpensive fighting brands to compete with low cost competitors without cannibalizing from the premium brands new offerings can also be carefully timed to avoid disrupting older offerings 2advantages and disadvantages of market cannibalizationmarket cannibalism is not always to be feared especially if it can protect or expand a company s market share apple founder steve jobs is reported to have embraced the practice saying if we don t cannibalize ourselves someone else will 3 although newly released iphones do cannibalize buyers from older models and other devices like ipods they make a bigger dent in apple s competitors it may also be an appropriate defensive measure against competitors as when airbnb started cutting into the margins of the hotel business marriott then started its own home rental business which cannibalized from its hotel revenue but ultimately denied market share to airbnb 4there are also major risks to market cannibalism high end retailers should be cautious about introducing low priced versions which could dilute the value of their premium brands there is also a danger of market saturation as might occur when two identical fast food restaurants appear on the same block depending on local market dynamics the brand might end up competing against itself as with other marketing decisions thorough market research and careful timing can make all the difference between positive and negative market cannibalization 5new offerings can revive interest in older product linesbargain alternatives can prevent competitors from undercutting core brandbargain alternatives may dilute the value of premium brandsmarket saturation may occur when multiple venues compete for customersexamples of market cannibalizationapple is an example of a company that ignores the risk of market cannibalization in pursuit of larger objectives when the company announces a new iphone the sales of its older models immediately drop however apple counts on its new phone to capture customers from its competitors so it can increase its market share companies often risk market cannibalization to see a boost in their market share for example a company that makes crackers may introduce a low fat or lower salt version of its brand it knows some of its sales will be cannibalized from the original brand but it hopes to expand its market share by appealing to health conscious consumers who otherwise would buy a different brand or skip the crackers altogether 