Definition
Cannibalization is the reduction in sales (units or dollars) of a firm’s existing products due to competition from other products from the same firm in the same category. One common type of cannibalization results from the introduction of a new product by the same firm. [1]
Cannibalization is something a firm can only do to its own products. Taking sales from competitors is not cannibalization.
Marketers often assume the cannibalization rate will be their portion of the fair share draw – the assumption that a new product will capture sales (in unit or dollar terms) from existing products in direct proportion to the market shares held by those existing products.
See Also
Competition
Imperfect competition
References
- Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; and David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (Second Edition). Pearson Education, Inc.