Cannibalization- Why Do Brands Cannibalize Their Existing Products (With Examples)

Every Business has faced this situation, where there’s depletion in the company’s sales turnover as a new product has been introduced, repercussions affecting the sale of old products in the similar product line.

In other simple words, generally, Cannibalization refers to eating one species, where the devourer belongs to the same species. Just like that, in the business field, the instigation of modern products is coupling the demand and supply of former products.

Obviously, people purchase the new launch and totally overlook the old product considering it a banal version of a similar product line, moreover this is prevalent in business.

For instance, Apple constantly releases a series of iOS to its customers, when the company introduced iPhone 12 Pro, people were enthralled to acquire it and ultimately shut one’s eyes to its previous version-iPhone 12. Thus; Cannibalization engenders no vicissitudes in the company’s sales turnover regarding existing products but gradually accelerates sales growth for the new product.

What is Cannibalization?
Effects of Cannibalization
Why is there a need for Cannibalization in Brands? How they overcome Cannibalization?
Five examples to state that Cannibalization works for existing products:
FAQ

What is Cannibalization?

Numerous corporations practice Cannibalism in Brands, by discounting existing products to compete with their recent products in the market. As a result, this will bring an augment profit on both existing and new products of the company. Besides, Cannibalization is nothing but a competition between exciting and fresh products of the same brand within the company.

Effects of Cannibalization

Just like Newton's third law: for every action, there is always an equal and opposite reaction. So, when the incorporation did anything, then it would definitely influence the incorporation in terms of sales or production.

If the company inaugurates a fresh product, say McDonald's comes up with BTS meals, no wonder the BTS armies are everywhere and BTS meal is hyping up in recent times, albeit the existing food products like Big Mac or McMuffin are receiving derivative fond as customers prefer BTS meal to any other foods in McDonald.

Therefore; no one holds any reprehensible for the loss of the company's market share, but itself the company by inaugurating new products as one of the newest versions of its old products.

Why is there a need for Cannibalization in Brands? How they overcome Cannibalization?

Cannibalization plays a crucial part in brands; where existing products are overlooked because of the newest product introduction. This will accelerate the demand for new products and decrease the sales of former products of its similar product line.

Businesses cannibalise their existing or outdated products by employing two ways to meet the same demand of their new product:

Discount

Company plans to touts existing products due to cannibalization, by providing discounts on such products in order to compete with the same demand for fresh products.

For instance; Samsung has launched its new version Samsung Galaxy F22 in July 2021, which overruled its preceding product Samsung Galaxy F12 which came to the market in April 2021.

What is the company planning to do, provided the former Samsung Galaxy F12 sales slump due to the demand for Samsung Galaxy F22 inflates?.

Factually, it is apparently evident that people would buy stuff when it is provided at a discount rate. So, the company vents former products at a discount price, where people fall for Samsung Galaxy F12 rather than paying a higher price for its newer version.

E-commerce

This pandemic became a beneficiary to e-commerce, where everything is supplied through Amazon, Flipkart or Myntra etc. E-commerce is the best way to captivate customers by generating many offers such as festival offers, Today’s Deals or deal of the day etc. For instance, Amazon recently applied for 26th-27th July Amazon prime Day India by selling products at low prices.

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Five examples to state that Cannibalization works for existing products

Cannibalization for existing products can be seen in every company when a new product is launched ranging from low-cost products like school supplies to high-end products like vehicles. The cannibalization of existing products can be proved through these examples.

iPhones

Steve Jobs, the founder of Apple in his biography has quoted saying that ”If you don’t cannibalize yourself, someone else will”. And likewise, Apple itself cannibalizes its products.

The iPhone first model was launched in June 2007. During this period Apple was coveted for its iPods and sales were at a high rate but Apple came out with iPhones that practically had the music feature along with phone services with internet connectivity and media support.

This led to consumers straying towards iPhones as they were a better substitute for iPods. This product like in the case of iPhones is an example of Self Cannibalization.

Coke-Zero

Coca-Cola, famous for its product Coke and Diet Coke, chipped away at its sales by introducing Coke-Zero targeting the male population that worried about their sugar intake in 2006 in the UK while compensating their total revenue.

Coca-Cola has also cannibalized itself by introducing Minute Maid, Fanta, etc. and removing coke and its variants as the essential face of the company.

P&G’s Tide Detergent

Procter & Gamble was mainly known as a manufacturer of soap and was known for its Ivory Soap which had drawbacks of its own like dirt wasn’t removed when used with hard water.

So even with risking cannibalization of their Ivory Soap, the company went ahead and introduced Tide Detergent in 1946 which was the first synthetic detergent that could deep-clean clothing as P&G didn’t want to be cannibalized out of the soap producer industry.

Maruti Suzuki Alto

Maruti Suzuki Alto manufactured by Maruti Suzuki was introduced in 2000. It was the Indian built version of the fifth-generation Suzuki Alto. In 2006, it was India’s largest selling car and by 2008 it had crossed 1 million in terms of production. But this increase in sales was only achieved by eating away the sales of the famous Maruti Suzuki 800. This was done with the help of price cuts and an ad campaign that lured many.

WeChat

China’s Tencent famously known as the world’s largest gaming company and the most-used internet portal used QQ an online instant message service during the period when desktop computers were the hype.

QQ failed to meet the standards with the development of smartphones and electronic devices. Therefore Tencent ordered a group of engineers to develop a messaging platform that would cannibalize QQ. Thus, WeChat was developed and released in January 2011.

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Conclusion

When human beings, in general, see something better, they essentially want it and feel inadequate with the thing they already possess and an urge to be updated with the upgraded version begins to fester. This is exactly what leads to the cannibalization of products.

The overlooking of existing products for a new one. If this phenomenon doesn’t work, there wouldn’t be customers for a newly launched product be it smartphones or vehicles.

Also known as corporate cannibalization of market cannibalization, this phenomenon is also the doom for a company as this nips away the sale of the previously introduced product. Thus proving this phenomenon to be double-edged.

FAQ

What is the example of brand cannibalization?

Coke Zero was introduced by Coca-Cola which chipped away the sales of Coke is one of the famous example of brand cannibalization.

What is Cannibalization?

Cannibalization is nothing but a competition between exciting and fresh products of the same brand within the company.

Why do brands cannibalize their existing products?

Brands usually cannibalize their existing products to accelerate the demand for new products and decrease the sales of former products of its similar product line.