Glossaries
Cannibalization
What is Cannibalization in Product Management?
Cannibalization in product management occurs when a new product or feature reduces sales or market share of an existing product within the same company's portfolio.
Synonyms: Product cannibalization, Self-cannibalization, Internal competition, Market cannibalization
Why Cannibalization Matters in Product Management
Cannibalization is a crucial concept for product managers to understand as it directly impacts a company's overall revenue and market strategy. While it may seem counterintuitive, cannibalization can sometimes be a deliberate strategy to stay competitive or expand market share. However, unintended cannibalization can lead to reduced profits and confused positioning in the market.
How to Identify and Manage Cannibalization
- Monitor sales data: Regularly analyze sales trends across your product portfolio.
- Conduct market research: Understand how customers perceive your products in relation to each other.
- Differentiate products: Ensure each product has a unique value proposition.
- Strategic pricing: Price products to minimize unintended cannibalization.
- Plan product launches carefully: Consider the timing and positioning of new products.
Examples of Product Cannibalization
- Apple's iPhone cannibalizing iPod sales
- Netflix's streaming service cannibalizing its DVD rental business
- Coca-Cola introducing new flavors that compete with its classic Coke
Frequently Asked Questions
- Is cannibalization always bad for business?: Not necessarily. Strategic cannibalization can help a company stay ahead of competitors and adapt to changing markets.
- How can I prevent unintended cannibalization?: Clearly define target markets for each product and ensure distinct positioning and features.
- What's the difference between cannibalization and competition?: Cannibalization occurs within a company's own product line, while competition is between different companies' products.
- Can cannibalization affect services too?: Yes, service-based businesses can also experience cannibalization when new service offerings impact existing ones.
