Firstly, what is sales cannibalization?
Sales cannibalization is when a brand’s new product captures a portion of sales from its existing products, reducing the market share of those existing products.
Product line extensions have a higher potential for cannibalization. When strong brands introduce new offerings within their existing product line, customers may trade-off between the different options, resulting in some sales being cannibalized from the brand’s existing products.
As a generic example, suppose a manufacturer of cookies introduces a new flavor as a line extension. If the new flavor captures a market share of 5% and sells 1 million units, it is unlikely that all of those sales came from competitive brands. Some of the sales would have cannibalized from the manufacturer’s existing flavor varieties, reducing their profitability.
While cannibalization reduces sales of existing products, it can still have a net benefit overall. By introducing new products and expanding the product line, a company can strengthen its brand, increase customer loyalty, gain retailer space, defend/attack competitors, and achieve overall sales growth, even if some cannibalization occurs.
Examples of Sales Cannibalization
Apple’s iPhone cannibalizing iPod sales:
When Apple introduced the iPhone, it impacted sales of its iPod line. Customers who previously purchased iPods for music playback started opting for the more versatile iPhone, which offered music playback along with various other features.
Coca-Cola’s introduction of Coke Zero cannibalizing Diet Coke sales:
When Coca-Cola launched Coke Zero, a zero-calorie soft drink targeted towards men, it attracted a portion of consumers who would have otherwise purchased Diet Coke. The introduction of Coke Zero resulted in some cannibalization of Diet Coke sales.
McDonald’s McChicken sandwich cannibalizing sales of other chicken products:
McDonald’s introduced the McChicken sandwich as a new product offering. While it attracted new customers and increased overall chicken sandwich sales, it also cannibalized sales of other chicken-based menu items, such as the Chicken McNuggets or the McChicken Deluxe.
Amazon’s Kindle cannibalizing physical book sales:
With the introduction of the Kindle e-reader, Amazon experienced cannibalization of physical book sales. Customers who previously purchased printed books began opting for digital versions, leading to a decline in the sales of traditional books.
Nike’s Air Max line cannibalizing sales of other Nike shoe models:
Nike’s Air Max line, known for its distinctive visible air cushioning, became highly popular among customers. However, as the Air Max line gained popularity, it started cannibalizing sales of other Nike shoe models within the same price range, as some customers switched their preference to Air Max shoes.
Samsung Galaxy Note cannibalizing sales of the Samsung Galaxy S series:
When Samsung introduced the larger-screened Galaxy Note series, it attracted customers who would have otherwise purchased the smaller-screened Galaxy S series, resulting in some cannibalization of sales between the two product lines.
Starbucks’ introduction of cold brew cannibalizing iced coffee sales:
When Starbucks introduced cold brew coffee as a new offering, it appealed to customers looking for a smoother and less acidic alternative to traditional iced coffee. As a result, some sales of iced coffee were cannibalized by the growing popularity of cold brew.
Toyota Prius cannibalizing sales of other Toyota hybrid models:
The Toyota Prius, known for its fuel efficiency, became a highly successful hybrid vehicle. However, its success led to cannibalization of sales from other Toyota hybrid models as customers specifically opted for the Prius.
Netflix streaming cannibalizing DVD rental sales:
As Netflix shifted its focus to streaming content, its DVD rental service experienced cannibalization. Customers who previously rented DVDs from Netflix started opting for the convenience and immediate access of streaming, leading to a decline in DVD rental sales.
Microsoft Surface cannibalizing sales of other Windows-based laptops:
With the introduction of the Microsoft Surface line of tablets and laptops, Microsoft experienced cannibalization of sales from other Windows-based laptop manufacturers. Customers looking for a premium and versatile device began choosing the Surface over traditional laptops.
Kellogg’s Special K Protein cereal cannibalizing sales of other Kellogg’s cereal brands:
Kellogg’s Special K Protein cereal, marketed towards health-conscious consumers, attracted a portion of customers who would have otherwise purchased other Kellogg’s cereal brands. This resulted in cannibalization of sales within the Kellogg’s cereal portfolio.
Nike’s Flyknit shoes cannibalizing sales of traditional athletic shoes:
Nike’s innovative Flyknit technology, offering lightweight and breathable shoes, attracted customers who would have otherwise purchased traditional athletic shoes, resulting in some cannibalization of sales within Nike’s footwear line.
Procter & Gamble’s Tide Pods cannibalizing sales of liquid detergent:
When Procter & Gamble introduced Tide Pods, the convenient single-use detergent packets, it appealed to consumers looking for a simpler and mess-free laundry solution. As a result, sales of traditional liquid detergent witnessed cannibalization.
McDonald’s All-Day Breakfast cannibalizing sales of lunch and dinner items:
McDonald’s decision to offer breakfast items all day was well-received by customers. However, it led to some cannibalization of sales from the lunch and dinner menu items as people opted for breakfast options throughout the day.
Fitbit smartwatches cannibalizing sales of Fitbit fitness trackers:
Fitbit’s expansion into the smartwatch market with products like the Fitbit Versa and Fitbit Ionic cannibalized sales of their own fitness trackers. Customers seeking more comprehensive wearable devices shifted their preference to Fitbit smartwatches.
Adobe Creative Cloud cannibalizing sales of individual Adobe software licenses:
Adobe’s shift towards a subscription-based model with Creative Cloud affected the sales of individual software licenses. Customers now have access to a suite of Adobe software through the subscription, leading to cannibalization of standalone software sales.
Tesla Model 3 cannibalizing sales of other Tesla models:
With its more affordable price point and high demand, the Tesla Model 3 attracted customers who may have otherwise considered other Tesla models, resulting in some cannibalization of sales within the Tesla lineup.
Microsoft Office 365 cannibalizing sales of traditional Microsoft Office licenses:
The shift towards subscription-based Office 365 cannibalized sales of traditional one-time purchase licenses of Microsoft Office, as customers embraced the flexibility and continuous updates provided by the subscription model.
McDonald’s McWrap cannibalizing sales of other McDonald’s sandwich options:
The introduction of the McWrap as a healthier and customizable sandwich option led to some cannibalization of sales from other sandwich choices on the McDonald’s menu.
Samsung QLED TVs cannibalizing sales of Samsung LED TVs:
With the introduction of QLED technology, Samsung’s QLED TVs attracted customers who were specifically looking for the enhanced picture quality and color reproduction, resulting in cannibalization of sales from their existing LED TV models.
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