Search Results

You are looking at 1 - 3 of 3 items for

  • Keyword: Cannibalization x
Clear All Modify Search
Open access

Charlotte Mason and Kaushik Jayaram

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.

Open access

Susan Fournier and Shuba Srinivasan

Abstract

In an increasingly risky socioeconomic environment, management needs to proactively consider brand-related risks. To understand brands as tools for risk management, they need to understand four types of brand risk: brand reputation risk, brand dilution risk, brand cannibalization risk and brand stretch risk.

Risk management is not a natural act for brand managers trained in astute execution of the 4 Ps, and contemporary market factors make this more challenging still. With an increasingly polarized society, it is almost impossible for brands to remain untouched by ideologies. In addition, the growth in digital advertising gives brand managers less control over advertising placement and context, and the mandate to keep growing adds executional risk.

The more exposed a brand is to brand risk, the more attention this topic will need in the boardroom. To shift a company’s marketing philosophy toward risk, it is important to define marketing competences in a broader way, to be self-critical and to be proactive.

Open access

Harald J. van Heerde, Shuba Srinivasan and Marnik G. Dekimpe

Abstract

To evaluate the success of a new product, managers need to determine how much of its new demand is due to cannibalizing the company’s other products, rather than drawing from competition or generating primary demand. A new model allows managers to estimate cannibalization effects and to calculate the new product’s net demand, which may be considerably less than its total demand. The new methodology is applied to the introduction of the Lexus RX 300 using detailed car transaction data. This case is especially interesting since the Lexus RX 300 was the first crossover SUV, implying that its demand could come from both the SUV and the Luxury Sedan categories. As Lexus was active in both categories, there was a double cannibalization potential. Indeed, demand is shown to originate from different sources and to vary over time. The results contain valuable insights for evaluating and managing brand extensions.