15. What is brand cannibalization?

Question

15. What is brand cannibalization?

Answer 1

Brand cannibalization is where a company introduces a brand that steals customers away from one of their other brands.  For example, Coke Zero gets a large percentage of its customer base from Diet Coke drinkers and from Coca Cola drinkers.  This means that Coke is eating itself in order to sell Coke Zero.

The theory behind it is that, while the product will incur a substantial amount of cannibalization, it will also draw in customers from other sources as well in order to, hopefully, increase the total company customer base (and thus increase revenue).

Edit:

Another example is... When Starbucks (or any other retailer) builds a new location, they look closely at the location of their current operations.  The goal is to build new places close enough to their current places so that there will not be too large of a gap between them (or they will lose potential customers).  But, if they put them too close together, the cannibalization rate will be so high that neither place will have enough customers of their own to survive.

Answer 2

A company competes with itself. That is, a company's brands compete against it's other brands.